FlightGlobal.com
Home
Premium
Archive
Video
Images
Forum
Atlas
Blogs
Jobs
Shop
RSS
Email Newsletters
You are in:
Home
Aviation History
1961
1961 - 1405.PDF
FLIGHT, 28 September 1961 509 BOAC and its Associates KEITH GRANVILLE interviewed by FRANK BESWICK THE net loss returned each year by the subsidiary companiesof BOAC has been one of the most conspicuous and exasper-ating features of British civil aviation. The persistence of some of these deficits has bordered on the grotesque. Financially,the subsidiary tail has often wagged the corporation dog. There are cases where the ratio of losses made to hours flown has been sogreat that one feels that a touch of genius was needed to secure such results. This is not a criticism of any particular man or Ministry. The netdeficit ten years ago was a little over £287,000. Solemnly we said in the Commons that steps were being taken; that improvementswould result. Each year it has been the same. Always there were special difficulties. Honest efforts were made. Most recently, when the subsidiarieswere put under the general direction of BOAC Associated Com- panies Ltd, Sir George Cribbett, as chairman, tackled the problem.No more conscientious and devoted champion of British civil aviation could be found. Yet the fact remains that the net deficitof BOAC AC for 1960-61 was £2,071,000—nearly £960,000 more than in the previous year. So I put some questions about this phenomenon to the presentchairman of the Associated Companies, Mr Keith Granville. One might call Keith Granville a "professional" air transport man.He started with Imperial Airways. He is one of the very few now at the top in Britain who have always been in civil aviation. To himit is a business—to be operated efficiently. He could scarcely have been given a tougher assignment and I was particularly interestedto hear what he said. Here is the record of my questions and his answers. First: about the general thinking on these subsidiaries. They havebeen justified in part because of their contribution as feeder lines and as a means of maintaining traffic rights, but other airlines contrive tosecure rights and traffic without such an expensive supporting net- work. Is it not possible that these claimed benefits have been over-exaggerated ? No, I think not. It is easy to criticize now but it is worth lookingback behind some of the present figures. This policy is not a new one—to some extent it was followed before the war. Look at someof the previous instances where we had a financial interest; there is Central African Airways, where we now enjoy a full partnership,similar equipment, and a pooling arrangement. This position might or might not have existed if we had not had our previous interest.The same applies to East African Airways. We have a successful record with Nigeria Airways and similarly with Ghana and others.Take into account the present partnerships, plus sales of British equipment, and it isn't a depressing picture. Nevertheless, it remains true that there are other companies—American operators, for example—who do not rely on similar arrangements ? Not to the same extent, it is true, but much of what we havedone has been in colonial territories. Someone has had to help along these countries and it is reasonable to expect that it should havebeen Britain. That brings me to the other justification for this policy—that assistance has been given in accordance with Government requirements; how far is this now true ? There is only one case in which we have had a definite request from HMG—in Kuwait. But on the other hand we have not exactly been discouraged in helping elsewhere. If you have not been under pressure to get in, am I not right in sayingthat you have been under real pressure to stay in when you would have preferred to get out ? You can say that, but today the position is completely clear;the decision to go in, stay in, or to come out, is one for us to make on the basis of our own commercial judgment, without any Govern-ment pressure at all. // a commercial judgment is now the only criterion, how can youjustify maintaining this financial support on the present scale ? In the first place, not all these companies make losses. AdenAirways shows a small loss this year but it has previously broken even, and will do so again; Borneo Airways is a borderline opera-tion—it had a £7,000 loss last year but will make a profit this year; Cathay Pacific has returned a profit; Fiji Airways has been doingbetter and will break even this year; Gulf Aviation has over £9,000 profit; Malayan Airways has a profitable record. All these com-panies are self-administered, with help from here; they are all providing an excellent service and their contribution to BOAC isextremely valuable. Unfortunately, their very creditable record has been swamped by the publicity given to the losses of two or three ofthe other companies. I must say that all the successful companies are considerably aggrieved when they read in the British press sweepingstatements about the necessity to slash the associates. Can we look at those companies which have made the big losses?Middle East Airlines are not your responsibility now, but how much money was lost altogether there '.' I cannot give any specific figures beyond those that will bepublished in next year's accounts. You will have seen that the chairman of ME A has issued a statementin which he says that only £1,500,000 was owed to BOAC, although the records show that something between £5m and £9m has been lent;how are these figures reconciled ? I prefer not to comment, though one can say that losses of recent years have been written off by us. One of the other items in Sheikh Alamuddins statement is that thecompany has made a profit in the last two years whilst BOAC's accounts refer to a loss for the three months of £134,000 and ashare of MASCO [Mid-East Aircraft Servicing Co] loss for the year of £418,000. How are these statements to be reconciled ? The figures are as published in our accounts, of course, and endat March 31 each year, whilst MEA accounts end at December 31 — this sometimes creates a slightly different picture. The statement also confirms that MEA has taken over MASCO; can you say what was paid and whether all loans will be repaid ? I am not in a position to give figures at the moment. On the general question of the sale: there have been similar proposals in the past—can you say what was different in the present situation which led to a decision to sell ? It is fairly straightforward. We felt we had done all that a Britishpartner could do in a Middle Eastern company. They are now equip- ped with British aircraft but they needed more capital for expan-sion and they had the possibility of raising it locally. This seemed an opportunity for us to withdraw. What about Bahamas Airways ? To many observers this seems a most odd affair. The company is sold and with a great flourish the new owners say they are going to make it pay; yet you buy it back within two years and show a loss in the next accounts of over £400,000. How can this transaction be justified? Under its new management, Bahamas Airways got into a verybad way indeed; the decision to re-purchase was a rescue operation based on commercial and moral grounds. We had to face the factthat, if the company had gone under, the licences would have lapsed—or gone to a foreign operator. Moreover, we felt Britainhad some responsibility to the Bahamas. The inter-island services have been subsidized but the traffic is increasing, and under AirCdre Powell's direction the regularity and reliability have greatly improved. The company should soon be breaking even, withoutGovernment subsidy. As for the other services, where the losses have been made, the fact is that our continuing interest is a neces-sary feature of the BOAC operating pattern. (Concluded on page sit)
Sign up to
Flight Digital Magazine
Flight Print Magazine
Airline Business Magazine
E-newsletters
RSS
Events
