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Aviation History
1931
1931 - 0169.PDF
FLIGHT, FEBRUARY 20, 1931 AIR TRANSPORT SIR ERIC GEDDES ON THE FUTURE* (Concluded from p. 144) Economic Results of Air Transport SIR ERIC GEDDES then continued by stating that it wastrue that, with two or three exceptions, there was nocommercial air transport in the world which could fly bv itself, unassisted by some form of subsidy. Sir Eric mentioned the exceptions, which will already be known to readers of FLIGHT, i.e., the services in Colombia and New r.ninea. Usually, the best surface-travel facilities existed where traffic was most dense, but under such conditions air transport had to compete with low rates of rail and sea transport. If they took the cost of operation as 100, the traffic earnings of the air services operated by several of the European countries represented France 20 Germany . . . . 33 Great Britain . . . . 47 lor the preceding year, Great Britain's figure was 63, but the inauguration of the England-India service caused a temporary reduction. Holland reached a figure of 64 for one year, but the inauguration of the Amsterdam-Batavia service would cause the ratio of traffic earnings to decrease. Cost of Operation Continuing with the assumption that the total cost ox operation was 100, this total could be sub-divided as follows:— Components of Air Transport Labour— Costs. Technical . . . . . . 19 Commercial . . . . . . . . 6 Charges incidental to labour . . . . 4 — 29 Fuel and oil . . . . . . . . . . 16 Obsolescence and depreciation . . . . . . 17 Materials . . . . . . . . . . 15 Insurance and accidents . . . . . . . . 5 Overhead charges, advertising and adminis- tration .. . . . . .. . . ..IS 100 For traffic receipts to balance expenditure, changes must occur somewhere. The industry was roughly half-way there now, and Sir Eric proceeded to examine ways and means of making up the other half. Under the heading Labour, he did not look to any fall in tue general wage level, but rather to improvements in design and construction, and to the reduction in the maintenance and repair costs. The items Fuel and Oil were not, Sir Eric thought, likely TO be materially reduced in cost, and they were commodities winch were very sensitive to the laws of supply and demand. Here was the possibility of heavy-oil fuel replacing petrol, although the heavy-oil engine could not yet give the e results as the refined petrol engine, he thought they would see remarkable improvements during the next five In dealing with Obsolescence and Depreciation, the ecturer pointed out that depreciation concerned plant and equipment, etc., but did not refer to aircraft and engines, •wear and tear on which were taken care of daily in maintenance. Very large sums had, however, to be' set tf e tor obsolescence, and it was under this heading that nt • Would find one of the greatest benefits from the progress b aeronautical science. Present-day costs were inflated f', 1 lSe' tor example, Imperial Airways fleet was written o! unify !r years' Tnis P°iic>' gave rapid replacement 'Has abl t aircraft of tne latest design, and they were desio-rT A talce ^vantage of the modern improvements construction This howeer was an artificialin desio-rT A antage of the modern improvementscostwVh construction. This, however, was an artificial Similar H°Uld nOt be aftorded were it not for the subsidy. . „ LOntlltlons prevailed in most countries, and Sir Eric n^," °f Paper read before the Marshall Society of Cambridge on pointed out that one American company provided for obsolescence at the rate of 50 per cent, per annum. " Given two air services," Sir Eric said, " one planning its fleet replacements every ten years, and the other enabled, by means of a subsidy, to replace its fleet every three or four years," it was obvious that the latter would outstep the former in knowledge and experience of operations, in the performance of its fleet, and, he ventured to believe, in all the attributes which make for commercial success. They also had to look for a decrease in the initial cost of aircraft and engines. Their cost to-day was weighted -with the burden of experimental and design costs, and overhead expenses spread over a limited output. Sir Eric did not look forward to any fall in the prices of material, but thought relief would come in the durability of components by the use of metal construction. Insurance provided one of the most encouraging signs of progress. Seven years ago, insurance and accidents repre- sented 11 per cent, of Imperial Airways' budget. The figure had now fallen to 5 per cent. There was room for improvement, but he thought Imperial Airways' rates were lower than those obtained by any other air service. As a fair premium, they could take, as an average figure, 1\ per cent, per annum on the cost of the fleet. .All other classes of charge could be grouped under the heading Overheads. In the air line he was considering, they were spread over an annual mileage of about \\ million miles, flown by aircraft of an average load of about \\ tons, of which roughly 60 per cent, was filled with paying traffic. If these overheads, and the important items of obsolescence and insurance, were to be spread over double the mileage, or over the same mileage with double the pay-load capacity, the budget would show a very different picture. Imperial Airways had always operated aircraft of a larger capacity than commonly used elsewhere, but in spite of this they had attained higher load factors. They had offered more space, and had sold a larger percentage of it. It would be unwise to estimate for an average of more than about 60 per cent., and there was ground for believing that if the capacity of aircraft was increased to three or four times what it was to-day, the load factor would come down lower, to, say, 40 to 50 per cent. This was a circumstance which could partly be controlled by the size of aircraft employed. Outlining savings which might reasonably be expected, and expressing these as part of the original cost of operation which was taken as 100, Sir Eric said that by aiming for a reduction in the productive part of technical labour costs a saving to about 3 per cent, might be expected. The use of heavy-oil fuel might be expected to give a reduction to 8 per cent., while an obsolescence spread over ten years, instead of four, should give a saving of 9 per cent. The increased durability of materials should decrease this item of cost by about 25 per cent., or reduce it to 4 per cent., while an insurance rate of about the same as for first-class shipping would give a reduction to 2 per cent. Altogether a total saving of 26 per cent. The position of the hypothetical air line after it had achieved these savings would be : cost, 74 per cent. ; revenue, 50 per cent. ; deficit, 24 per cent. It was thus clear, Sir Eric said, that these possible economies alone would not enable the air line to change from a minus to a plus result, and this brought him to the two fundamental improvements which they expected on the one hand from the designers and constructors of aircraft, and on the other, from the men whose duty it was to create a greater demand for air travel. He had shown how the designer ten years ago gave them a pay-load capacity of 1 lb. per h.p. The figure to-day was about 3-1 lb. per h.p., and he asked whether they would be setting too hard a task for the scientist if they asked him to give 5 lb. per h.p. paying load on a similar fuel range basis. He admitted the task was hard, but did not think it was insuperable. The latest type of machine being commissioned would give a pay-load of about 3£ lb. per h.p., so that they were working up to the 5 lb. for which he asked, although 5 was but a stepping stone to 6 and 7 lb. per h.p. The effect of increasing the capacity was very marked. Thus if an increase in pay load was obtained, giving them 163
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