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Aviation History
1961
1961 - 0803.PDF
f[JGHT,S June 1961 813 jnteiest of creditors if the company becomes insolvent? This wasf- an improper suggestion, retorted Mr Ashton Hill with some heat. ! j0 ay that a company of the standing of Cunard Steam-Shipvou.d dodge their obligations was unthinkable. N.xt stage in the long battle was now the cross-examination byBOAC's counsel of Mr Basil Smallpeice, the corporation's managing dire. ;or. It was a situation not without humour; counsel's questions wen so carefully phrased into leading questions that an image ofthe itusic-hall "feed-man" immediately sprang to mind. Is it reasonable to assume, was the first question, that the UKearners would carry a high share of transatlantic traffic in the futire? "Not in the long run," said Mr Smallpeice, "although onthe estern routes we are now carrying slightly more than 50 per cent." What is the average rate of growth of the passenger market?asked Mr Fisher. "I have taken the six-year period between 1954 and i960," said Mr Smallpeice, "in which the total passenger rateof growth was 10 per cent per annum by air and sea to the USA and 6 per cent to Canada. And in projecting the figures forward," hesaid. "I have not simply assumed a continuation of past trends but have taken into account future fare reductions, travel habits anddistributions of incomes." Have you sub-divided into three main areas? "Yes. This dis-tinction has to be made by any operator since there are special characteristics in each case." BOAC then presented graphs andtables which showed the traffic carried between the United King- dom and Canada and specific areas of the United States and theamount of "cleaning of figures" that had been done in estimating future traffic growth. The sort of adjustments that were consideredessential, said Mr Smallpeice, if the special characteristics of par- ticular years were to be removed were, for example, (a) to takeaccount of emigrants who travelled on a space-available basis; (b) determination of the numbers of passengers who transferredfrom their immediate destinations on the eastern seaboard to the west coast of America or to the middle west; and (c) what hedescribed as "jet novelty passengers"—passengers who were attracted to London in 1959 when about two-thirds of all jetservices to the United States operated from there. There were also the traffic boosters—such as, for example, the introduction ofeconomy fares and the 28 per cent reduction in winter fares in 1960-61. What was the likely course of fare reductions? "We haveestimated," said Mr Smallpeice, "a fare reduction of 10 per cent in 1963-64 and a further 5 per cent in 1965-66." Factors in BOAC's Forecasts The other factors which BOAC had taken into account whencompiling their forecast figures were (1) the fact that the air market could not go on increasing for ever at the present rate, since thecomplete disappearance of sea traffic was unlikely; (2) the marked decline in transatlantic travel which meant that bookings at themoment were less than they were last year (this was perhaps a short-term trend); (3) surveys by the European Travel Commissionand BTHA which showed that the average time spent in Europe by visitors from the US was four-and-a-half weeks but that thispattern was changing; (5) distribution of incomes in the US— there was an upward trend in the pyramid of incomes but thegrowth was slow; and (6) population growth and gross national product. The annual average population growth in the US had been1.7 per cent over the past decade, the forecast for the next ten years was 1.6 per cent, and the forecast for the increase in gross nationalproduct was 3.8 per cent. All these factors, said Mr Smallpeice. led to BOAC's estimate that there would be an annual averagegrowth in traffic to the US between 1961-62 and 1966-67 of 17.4 per cent. This was not a special forecast but one made when theBoeings were ordered. All this evidence seemed most impressive, and its detail had atelling effect upon the managing director's audience. Right or wrong though the picture may have been that the figures had totell, the feeling that BOAC had done all their homework was ines- capable. It only remained for Mr Fisher to ram the point homeby asking, as a reminder to the Board that Eagle had forecast an average annual traffic increase of 20 per cent: Would it be rightto assume a higher rate of increase than 17 per cent?—"No, it would not be. We have done it as scientifically as we know how." Finally, there came the afternoon's parting feed-line. "Haveyou had any opportunity to test the accuracy of your forecasts?" asked Mr Fisher. "We test them continuously," said Mr Smallpeice."For this hearing we did a check and the Board may be interested to know that the 1956 estimate of passengers to be carried between the US and UK in 1960-61 was 665,800. Passengers actually carriedwere 662,000." With the smile of a man who knows that he has pulled off something of a fluke, Mr Smallpeice commented: "Thisis an indication that we do have some expertise in this matter." Mr Smallpeice gave BOAC's estimates of the total passengertraffic across the north Atlantic in 1961-62 and in 1966-67 (1,349,500). He then spoke of the effect of bilateral agreements,arduously negotiated and necessitating traffic concessions to US carriers on other BOAC routes, on the share of North Atlantictraffic carried by BOAC and on the share of the traffic carried by fifth-freedom operators whose routes to the eastern seaboard ofthe United States passed through the UK. This fifth-freedom traffic had amounted to an average of 14 per cent of the total be-tween the UK and the USA during the period 1953-60 and might increase as there were European operators with fifth-freedom rightswhich they were not yet exercising. (It was not clear whether BOAC were including in the 14 per cent traffic carried by fifth-freedom operators in pool with BOAC, e.g. Air-India and Qantas.) The remaining 86 per cent of this traffic was carried by UKand US airlines which must, under the terms of the Bermuda agreement, have equal opportunity; BOAC's share of this trafficwas therefore 43 per cent. Pooling To Canada On the routes to Canada there were no fifth-freedom operators,but there was a pool agreement between BOAC and TCA (the designated Canadian carrier), entered into in order to cut outwasteful competition and allow them to develop the routes to the best advantage. On the routes between the UK and the middle west of the USAthere were no fifth-freedom operators, so that BOAC were entitled to 50 per cent of this traffic. Mr Smallpeice then gave details of the assessment of aircraftrequirements to provide capacity for the anticipated traffic. Up to 1963 the Corporation would use Britannias and Boeing 707s,and would begin introducing Vickers VClOs and Super VClOs in 1964. By 1966-67, BOAC would provide slightly over 1,000,000seats, sufficient to accommodate the total British share at a load factor of 50 per cent. Mr Smallpeice also spoke of the varying fortunes of BOAC onthe north Atlantic since the war, and mentioned how the non- availability of suitable aircraft immediately after the war and thewithdrawal of the Comet Is had each led to the proportion of the traffic carried by BOAC falling off. Since 1956-57 BOAC had deliberately increased their capacityin order to recover their full share of the traffic. In 1956 they had sought permission to buy 17 Boeing 707s, but had received permis-sion for the purchase of 15 only. In 1958 they had diverted Comet 4s from other routes in order to meet the impending American com-petition with big jet aircraft. Figures presented by Mr Smallpeicc showed the degree ofBOAC's success in increasing not only the amount of traffic carried, but their percentage of the total traffic. They had succeeded inobtaining "a bigger share of a bigger cake." To achieve this they had increased their capacity over the last five years by approxi-mately 30 per cent per annum. BOAC's plans and commitments entered into in 1956 would, in1962-63, permit them to carry the whole of the British share of the traffic on these routes, and BOAC therefore invited the Board toconclude that the present services were adequate and Cunard Eagle's proposed services would be redundant. Mr Smallpeice also considered that the granting of the licencewould inevitably lead to "material diversion" of traffic from BOAC. It was improbable that British airlines would ever consistentlycarry more than an equal share with United States carriers of the traffic not handled by fifth-freedom operators. Any persistentincrease in the proportion of traffic handled by British carriers might lead to an American demand for the revision of the bilateralagreement. (To be continued) "Flight" photograph Reviewed in our issues of May 11 and June I was Short's freight ter- minal—a cargo handling system integrated with the new swing-nose commercial version of the Short Belfast freighter. Each pier consists of 'wo banks of pallets which are slid into the upper and lower floors of the aircroft. ( n this way maximum use of the Be/fast's 100,0001b freight capacity is achieved
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