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Aviation History
1961
1961 - 1026.PDF
30O00O 25O.OOO aoaooo I5O.OOO too.ooo 50.000 Point t to • On o rry o point tra trom Londt wing annua — fir basis __.—, r- B£L EDIHI • -, • . ^^ MANO GLASGOW, JERSEY S AST ^ 15TER / /, 3OO.OOO 250.0O0 2OO.OOO 15O.OOO too.ooo 50.000 1952/53 1953/54 1954/55 1955/56 1956/57 1957/58 1958/59 (959/6O I95O/6I BEA's domestic-trunk passenger traffic over the years AIR COMMERCE . . . liberalization. In his view the traffic volume justified more than oneoperator on only one of the routes applied for (London - Paris). Asked about the domestic services, Mr Wheatcroft said that theywere a different problem; there was at present no competition and he would favour a second carrier if the traffic would support two, but thatwas not yet the case. To illustrate his argument he introduced docu- ment BEA 59, on which, against six domestic routes, were tabulated the"commercially desirable frequency" for the route length, the BEA monthly passenger averages, and the monthly passengers required tosustain two competing airlines operating 60-, 80- and 100-seat aircraft. This showed that the rapidly increasing traffic on domestic trunkroutes would be overtaken by the increasing BEA capacity and, there- fore, the time was not yet ripe for competition.Mr Wheatcroft was asked by Mr Marking what size aircraft he had considered when saying that the London-Paris route could support twooperators. Referring to the figures for a route of 101-200 miles, on table BEA 58, he said that even on this route Vanguards might not bejustified with two airlines operating [according to this table 35,400 passengers a month each way would be necessary to sustain the 14flights which two airlines would probably operate assuming they used 120-seat aircraft]. Summing up, he said that he would recommend thatthe Board, in the general interest of British civil aviation, should reject the applications for licences on both international and domestic routes.Mr Wheatcroft was then cross-examined by counsel for BUA, Mr Gardiner, who said he assumed Mr Wheatcroft thought the Govern-ment had been wrong in passing the Act. Mr Wheatcroft said he did not think so. The Act was an enabling act only; it was for the Boardto decide on the applications. Wheatcroft On Pooling Mr Gardiner quoted from Mr Wheatcroft's book (The Economicsof European Air Transport) passages criticizing pooling agreements. Mr Wheatcroft said that the criticism of restrictions on capacity referrednot to pools but to inter-governmental agreements. Mr Gardiner insisted that the passages quoted referred to the general undesirabilityof pooling agreements. He quoted a further passage stating that the "economic consequences of the effect of airline competition are notsusceptible to measurement from one route to another," and suggested that Mr Wheatcroft's use of arguments based on Canadian data aboutEuropean airlines went against this principle, Mr Wheatcroft main- tained thai the cases were generally similar, and Mr Gardiner referredto differences in route lengths, and density and distribution of popu- lation as important points of difference. Mr Gardiner asked whetherMr Wheatcroft did not agree that the arguments advanced in his book (written five years ago) in favour of competition on European airlinesshould apply even more now. Mr Wheatcroft denied this; he said ihat aircraft productivity, in capacity-ton miles per hour, had increased tosuch a degree that competition could now be less easily sustained. Mr Gardiner quoted, from Mr Wheatcroft's book, comments about thevery few circumstances in which pooling agreements could be justified, and the desirability for some degree of public regulation of any thatmight be made. Mr Gardiner also quoted the opinion expressed by Mr Wheatcroft, in a lecture to the Royal Aeronautical Society, thatcross-subsidization of routes was financially and socially undesirable and suggested that this applied to BEA's claim to support the operationof unremunerative domestic routes from the proceeds of profitable international services. Throughout, Mr Wheatcroft agreed that he hadexpressed the opinions quoted, but did not agree with the conclusions Mr Gardiner drew from them. Some time had passed since his bookwas written and conditions had changed. The Chairman asked Mr Wheatcroft to explain the heading "com-mercially desirable daily frequency." Mr Wheatcroft said that this related the time of flight over a particular route distance to a frequencywhich would attract traffic by giving a reasonable time-saving in com- parison with alternative methods of transport. It was not related totraffic volume, which would tend more to dictate the size of aircraft to be used at the established frequency. Mr Gardiner suggested that,as traffic on the various routes would double by 1965, the very small diversion that could be produced by the limited intervention of one ofthe applicants would scarcely cause a calamity. Mr Wheatcroft said that the total diversion which would be effected by the granting of allthe applications would result in a reduction in productivity which would adversely affect the economics of operation. BEA were concernedabout the diversion in the early years, before the traffic would have doubled. Mr Gardiner put it to Mr Wheatcroft that BEA would not beable to start operations before 1963, by which time the traffic would 128 FLIGHT, 27 July 1965 have substantially increased, and BUA's initial frequency would notbe the maximum asked for. Mr Wheatcroft said that would aggravate the problem as BEA would have to provide capacity for the full Britishshare of traffic up to that time. Mr Ashton Hill, for Cunard Eagle Airways, was the next to cross-examine Mr Wheatcroft, and began by asking whether the witness could not be said to have changed his views on pools since 1956. MrWheatcroft said that he had modified them, but not substantially. Mr Ashton Hill suggested that the witness had had very definite ideas onthe subject in 1956 (with which Mr Wheatcroft agreed) and quoted passages from Mr Wheatcroft's book on the general undesirability ofpools and the rarity of the circumstances in which they were desirable. Mr Wheatcroft emphasized that circumstances had changed due to theprotectionist attitude of various foreign governments. Mr Ashton Hill also suggested that statistics used by BEA applied only to conditionsof normal growth of passenger traffic and could be misleading in ab- normal circumstances. The Board questioned Mr Wheatcroft about the applicability of hisCanadian study to European operations and suggested various factors which made the cases dissimilar. Mr Wheatcroft said that he thoughtthe two cases were broadly comparable. Mr Marking then re-examined and asked what his witness felt about suggestions that cross-subsidi-zation of unremunerative by profitable services was undesirable. Mr Wheatcroft replied that this was still his opinion, but such cross-subsidization was sometimes necessary. The next witness for BEA was Mr W. R. Collingwood, who, afterconfirming his special responsibility for advising BEA on agreements and pools, was asked by Mr Marking to outline the circumstances whichhad led to the pooling agreements. Mr Collingwood explained that BEA had, in effect, two problems: to deal, on the one hand, with thosecountries with powerful airlines and, on the other, with countries whose airlines were weak but who protected the interests of theseairlines against competition. BEA had dealt with the first problem by trying to match the strength of the powerful airlines despite an initialinferiority in equipment; they had also had to contend with the results 800.000 600.000 400.000 200,000 1954 1955 1956 1957 1956 1959 I960 1961 1962 1963 I1 Ycor itiitS 31 sl. March BEA's domestic-trunk seating capacity, past and future of these operators subsidizing the European extensions of their long-distance routes in order to attract traffic to the latter. To achieve this BEA had entered into commercial agreements with the foreign airlines.The second problem arose because bilateral government agreements provided for the protection of the small foreign airlines and obstructedthe growth of BEA. This problem had also been overcome by com- mercial agreements which had allowed BEA to build up a major shareof the traffic between the UK and the countries concerned in return for a small degree of protection. These agreements had not beencommercially expensive to BEA; they protected BEA's interests and provided for compensation for disparity of traffic carried. The Govern-ment had supported pooling agreements, but liberalization of traffic rights was sought. Asked about the general principle of pools, Mr Collingwood saidthat they were aimed at improving the service offered to the public and eliminating waste, by providing a good spread of flight schedules at areasonable frequency and sharing services. Mr Marking then asked his witness's opinion of the possible effectsof the introduction of a second British carrier on European routes. Mr Collingwood said that unity of effort and efficient negotiation ofagreements would be prejudiced. He referred to Sir George Cribbett's evidence on the allocation of fixed shares of traffic under bilateralagreements, which would mean a loss of traffic to BEA. It was even possible that the British carrier or carriers might be restricted to theshare provided for in bilateral agreements instead of the rather more generous share which BEA had succeeded in negotiating under com-mercial agreements. Pooling agreements did not eliminate competition; this was ensuredby other operators and by the mutual competition between the parties to the agreements in view of six-monthly re-negotiation of terms.
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