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Aviation History
1958
1958-1- - 0266.PDF
270 FLIGHT, 22 August 1958 Seen at Vancouver is a C.P.A.L. Britannia 314, first-line equipment of the carrier which hopes to be granted transcontinental domestic traffic rights in competition with T.C.A. Beyond is a T.C.A. North Star. "Flight" photograph C.P.A.L.'s view is that T.C.A. ought to concentrate more oftheir newly ordered capacity on international routes; they point out, for example, that T.C.A. carried only 42 per cent of Canadiantraffic to and from Europe in 1957. But of course T.C.A. could not use their Vanguards on the \tlantic, and these aircraft werepresumably ordered on the basis of a continuing T.C.A. monopoly of domestic services. Assuming that C.P.A.L. are, on the strength of the Wheatcroftreport, next year granted four transcontinental services daily, they would have a requirement for an additional capacity of about46 million C.T.M.s. Mr. Grant McConachie, C.P.A.L.'s presi- dent, has spoken of his interest in Comet 4s for transcontinentalservice; to provide the required capacity a fleet of about four Comet 4s would be needed. Thus into clearer perspective go expectations that a large orderfor new aircraft might be the immediate result of a successful C.P.A.L. application—particularly when it is borne in mind that,according to the report, four services a day would be an "absolute maximum" capacity. In passing, it is worth noting that should Airline Competition in Canada A COMMENTARY ON THE WHEATCROFT REPORT •O4O •O3 5 3 z H-O3O u a* 3-025 o S-O2O •O15 1ATER this summer the Canadian Air Transport Board areto hold a public hearing on Canadian Pacific Airlines' and-J Pacific Western Airlines' applications to operate transcon- tinental domestic services. These routes have hitherto been themonopoly of Trans-Canada Air Lines. The Canadian Government is in principle predisposed to "some measure of competition";however, it called for an independent review of the desirability and economic consequences of such competition. This was under-taken by Mr. S. F. Wheatcroft, who is economic adviser to B.E.A. and author of The Economics of European Air Transport. His report is worth close study outside as well as inside Canadabecause it sets out certain basic principles which are applicable to air transport in general. It also puts into better perspective thepossible new market for transport aircraft which the granting of transcontinental domestic routes to C.P.A.L. or P.W.A. mightopen up. Simply stated, the conclusion of the 79-page report is that ifcompetition were permitted immediately it would lead to a T.C.A. deficit unless such competition were strictly limited in its extent.The "absolute maximum possible" competition which could be permitted in 1959 without leading to a T.C.A. deficit would, saysthe report, be approximately four daily transcontinental services; however, these might be reduced to two services daily to easeT.CA.'s problems of adjustment (for example, the disposal of aircraft on order), and to allow them a share of traffic growth(without which their unit costs would probably increase). For the future, the study considers that the prospects for competitionwithout danger of cost increases appear to improve considerably at some date in the years between 1961 and 1966. The favourite candidate for the introduction competitive trans-continental services—though of course the report does not suggest this—is C.P.A.L. This airline has applied (Flight, March 7,1958) to operate four-and-a-half transcontinental services daily; and therefore it must view with a fair amount of optimism thereport's finding—strongly qualified though it is—that four com- petitive services a day might be permitted. 1\ t1 1w \ \\\ •. \ \ \ \ •••.. --_ ./VISCOl -——J INT — , -1 •——» *VANGUA COME _6ftltAi %0 T 4A LNIA DC-8 2OO 4OO 6OO 8OO 1,000 1,200 STILL AIR RANGE (nrrv) 1,400 2pOO Mr. McConachie decide to use Britannias for transcontinentaluse, a repeat-order for about four of these aircraft might be placed. But it seems possible that the net result of a successful C.P.A.L.application would be "no gain" for the British industry as a whole, since T.C.A. might have to back down on part of their order for20 Vanguards. The acquisition by C.P.A.L. of two types of jet (i.e., three typesof turbine airliner) appears unlikely; more likely is the possibility that Britannias might be used for domestic operations. Thispossibility is reinforced by an important section of the Wheatcroft report devoted to the general problems of equipment and techno-logical progress. Though written in a Canadian context, these words have a meaning for the air transport industry as a whole:— "There is the question whether very rapid technological progress isinvariably in the best public interest. This is a problem of very great importance in the world airline industry at the present time. It maywell prove that the present rate of technological progress, which threatens to make obsolete nearly all existing aircraft in the next three or fouryears, is more than the industry can afford. "The industry faces a crisis as a result of the jet revolution. Thespeed of the new jet aircraft is such an important competitive factor that, if there is no difference in the fare levels, the airlines will increasingly \be forced by competition into using these aircraft even on routes where other types of aircraft could provide lower cost service." Mr. Wheatcroft considers that in the Canadian domestic market "This kind of development could well mean that airline competitionresulted in a higher level of costs and hence higher fare levels. The danger can be demonstrated by a consideration of the operating costsof die aircraft which might be used on competitive services within Canada. [The graph] shows the operating costs at various ranges forthe Viscount, Britannia, Comet, DC-8 and Vanguard. "T.C.A.'s future plans are based upon using the DC-8 only on a limitednumber ot long haul domestic routes on which the seat-mile costs of this aircraft come closest to those of the Vanguard and on which asignificant time saving is offered. "If, however, competitive service were authorized on the transcon-tinental routes it is highly probable that the new airline might introduce jet service on those routes on which T.C.A. now plans to operatethe Vanguard. Jet service on such routes, either with the Comet or the DC-8, would involve a significantly higher level of cost than theVanguard but it might appear worth while because of the competitive advantage it would give to the carrier introducing it. The inevitableresult would be, however, that T.C.A. would be obliged to meet the jet competition and replace Vanguard services by jet services. Theresult of this would be that the overall level of operating costs would be increased and higher fares would be necessary. "This danger can only be avoided if the regulatory agency insists thatfares should be based on operating costs. If a competitive carrier intro- duces jet services on routes on which they involve a higher level ofoperating costs they should be obliged to charge a premium fare for the jet services. A policy decision of this nature, extended also into theinternational field, might go a long way to overcome the crisis which the whole industry may face in the next few years." Only rarely is it possible to publish an airline's own comparison of aircraft costs. In reproducing this T.C.A. analysis from "Airline Com- petition in Canada," we would add that costs may vary widely dependhg upon an airline's particular circumstances. Assumptions here Q>e I.S.A.; constant-altitude cruise; seating capacities: DC-8, 126; Van- guard, 101; Britannia, 101; Comet 4A, 74; Viscount, 44. Costs of the Comet 4B, T.C.A. estimate, are ten per cent fower than those of the 4A.
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