Pan Am's lasting and positive image from its inception in 1929 is remarkable in view of its long and agonizing decline, which began in the late 1960s and noticeably affected the quality of passenger services from about 1980 onward.
Perhaps the single most decisive reason for Pan Am’s decay was its inability to secure political support for acquisition of an American domestic route network in its home market. By the time it seriously started to lobby for them in the early 1940s, it had become by far the world’s most powerful airline, and other US airlines convincingly argued that Pan Am would create a monopoly if allowed to compete with them.
Over the next decades, its increasingly dire financial situation led to the gradual sale of its various divisions. In April 1985, it sold off its Pacific division - 25 per cent of its entire route network - to United Airlines.
Things only worsened when, on December 21, 1988, Libyan terrorists bombed Pan Am flight 103 over Lockerbie, Scotland, resulting in 103 passenger fatalities. The airline was later slapped with a $300 million lawsuit filed by more than 100 families of the flight.
Pan Am was finally forced to declare bankruptcy on January 8, 1991. Its last remaining profitable assets were purchased by Delta Air Lines, and the rest faded into history.