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Aviation History
1962
1962 - 0195.PDF
rUGHT International, 8 February 1962 197 AIR CO E R C E Too Many BOAC Aircraft? By the Air Transport Editor J UST published by BOAC is a graph (reproduced left below) showing the capacity required to carry estimated scheduled traffic during the decade ahead. It shows that there will be only a small excess of capacity in the years up to 1968—an excess which will, in BOAC's view, easily be taken up by charters. Two questions arise. First, what passenger load factor is as sumed? Second, is it not more realistic to measure capacity in terms of the total product being sold, namely ton-miles? The question of load factor is important, because this determines profitability. Obviously, the lower the load factor assumed, the closer will these capacity curves appear. BOAC's passenger lead factor has been around 60 per cent during the last three years; though this has achieved a profit on the operating account, it has not been adequate, taking one year with another, to cover interest on capital—and it has certainly not been enough to cover the losses of associate companies (£2m last year). Leaving aside the associates' losses as something of which BOAC will eventually get rid, it is clear that load factor must be high enough to cover interest on capital as well as operating costs. The passenger load factor assumed in the corporation's graph, it is understood, is 56 per cent. No doubt BOAC's break-even load factor will continue to come down; but it is less likely, with a £150m investment in the VC10 to pay off, that interest (£4fm last year) will come down in relation to total costs. The presumption, therefore, even making allowance for the lower break-even load factor of the big jets, is that a 56 per cent passenger load factor could prove uncomfortably low. Indeed, for BOAC to be profitable overall, which must obviously be the corporation's aim, the attainment of at least a 60 per cent load factor seems desirable—in which case Sir Basil's graph would indicate a substantial excess of capacity. Ton-miles or seat-miles? This is what BOAC say:— "In planning our forward requirement for combination aircraft we assess the required frequencies on passenger-mile estimates at a practicable load factor, and having done that we then examine the deadload situation. With the development of cargo traffic and the new rating there may well be no problem in achieving a satisfac tory overall load factor. On the other hand, when we do this examination of the deadload position, it could be that there is an adequate spillover of deadload to justify an examination of all-cargo IN a review of the reasons for BOAC's cancellation of three VCIOs in our January 11 issue, it was estimated that the corpora tion will have a substantial surplus of capacity in 1966-67. In "BOAC News," the corporation's staff magazine, Sir Basil Smallpeice, managing director, considered that this gave "a wildly incorrect impression." BOAC's side of the story was given in the January 25 issue; this article examines the validity of Sir Basil's comment. Leading article: page 193. services!" But if one tries to plan aircraft fleets on the basis of total estimated load ton-miles, one is almost bound to produce a total fleet productive capacity out of bounds with the estimated passenger or cargo markets, and probably both. To take an extreme example, if the cargo market growth was assumed at the high level that some experts appear to think probable, we should find ourselves ordering combination aircraft to carry only freight." BOAC's graph is thus based on seat-mile output, the product which (apart from mail) gives the best return. But this represents only 70 per cent of the corporation's total current output, a pro portion which will fall as the big deadload capacity of the VCIOs is put on the market. Though the financial return on deadload is relatively low, and likely to become lower as freight rates reduce, it obviously has to be sold. BOAC are talking more enthusiastically than ever before of plans to increase their freight business. They have ordered, and indeed written the specification for, a large number of big jets of a type having a large deadload content. A realistic assessment of fleet adequacy, it is therefore suggested, must be on the basis of the total potential ton-mile capacity that has been purchased, and not only on the two-thirds seat-mile content. On this basis, then, the capacity of BOAC's fleet six years hence, when all the VCIOs (12 Standards, 30 Supers) will be in full service, will be as shown in the table on p. 203. All figures for block speed, payloads and utilization are as assumed by BOAC, with one exception—a 21-ton payload for the Super VC10 compared with the 19j-ton payload assumed by BOAC. The figure of 19£ tons is a substantial derating of the 22i tons quoted in the corpora tion's 1960-61 report: it seems curious that the usable payload Concluded on page 203 How will BOACs capacity on order match estimated traffic! On the left is BOACs estimate and on the right is the estimate discussed in the text £ c z : UJ 5 SEAT MILES ESTIMATED TO BE REQUIRED AT CONSTANT V LOAD FACTOR TO CARRY FORECAST TRAFFIC \ 4 ESTIMATE PRODUCTION OF SEAT MILES 1.600 1962-63 63-64 64-65 65-66 66-67 67-68 68-6?
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