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Aviation History
1960
1960 - 2210.PDF
562 FLIGHT, 7 October 1960 AIR COMMERCE BOAC MAKES MONEY ON THE SOUTH ATLANTIC A FTER eight months' operation on the route to Brazil, Uruguay,** Argentina and Chile, BOAC are to date making a small profit on their South American service. Although the route's? potentialwas resolutely upheld by the corporation when the South American service re-opened, it was generally accepted that the service wouldbe one on which, for some time to come, it would be extremely difficult to operate profitably. In view of the capacity already onthe route the best that could be hoped for, it seemed, was that the South Atlantic would generate a profitable amount of traffic overthe triangle of BOAC's routes between Europe, New York and South America. A number of factors have combined this year to upset widelyaccepted forecasts that the route (to quote the December issue of the BALPA journal The Log) was "absolutely certain to losemoney for BOAC over the next five years." One of these has been the effect of the Great South American Rate War which, viewedin the context of autumn 1960, has not been entirely an unmitigated evil. While the rate war resulted in an additional £im "salescosts" to BOAC on sale of tickets to Europe (some airlines are said to have offered rebates of up to 75 per cent) the additionaltraffic generated for all airlines has put a different complexion on an anxious situation. BOAC's load factors since the servicere-opened on January 25 have "for long periods" exceeded 90 per cent first class and have been between 80 and 90 per cent touristclass, with the result that the corporation have already recaptured about nine-tenths of the share of the traffic that was relinquishedcompletely in 1954. Also on the credit side of the operation has been a bonus onoperating costs resulting from an increase in Comet utilization on all routes (it is currently more than lOhr per day), developedComet operating techniques which have resulted in a general reduction in fuel costs and, to some extent, conservativeestimating. Less tangible is BOAC's good reputation in South America as an accomplished jet operator. The present profit is still a real one when station costs andother overheads (including the costs of the rate war) allotted to this first year of operation are taken into account, although withthe European winter and big-jet competition ahead, BOAC may not be able to maintain their profitable position over the fulltwelve months. Also, additional business generated by the rate war has convinced the corporation that winter fares are at presenttoo high to attract passengers in profitable volume or even to keep the market "clean"—they are having to compete against SouthAmerican ticket offices which are even now offering rebates reputed to be up to 20-30 per cent. Rates problems affect thewhole of South America. Commenting at Copenhagen on South American fares, IATA's traffic advisory committee said: — "For more than a year past, there have been serious attempts by IATAmembers, governments and non-IATA carriers in the area to remedy a serious instability of fares on routes serving South America and con-necting it with the rest of the hemisphere. As the result of several meetings, the Honolulu Conferences agreed certain fares which were to be put into effect provided other carriers would adhere to publishedfares at a stated percentage below these levels. While some of the non-IATA carriers concerned have tended to adhere to these terms, itis not yet clear whether all governments in the area are ready to take the necessary steps to stabilize the situation." Further competition will face all operators on the SouthAtlantic under the arrangement recently concluded between Panair do Brasil and TAP. The former's DC-7Cs are to be usedalternately by each carrier between Rio and Lisbon. This winter Portuguese emigrants southbound and "Brazilian residents" north-bound will be carried at 50 per cent less than the normal tourist fare. In the meantime, the proposed BOAC-Panair pool agree-ment, which might have done much to stabilize the South Atlantic situation, is temporarily in abeyance. Signals communications which have been overtaken by jetspeeds, the normal reservations difficulties on a multi-sector route, a deteriorating runway at Recife—there are plenty of problems tosolve on the South American operation. When the Sao Paulo airport of Cumbica reverts to military operation, BOAC may haveto move to Viracopos—60 miles from the city. "When the route started," comments Mr M. A. Snowball,assistant general manager, western routes (South America), "every- one had the impression that South America was difficult. In factit is not difficult, but it is certainly different. It's no good banging your head against a brick wall; you've got to be flexible in yourapproach." BOAC's attack on attracting traffic to the route is two-pronged.In the first place, a really major effort is being made to revive British industry interest in the modern South American market,in which traditional trading commodities are being replaced by a demand for machine tools, heavy and other engineering products.A recent national newspaper advertisement prepared jointly with the London - South American bank is typical of this campaign.Secondly, the corporation is out to attract South American tourists to London as the shopping and entertainment centre ofEurope. The rate war pointed the way, and no doubt BOAC would be very happy if excursion fares which would attract SouthAmericans to Europe in the winter are an outcome of the present Cannes conference. Next year, when BOAC's Comets are up against 100 per centjet competition from nine other carriers, the going will toughen. But the Comet may still be the only jet suitable for the low-bearing-strength runway at Santiago, forcing the big jets to ter- minate at Buenos Aires. Otherwise, the corporation cannot hopeto compete on an elapsed time basis (the fast, long-haul "cannon- ball" service is not truly practical) but will continue, with theCornet, to compete on highly saleable frequency. If economy fares are introduced on the South Atlantic, perhaps next year, it wouldbe difficult to operate the Comet on a three-tier fare structure. But there are other solutions, not the least of which could bethe introduction of the corporation's Boeing 707s or, in 1964, the VClOs. (Left) Gen John Schweizer of the Bell Aircraft Corporation presents Lord Douglas, chairman of BE A, with the Lawrence D. Bell Helicopter Pioneer Award. At left is Mr A. H. Milward, BEA's chief executive, and on the right is helicopter pilot "Jock" Cameron. The corporation has been operating helicopters since 1947. Just visible is BEA's Bell 47B which the corporation believes is the oldest helicopter still flying. (Right) Not immediately apparent is a connection between BE A and these DC-2s in Nigeria Airways' colours. Part of BEA's Pionair fleet, three aircraft have been chartered to Nigeria for a month during Princess Alexandra's tour. They were ferried out by Nigeria Airways crews on September 24
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