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Aviation History
1963
1963 - 0161.PDF
\llGHT International, 31 January 1963 149 HEATHROW'S PROFIT: A POSTSCRIPT jl 0ur recent review of the trading results of Britain's state air- orts in 1961-62 Flight International, January 17, page 75) we ,0ted that the presentation of the accounts had "improved beyond ^cogni;ion," but that the allowances made for depreciation and for oteresi on capital still appeared to be inadequate. An article in he January 18 issue of The Statist goes further, saying "/f must ,e concluded that expenditure has been seriously understated at Main's airports in general, and at Heathrow in particular." The implication of the article is that the small profit declared for he four international airports—Heathrow, Gatwick, Stansted and 'restwick—may not be a profit at all, and that the overall loss at 11 the airports may be more, perhaps much more, than the £1.9m ieclared. Such is the scale of the arbitrary items in the Ministry iccounts, declares The Statist, "that real doubt exists as to whether Britain's airports are really marching towards solvency as the Ministry claims." This is a strong statement indeed, because it is the Minister's declared intention to hand the four major airports over to an in dependent authority in the next year or two in a profitable state. A study of Heathrow's expenditure, it is pointed out, shows that despite the costly development programme that has continued— particularly in respect of terminal buildings—over the last few years, the annual depreciation charge has remained unchanged at just under £lm, while the annual interest charge has fallen from £l£m to £lim." In the normal way, says The Statist, these two items would be expected to increase. In the case of interest on capital it is pointed out that no specific charge is levied for interest payment, but a "notional figure" is established by applying arbitrary interest rates to the written down value of fixed assets and to the average working capital employed. A more realistic valuation would, it is estimated, result in an interest charge of at least £3m a year by now, and perhaps even £4m, com pared with the £2.3m declared. One of Capitol Airways' five Argosies has recently been carrying out commercial charter fights in addition to Logair services on behalf of the USAF. Demonstrating its outsize cargo capability the aircraft recently airlifted a 24ft Viscount outer wing panel in a nonstop flight of 1,500 miles. The panel would not go into any conventional freighter in the US Again, in the case of depreciation, the article notes how in the past the Ministry has not reported its policies in this respect, though they were "unrealistically protracted"—50 years for most items, 15 years for temporary buildings. There is nothing to suggest that more severe rates have recently been adopted and indeed a fall of £lfm in 1958-59 to £ljm last year suggests that if anything the depreciation policies have become even less onerous. It is sug gested that a depreciation charge of £3m a year "would be nearer the truth than the figure given by the Ministry." If The Statist's revised estimates of depreciation and interest charges are valid, then it would appear reasonable to hope that the accountants of Britain's four major state-owned international airports will be able to show not only a profit, but a real profit. BRITAIN'S STATE OWNED AIRPORTS Annual Financial Results (£ million) 1961-62 Heathrow Gatwick Stansted Other Scottish Prestwick Major and Airports Scilliet Total 1960-61 Total 1959-60 Total 1958-59 Total Outgoings Salaries and wages interest Depreciation Other expenses Total Income -anding fees 3ther airport fees 3assenger service charge Dther (inc. rents) Total Profit (or loss) 2.4 1.2 0.9 2.8 7.3 4.7 1.0 0.8 2.2 8.7 1.4 0.4 0.4 0.1 0.9 1.8 0.4 0.1 0.1 0.2 0.8 -0.9 0.1 * * 0.3 .04 0.2 * * 0.1 0.3 -0.1 0.5 0.2 0.1 0.6 1.4 0.9 0.1 • 0.2 1.2 -0.1 0.8 0.3 0.2 1.3 2.6 0.7 * * 0.4 I.I -1.4 0.1 0.1 0.1 0.4 0.8 0.1 * * * 0.1 -0.7 4.3 2.2 1.4 6.3 14.2 7.0 1.2 0.9 3.1 12.2 -1.9 3.9 2.0 1.7 5.0 12.6 4.1 1.0 0.8 2.7 8.6 -3.9 3.8 2.5 1.8 4.9 12.9 3.1 0.9 0.6 2.6 7.2 -5.5 3.4 2.6 1.7 4.4 12.1 2.1 0.9 04 2.4 5.8 -6.4 * Less than 50,000 Representatives from 22 airlines in 19 countries recently visited Glasgow for a three-day conference organized by Rolls-Royce for Avon engine operators. On the left, I to r, are three SAS visitors: C. Libeus, B. Bauer and K. £. Hassmen. On the right, I to r, A. M. Scott, Rolls-Royce; P. Lafon, Air France; and P. Chetail, Air France
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