Pan Am To Rise From Ashes.

<FONT SIZE="+3"><B> Pan Am To Rise From Ashes</B>

<I> Flying With Full Frills and Agency Commissions To Top Biz Destinations</I>

Jay Campbell

New York - Although the U.S. airline industry is moving away from its reliance on travel agencies for sales and distribution to large corporate buyers, one new entrant plans to embrace the traditional commission-based system.

Fittingly, that carrier's name is older than the system itself-Pan Am.

The airline has vowed to pay 10 percent commissions with no cap and will not set up direct deals with corporations. Instead, it will attempt to court business travelers both with its product and through override arrangements with agencies.

"We already have a number of special arrangements with corporate travel agencies and two deals with agency consortiums," said Pan Am senior vice president of sales Donal McSullivan, who said Department of Transportation certification for the carrier could come as soon as this week. "We wouldn't go directly to the client, but we are open to negotiations with corporate agencies who can drive volume for special commission considerations."

Supporters of travel distribution reform might suggest that Pan Am get with the times, but what the carrier plans to offer in terms of service and pricing structure could be appealing to corporate travel buyers.

Pan Am's plans will not make it a major carrier by any means, but still one serving top business destinations from New York, including Miami and Los Angeles and, eventually, San Francisco and Chicago.

Pan Am's self-imposed distinction from the major carriers is similar to what airlines such as Kiwi International (BTN, April 22) have pitched to corporate travel managers: low costs with full frills.

Pan Am will offer first- and coach-class service on A300s with meals and movies for both long and short flight segments. The carrier will have a simple pricing structure of one fully unrestricted fare and one seven-day advance purchase excursion fare without a Saturday night stay.

Pan Am's anticipated cost structure of about five cents per available seat mile-enabled by longer routes and lower staring salaries-will allow it to offer "first-class round-trip service from New York to L.A., for about $1,000," McSullivan said.

Distinct from airlines like Kiwi, however, Pan Am will offer access to international destinations through marketing relationships with nearly 20 foreign carriers, which it will feed at JFK International. The airline also has developed a shared frequent flyer program with those airlines, which include 11 members of Latin Pass (BTN, Nov. 13, 1995) and Aer Lingus, Iberia, Icelandair and Air Ukraine. Pan Am also has installed airport lounges for first-class and frequent passengers at New York, Miami and L.A.

One question that remains before the carrier's first flight is the number of frequencies it will offer. "We won't be sure on the frequencies until we get DOT approval," McSullivan said. He did say, however, that the airline will have a 5:30 p.m. flight from New York to L.A. with a 7:30 a.m. departure from L.A., and three flights daily from New York to Miami. Within a month of start-up, the airline plans to fly from New York to San Francisco with a similar schedule, and eventually from New York to Chicago-Midway.

Pan Am's attempt to purchase Carnival Air Lines, which failed late last week, would have expedited its DOT certification and provided it with more than 30 planes. Pan Am CEO Martin Shugrue said the airline will soon have three planes and will be flying by Labor Day.

McSullivan, who ran the Irish Tourist Board from 1976 to 1986, conducted marketing studies for Shugrue when he was a trustee for the estate of Eastern Airlines. McSullivan began working with Shugrue to develop the business plan for the new airline 18 months ago.