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Aviation History
1951
1951 - 0651.PDF
FLIGHT, 6 April 1951 405 CIVIL AVIATION . . . Aviation, speaking in another place, had declared that the State Corporations regarded any repetitive service, whether readily available to the public or not, as their lawful entitlement, and that with his support and encouragement they would use their resources to compete for them. He had gone on to say that if the intention of the Act were persistently thwarted, it would create a position which the Government could not accept. Mr. Ward maintained, as did independent operators, that the intention of the Act was perfectly clear and was not being thwarted; and that to throw doubt upon that definition without having it decided in the courts was to put the charter companies into a hopeless position. His second question—would not the Corporations be in a posi- tion to compete unfairly?—had been met during the passage of the Act by a definite assurance by the then Minister, Lord Winster, that they would not be allowed to use the resources of the State to the disadvantage of the private operator. But there was to-day abundant evidence that the Corporations were in fact using their subsidy and their privileged position under the Act of 1946 to try to drive the independent operators out of business. Corporation Charter Work Dealing first with the question of subsidy, Mr. Ward said that on page 43 of the accounts of B.O.A.C. for the year ended March, 1950, no operating overheads had been charged to "other than scheduled services"—that was, charter work. But how was it possible to undertake six million capacity ton-miles of charter work without incurring any overhead expenses? Perhaps the Parliamentary Secretary could explain it, but he was bound to say that it looked very much as though the overhead expenses incurred in competing in such work against the independent operators had been charged up to the regular scheduled lines. In that case the subsidy had been used to finance charter work and give a wholly unfair advantage to the State monopolies. He understood also that certain York aircraft had been set aside by B.O.A.C. for charter work. As the cost of operating Yorks for passenger trans- port was known to be not less than 12s 6d per mile, it was very difficult to see how the Corporation could possibly compete against charter companies without using their subsidy. Justifying his charge that the Corporations were using their privileged position unfairly, Mr. Ward said that we had the example of the contract recently awarded to B.O.A.C. for carrying families of Service personnel to Egypt. The Corporation was carrying out that contract with Stratocruisers, which were bought for dollars for use on the Atlantic routes. The operating costs of these very large aircraft were so high that it would be impossible for the Corporation to have submitted the lowest tender on the same terms as the charter companies. But the point was that the independent operators were not allowed by law to advertise for fare-paying passengers for the return journey. They had to be lucky enough to find someone who would charter the whole aircraft. The Corporation could, on the other hand, under the terms of the Act, advertise for passengers and sell tickets seat by seat to any fare-paying passengers just as though it were a regular scheduled service. That naturally gave them a tremendous advantage. There were several other examples of preference given to B.O.A.C. by Government departments and other public bodies, such as the Overseas Food Corporation, although private operators had often been able to submit the lowest tenders. All this was entirely contrary to the pledges given during the passage of the Act by Lord Winster. Associate Agreements Then there were the associate agreements with B.E.A. This scheme had been announced with a tremendous fanfare of trumpets as though the Crown jewels were being bestowed by the Corpora- tion upon the charter companies. But when it came to the point, •H *ae five-year agreements—the only ones which made it possible to buy new aircraft—were in respect of those routes on which there was very little chance indeed of getting enough traffic to make the service pay. For the past four years, Airwork, Ltd., one of our largest and most reputable private operators, had tried to get an associate agreement with the Corporation to run a service to Basle at fares w»U below the cost of second-class rail travel. Although B.E.A. Qi'j not themselves run a regular service to Basle, and although this application offered unprecedented opportunities for travel at very cheap rates, Airwork's application had been consistently turned down year after year. For several years B.O.A.C. had been passing on to foreign airlines, rather than to British inde- pendent operators, the surplus passengers or freight which they thtniselves could not carry on their own services. Why were not cm- own people given a chance to carry this traffic, unless it was "la: the Corporations deliberately wanted to drive the British Pn ate operators out of business ? Mr. Ward had no doubt that other similar examples could be produced, but there was no doubt whatever in his mind that the charter companies were getting a very raw deal indeed, and it was remarkable that so many of them had been able to survive. He then touched briefly on private flying, i.e., club pilots and private owners. They, too, were slowly being squeezed out of the air, as the following figures showed. In the first nine months of 1939, the Royal Aero Club issued 3,287 private pilots' licences; in 1946, the number issued was 1,688; in 1947, it was 1,763, and in 1948, 1,784. So far, it would be noted, the figures had been gradually increasing since the end of the war. In the last nine months of 1949, however, only 470 were issued, and in the first six months of 1950 the figure had dropped as low as 128. There was clearly a variety of reasons for this alarming drop in the number of private flyers, but he thought it significant that the first really big drop took place in 1949; because that was the year when the Air Navigation Order, of 1949, came into force. This order really did make the lives of private flyers almost impossible by producing a mass of rules, regulations and restrictions. He begged the Minister to look at this Order again and see whether it could not be simplified. MR. FRANK BESWICK, Parliamentary Secretary to the Ministry of Civil Aviation, said that he repudiated immediately the sug- gestion that the Corporations about which Mr. Ward spoke were not subject to any competition. It seemed to him that air trans- port was one of the industries subject at this moment to the keenest competition. He spent some part of the Parliamentary recess last year in going round the South American continent and was amazed at some of the cut-throat tactics employed by the competing airlines in that part of the world. Mr. Beswick said that within a week of his taking office he had given an explanation of the higher-than-estimated deficit of B.O.A.C. by detailing the unfortunate experiences with the Tudor; the effect of devaluation; the delays with new aircraft, and the difficult trading position in South America. He had also said, however, that the Corporation was determined to do everything in its power to keep down costs and to increase business. He was glad to say that the efforts of all in B.O.A.C. had resulted in a radically changed financial picture by the end of 1950. Recent B.OAC. Statistics Mr. Beswick then proceeded to indicate some of the available figures to bring the information Mr. Ward had given a little more up to date than the accounts terminating in March of last year. The passenger-miles flown by B.O.A.C. in the 12 months ended January, 195 ij totalled 555 million, compared with 410 million for the previous 12 months. In the year up to January, 1951, the output per employee in capacity ton-miles, was 9,250 against 6,750, which he thought was the figure which Air. Ward had to quote. The number of employees had been falling steadily. In April, 1948, it was 23,600 and in January, 1951, it was 15,600. The revenue earned per employee for the year ended January, 1951, was £1,350, compared with £900 for the previous 12 months. Mr. Ward here interposed that the recent figure of productivity for B.O.A.C. of 9,250 capacity ton-miles per employee was still 10,000 capacity ton-miles behind Pan-American. Mr. Beswick said that the importance of the comparison which he was making was that it showed the trend within our own Cor- poration. That was a fair comparison to make. The operating deficit for the 12 months ending January, 1951, was just under £5 million, compared with just under £8 million for the previous 12 months. That was the overall deficit. The operating revenue had gone up from £19 million for the year ending January, 1950, to £23 million for the year ending January, 1951. As an indication of the effect upon the economics of this Cor- poration Mr. Beswick pointed out that they now broke even at a load factor, in January, 1951, of 75 per cent, compared with a load factor of 92 per cent in January, 1950; that was to say, if they could get all their aircraft three-quarters full, with operating costs as at January, 1951, they would break even. For B.O.A.C., in the period ending December, 1951, operating costs per capacity ton-mile were 44.2c!. Compared with previous years, the figure showed a marked decline. In the year 1946-47 the figure was 70.9d. In any case, he thought we could claim that the trend was a sharp one, and that it was in the right direction. Mr. Beswick concluded this portion of his statement with a word of warning : the progress and the improvements in financial results had been achieved in the teeth of higher working costs, and within the next few months when newer and more advanced types of aircraft were introduced, the costs of such introduction would inevitably be high and in the short term might affect the present favourable financial trend; but he felt that the money invested in the introduction of turboprop and turbojet aircraft like the Viscount and the Comet would not only prove a good investment for the Corporation itself but for aviation as a whole. The next subjects referred to by Mr. Beswick were air-traffic control and facilities at airports. Out of a total of 7,600 staff of
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