Swapping for Survival

Like mammoth prehistoric birds, Pan American World Airways and Trans World Airlines face a threat of extinction because of changing conditions, notably a fourfold rise in fuel prices and a deep slump in international air travel. Having failed in an attempt to wangle Government subsidies to keep them aloft, the two carriers last week unveiled the first move in their strategy for survival: a far-reaching, five-year swap of overseas routes that would drastically reduce head-on competition between the American giants and, they hope, allow them to fly planes somewhat more fully loaded (though each would still be competing with a swarm of foreign-flag carriers). If the agreement is approved by the Civil Aeronautics Board and the White House, it could take effect as early as Feb. 1.

Full Marriage. For passengers, the agreement will mean fewer and more crowded flights to cities outside the mainland U.S., though traffic is not heavy enough to produce any actual shortage of seats. TWA will discontinue its flights to Germany, leaving Pan Am the only U.S. carrier serving that country; Pan Am in return will surrender all but one of its flights to France, Portugal, Spain and Morocco. Both carriers will trim their U.S.-to-London schedules. Pam Am will get most of TWA's transpacific routes to such places as Bangkok, Guam and Bombay, but will turn over to TWA its share of the heavily traveled route from the mainland U.S. to Hawaii.

Pan Am Chairman William T. Seawell and TWA Chairman Charles C. Tillinghast Jr. estimate that the swaps will save each airline at least $25 million a year, and some Wall Street analysts think the savings could run double that. The deal is not certain to go through. The Justice Department may register antitrust objections, since approval of the agreement would reverse the Government's overall policy of insisting that at least two U.S.-flag airlines serve each major overseas route. The CAB favors the agreement in general, but it still must approve the details. On the other hand, if the swaps come off, they could mark a long step toward a full Pan Am-TWA merger. So far, the two lines have been cool toward marriage, despite prodding by the Ford Administration, but they are continuing to explore the proposal.

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