Pan Am. v. Export

For twelve years, Pan American Airways Corp. has had a U. S. monopoly on intercontinental air transportation. Its huge Sikorskys, Boeings, Martins and Douglases have flashed through skies clear of competition, except for three or four weaker foreign-owned airlines. An aerial trail blazer, Pan Am has nosed southward into South America; westward to Hawaii, China, Australia, New Zealand; eastward to Europe. With few rivals, Pan Am could take its time pathfinding, make sure its explorations would pay. It has made money since 1931, $1,984,000 last year.

But in 1937 a competitor hove in sight. American Export Lines, Inc. (steamships) announced it would start transatlantic air service this year. Pan Am vigorously fought the idea. One afternoon last July, Export officials dashed through the halls of their buff-colored downtown Manhattan offices joyfully shouting "We got it!" "It" was an O.K. from the Civil Aeronautics Board to fly the Atlantic (TIME, July 29). But while Export groomed its lone twin-engined Consolidated flying boat for mail and express flights to Europe, Pan Am worked feverishly to keep it on the ground.

Last week, Export bigwigs were dizzy from the worst blow in four years of airline planning. A Senate subcommittee turned down a $500,000 airmail appropriation to finance their preliminary transatlantic flights. On general principles the State, War and Navy Departments were all behind Export in the Capitol corridors. (The Navy has stood aside to let Export have its three big warlike Sikorskys in the spring.) That was little consolation. Export must await another deficiency appropriation (probably until next year) before trying again. For the turndown of what looked like a sure thing, committeemen gave no official explanation, Pan Am was as silent as a catful of canaries.

Ironically, the blow fell while Export was staging a victory dance on another front. It had invaded Pan Am's semiprivate preserve--Latin America--by buying a phenomenally successful line called TACA (Transposes Aereos Centre Americanos). To the superstitious natives of Central America, TACA is a byword with a touch of magic. Many of them who have never seen an automobile cheerfully clamber into a TACA transport, grin across the aisle at U. S. or English businessmen heading to or from Pan Am's main stem.

TACA is the creation of 45-year-old, stocky, square-jawed Lowell Yerex, New Zealand flier in World War I. After the war, Yerex spent ten years barnstorming and selling automobiles in the U. S., then drifted south to Honduras with $25 and an old Stinson monoplane, went into business. His business: to haul anything anyplace in Central America a plane could land. He also managed to keep on the right side of the volatile Central American Governments, even did air fighting for Honduras against revolutionists. One day while he was strafing native troops, a rifle bullet smacked his head, put out an eye. A crack pilot, he banked his plane for home, made the field before collapsing. Now he has a glass eye.

Today TACA spreads in a series of fans over British Honduras, Honduras, Guatemala, Salvador, Nicaragua, Costa Rica and Panama. It makes scheduled stops at 125 of its 235 airports (mostly carved out of dense jungles); operates 40 radio stations; employs 700 men, mostly natives. Equipment includes 22 trimotored Fords ("Tin Geese" all bought second-hand), six new Lockheed 145, three twin-motored Curtiss Condors, 21 light planes. TACA's airplane repair shop at Tegucigalpa is the biggest between the U. S. and Panama.

TACA is also the world's No. 1 carrier of air freight, from which it gets 60% of its revenues. When he buys a plane, Yerex rips out the plush seats, toilet, stewardess' quarters, puts in metal flooring, sidewalls, removable seats instead. The "Tin Geese" have huge hatches in the roofs or large double doors in the sides. Outside aviators stand agape at the way TACA planes are loaded with no apparent regard for weight, then sluggishly take off over some of the toughest flying terrain in the world. No. 1 source of freight revenue is machinery and supplies, mostly for gold mines. In December 1938, Canadian-controlled La Luz Mines began work on an 800-ton-a-day mine at Siuna, Nicaragua. TACA first flew in three Caterpillar tractors, followed them with bulldozers, graders, two "ball mills" (weighing 110,000 pounds assembled), a 2,300-h.p. Diesel plant. When shown the complete mine buildings, even the blase Yerex exclaimed. "We never hauled THAT?" No. 2 freight item is grey puttylike chicle, base of chewing gum. From the chicle-producing jungles of Guatemala to the coast is one to two weeks by mule train, 40 minutes by TACA. Other freight includes refrigerators, bedsprings, oil, bananas, cattle, chickens.

Yerex also bolstered his revenues with passengers and mail. He always made money; profits rose every year. Last year TACA grossed $1,079,000, netted $216,000. This year Yerex hoped to clear $250,000. But the state of the world worried him. Several months ago he considered selling out to Americans, thus getting under Uncle Sam's protecting wing. Last week (subject to CAB approval) the deal was closed for a reported $2,000,000-plus. Besides cash and American Export stock Yerex got the job of managing TACA for its new owners. American Export, its more ambitious plans confined to paper by Pan Am and the vagaries of Congress, got a going airline; a chance to practice for later competition with Pan Am.

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