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Aviation History
1938
1938 - 0735.PDF
MARCH 17, 1938. FLIGHT. 263 CADMAN COMMITTEE ON AIRLINES routes, including those to the West Indies and across thePacific. The limit of ,£1,500,000 imposed under the Air NavigationAct of 1936 left little or no margin for suggested developments and Parliamentary sanction for further sums should bepromptly sought. The Committee emphasised the fact that British civil aviation could not compete with foreign progressunless it was comparably subsidised. The external services should be concentrated in a smallnumber of well-founded organisations, since, foreign air services would be likely to provide all the necessary stimulating com-petition. No single external route should be operated by more than one British company and, following the Maybury recom-mendation, some measure of restriction should be applied to avoid competition on internal services. Imperial Airways, having been entrusted with the operationof services to Africa, India, Australia, and across the North Atlantic, should be concerned primarily with the developmentof these services, and British air services in Europe should be developed by British Airways, Which, since 1036, had been thesecond " chosen instrument." This company already ran a day service to Scandinavia, a night mail service to Berlin, anunsubsidised service to Paris, and had been selected to operate an experimental service to West Africa and, eventually, toSouth America. The Committee thought that the large traffic potentialitiesou the London-Paris route singled this out for special treat- ment and suggested that the two companies should be amalga-mated under a single company with pro-rata shareholding. This course would permit the interests of each company to berecognised while avoiding the justifiably criticised state of affairs in which two subsidised companies were operating overthe same route. Imperial Airways were already required to traverse France and Italy and their title to be associated withservices to these countries and to Greece should be recognised. Imperial Airways " Intolerant of suggestion and unyielding in negotiation." After giving very close consideration to matters concerningImperial Airways' relations with the Air Ministry, its dealings with its staff and its internal management, the committeewas profoundly dissatisfied. In 1923 the Hambling Committee defined the relations be-tween the Air Ministry and Imperial Airways in the following terms:—"In the first place, we desire to make it clear thatwe do not recommend the creation of a Corporation or Com- pany administered under Government control, but of a com-mercial organisation run entirely on business lines with a privileged position with regard to air transport subsidies, onterms and conditions to be defined later. . . . The Govern- ment should not exercise any direct control over the activitiesof the Company, other than by the appointment of directors, except for the purpose of such checking as may be necessaryto determine the amount of subsidy payable and except for such control as may from time to time be exercised by theGovernment through the Civil Aviation Department over all civil flying in the country." These recommendations were adopted, and had governed therelations between the Department and the Company. This policy could be maintained only on the clear under-standing that, in view of the international and Imperial problems involved, there should be the closest liaison betweenthe Company and the Air Ministry. As a chosen instrument of the policy of the Government, the Company must be fullyand promptly informed of all proposals which concerned it. On its part the Company must continually be ready with in-formation, advice and suggestions on the best means of giving effect to these proposals, and must frankly disclose its ownplans and projects. Although the carriage of air passengers in safety and com-I'Jrt and the conveyance of mails and freight had been achieved by Imperial Airways with considerable efficiency,t'ne Committee could not avoid the conclusion that the manage- ment of Imperial Airways had -been defective in other respects.Ju particular, not only had it failed to co-operate fully with the Air Ministry but it had been intolerant of suggestionaud unyielding in negotiation. Internally its attitude in staff matters had left much to be desired. .« appeared to the Committee that the Managing Director°f the Company—presumably with the acquiescence of the aoard—had taken a commercial view of his responsibilitiestuat was too narrow, and had failed to give to the Govern- ment departments with which he had been concerned theco-operation which should have been expected from a Company heavily subsidised and having such important internationaland Imperial contacts. There should, in their opinion, be an immediate improvement in these respects. The Committee further considered that the responsibilitieswhich now confronted the Company had increased to the point that they could no longer be borne for practical purposes bya Managing Director. The Chairman of the Company should be in a position to give his whole time to the direction of thebusiness, and should do so. He should personally control the management of the Company, and he should be aided by theservices of one or more other whole-time Directors. They particularly stressed the appointment of a whole-time British Airways conceived as "a counterpart to Imperial Airways in carrying out British civil aviation policy." Chairman, because, apart from the many directorial dutieswhich would fall to him, close presonal intervention on his part was immediately necessary to restore the mutual con-fidence and good will which had been seriously prejudiced, but were essential in the relations of the management to Govern-ment Departments, the Company's staff and others. As regards British Airways, the extension of its activitieswould necessitate its being organised in the matter of capital, personnel and equipment on a scale appropriate to the largeresponsibility which should be given to it. The Committee conceived this Company as a counterpart to Imperial Airwaysin carrying out British civil aviation policy, and there must be close co-operation between the two companies. As in thecase of Imperial Airways, British Airways should also have the services of a whole-time Chairman and Directors. While dealing later with certain specific complaints, theCommittee noted that in the same year Imperial Airways not only cut the salaries of pilots but increased its dividend from8 per cent, to 9 per cent, and more or less doubled its Directors' fees. The original prospectus provided for the balance ofprofits, after the payment of a 10 p.c. dividend on the paid-up capital, to be divided as follows: One third to the Governmentfor the repayment of subsidy; one third to a reserve for de- velopment ; and one third to be available for additionaldividends to shareholders. There was little doubt that capital was attracted to the enterprise by the prospect of substantialdividends. During the early years none was paid, and between 1923 and 1937 the shareholders received, on anaverage, 4^ per cent. If the recommendations of the Committee were put intoeffect the position of Imperial Airways and other subsidised air transport companies would be more secure than that ofcompanies trading on a normal commercial footings. The Com- Government agreeable to increase airline subsidy limit from £1,500,000 to £3,000,000. mittee thought that the dividends of all such companies should be restricted to the limits usually associated with public utility companies. # # * The Government were in general agreement with the Com-mittee in the matter of civil airline expansion and were pre- pared to recommend to Parliament that the limit of the totalsubsidy payable to all air transport companies should be in- creased from £1,500,000 to £3,000,000. The recommendationfor the establishment of particular services would be considered in due course, but the increase in subsidy did not commit theGovernment to a grant on any particular route. They accepted the recommendations with reference to the number of co-operating companies and the allotment of routes. Imperial Airways should be concerned first and foremost with the de-velopment of Empire air routes and British Airways should, in general, develop the British air services in Europe andshould operate experimentally to West Africa. They approved the suggestions that the two companies operating the London-Paris route should be amalgamated, and agreed that Imperial Airways should still be associated with short-haul services toFrance, Italy and Greece. It had been ascertained that both Imperial Airways and British Airways were willing to acceptthe recommendation.
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