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Aviation History
1961
1961 - 0165.PDF
pliaHT, 3 February 1961 LANDING FEES: THE AIRLINES PROTEST 165 the 33 i \ as pn BC X for many years, if indeed ever, has IATA delivered such ;n outspoken attack on a Government as last week's protestUK landing fees delivered to the Minister of Aviation by ,':lliam Hildred, IATA's director general. The protest, that government should change its plans to increase fees by _-r cent on April 1, was rejected by Mr Thorneycroft. irds picked out of context from the IATA statement such hocked" and "disastrous" do in fact reflect the feelings .rely expressed by the 40 airlines using London, including C and BEA, since the increases were announced last u_;nm. Pointing out that UK landing fees are already "virtuallythe' Highest in the world," the airlines say that the proposed inc; ases will take them to a level "far above that of other principal airports." Examples quoted for an intercontinental Bot-ing 707 or DC-8 are as follows:— London, £181 (£240 proposed); New York International, £122; Paris,r]i ; night); Rome, £102 (night); Copenhagen, £74 (night); Frankfurt, £71 Zurich, £58 (night); Amsterdam, £50 (night); San Francisco, £26;Chicago Midway, £22; Los Angeles, £5. rive of the airports listed above have more movements and handle more passengers than London. The airlines say that the proposed charges are "entirely dis- proportionate to the amount of traffic involved" and that one world-wide carrier (un-named) will be paying about 20 per cent of its total landing fees to London Airport, a place which accounts for only five per cent of its aircraft movements. The airlines fear that other countries might follow the UK lead, with effects which would be "potentially disastrous" to air transport. They find it difficult to reconcile "a policy of repeated increases" [UK landing fees went up 15 per cent in June 1957 and a further 28 per cent in April 1959] with the Minister's policy of insisting upon "drastic fare reductions." Inevitably IATA make their usual point about the value of airports to the nation's tourist industry, remarking that in 1959 700,000 visitors arrived in the UK by air and spent £65m in Britain. Less valid perhaps is the IATA assertion that costs arising from technical services, administration and interest should not be paid for by the airlines. According to "widely accepted international practice," says IATA, "these items are not normally charged off by governments to airlines." Whether or not IATA has made a full survey of international practice is not known, but what they must really mean is that the levels of these items of expenditure are not so high in the case of other airports. What IATA seem to be saying in effect is that these cost items should be met by subsidies, and that the taxpayer owes the airlines a living in respect (for example) of ATC services—a suggestion which the airlines cannot really expect to be taken seriously. It is thus not quite right for IATA to subtract such costs from London and Prestwick accounts and to declare that these airports are "profitable now and will become more so," according to what the statement calls "the concept of airport costs used elsewhere." It is one thing to say that the cost of UK airport administration, interest and technical services is too high; it is quite another to say that this cost should not be charged to the users of airports. And if Flight's analysis of the UK airport accounts (last week's issue, page 105, where it was suggested that the real loss last year was more like £13m than £5^m) is accepted then by no stretch of the imagination or manipulation of figures could London and Prestwick be shown to be profitable. One point that is made most strongly by the airlines, and which must be completely accepted by the Government (who asked for IATA's views on the subject) is that "other sources of revenue at UK airports, particularly London, have been neglected." The statement notes that only nine per cent of total UK airport revenues came from such sources in 1959-60 whereas "certain US airports . . . collected 50 per cent and more of their total revenue from concessions and other non-aviation sources." Hinting obliquely that London Airport may lose traffic as a result of the proposed increases, the airlines say that "such a policy [of increasing landing charges] is inconsistent with the aim of attracting increased traffic." Certainly, as the graph below illustrates, the cost level of an airport decreases with utilization. Here perhaps is the real weak- ness of Britain's airport economy—under-utilization. It would be the aim of the new autonomous airport authority which may yet take over the running of Britain's airports (a step which the IATA statement specifically recommends) to remove this weakness. There are already hopeful signs (page 162). MoA AIRPORTS, 1959-60: REVENUE AND penditure: Staff nceresr... Depreciation ... Maintenance ... Overheads Water, power ... Orhcrs >enditure ... fc.'.-e: .• Undmg fees ... Ren«, etc. Apron services... Pass, services ... S^-dries r,.QIC revcnue." 1- -60... 15S8-59 EXPENDITURE All figures shown in C million and rounded off) Heathrow 2.0 1.3 0.9 0.4 0.2 0.3 0.9 6.0 2.0 1.4 0.6 0.5 0.4 4.9 1.1 2.1 Gatwick 0.4 0.4 0.2 0.1 0.1 neg 0.2 1.4 0.1 0.1 neg neg neg 0.3 1.1 0.9 Prestwick 04 0.2 0.1 0.1 0.1 neg 0.3 1.2 0.4 0.1 0.1 neg 0.1 0.7 0.5 0.6 Others 1.3 0.6 0.5 0.6 0.4 0.3 0.6 4.3 0.6 0.6 0.1 0.1 neg 1.4 2.9 2.8 Total 1959-60 4.1 2.5 1.7 1.2 0.8 0.6 2.0 12.9 3.1 2.2 0.8 0.6 0.6 7.3 5.6 6.4 Total 1958-59 3.7 2.6 1.7 1.2 0.5 0.6 1.8 12.1 2.1 2.1 0.8 0.4 0.3 5.7 6.4 5O- 4O- 10 UJ_J KjLL O a^- V- CEOa. !*>< CD <U _I oo a I a:m —7 Dir 5 I Q< O p 11 s San PASSENGER 20 30 40 50 60 70 8090100 NUMBER OF PASSENGERS X 1POO 200 300 400 At left is a summary of the essential financial situation. Above, based on the Report of the Select Committee on Estimates, 1956-57, is cost and revenue per passenger at UK provincial airports plotted as a function of passengers handled This is how BEA's Comet 4B stewardesses look when they disem- bark at Moscow during the present winter season. Last winter only stewards flew this route. The girls board at London in their normal uniforms, mak- ing a quick change into ski pants, lambswool lined boots, fur ear- muffs and fur-lined raincoats before arrival in Moscow POWERS OF DEPRECIATION ONCE again the US Civil Aeronautics Board is asking Congressto give it authority to regulate airliner depreciation-rates. When the CAB previously tried to do this it was eventually over- ruled by a judgment of a US Court of Appeals. Now the Board is returning to the attack, notwithstanding the dissent of one member (Mr Chan Gurney) who believes that depreciation practices are "primarily a function of management" and that "any regulatory supervision constitutes an unnecessary interference with the operation of an air carrier." The CAB feels that without reliable information about deprecia- tion it cannot appraise the true financial condition of the airline industry. It considers that improper depreciation charges can undermine the financial picture in "exactly the same manner as inaccurate charges for salaries, rent and other operating expenses." It considers that errors in the reporting of depreciation "tend to accumulate over a period of years and are difficult to correct in the accounts of carriers once the inaccuracies become rooted over an extended period of time."
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