"Why Will Pan Am III Die?"
The entire question is wrong. First of all, there is no such thing as a Pan Am III, it's still Pan Am II. It's still the same company that was founded by ex-Pan Am I CEO, Marty Shugrue. Secondly, you can only ask, whether
they will fail or not, or, at best, why they might
fail. So much on semantics.
As far as their business strategy is concerned, they stand a better chance to survive than most other recent start-ups, because they have not fallen prey to the temptation of early over-expansion. The B727s work just fine them. They do not pay lease rates, because most of them were bought by Guilford with cash. A vintage B727 costs about $6-8 million, a new A320 close to $40 million. You can burn a lot of fuel, until you reach the expense level of an operation with brandnew aircraft. Pan Am has done the math and they know that for their purposes the B727 has the lowest operating cost per seat. Pan Am earns a lot of its revenue with cahrter flights. Therefore, they need a reasonably sized aircraft with lots of cargo space, and not regional jets (RJs have the highest operating cost per seat of all commercial aircraft). Btw, the single daily B727 flight out of Bangor gives Pan Am 36% market share in this city. Not bad, is it? And the four biggest airlines in the U.S. (and in the world for that matter) all fly B727s. I don't see how the utilization of that type may hurt Pan Am.
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Photo © Lawrence Feir
This is eye candy to me. Their 727s are well-maintained, and personally, I feel more comfortable in a 27 than in a B737 with its crappy rudder hydraulics.
One other thing: Midamerica Airport is much closer to St. Louis than Gatwick is to London, and St.Louis is the closest city to BLV, so why shouldn't Pan Am be able to market BLV as St. Louis??? The same is true for Sanford. The airport itself uses Orlando as its primary name:
Pan Am (I) earned its reputation by pioneering the airline industry, and this tradition certainly lives on in the new Pan Am. As someone else pointed out, opening up underserved airports to scheduled airline service has never hurt Southwest. Why should it be diffrent in Pan Am's case. And, with a few exceptions, Southwest flies to almost all the premium airports in the U.S. nowadays. Who is to say that Pan Am will not do the same 20 years from now? To quote John Nadolny, Guilford's senior vice president and general counsel, "We feel we are the custodians of something very precious. The name is held near and dear to people," he says. "We have a high standard to live up to. We want to bring the Pan Am name back to its rightful place."