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Aviation History
1963
1963 - 0164.PDF
152 FLIGHT International, 31 January %j AIR COMMERCE EAST AFRICA'S WELL FED LION IN past years the annual report of East African Airways has been noted for an appearance of austerity that belies the prosperity which has come the way of this airline since its leonine emblem has become familiar in Europe. In addition to its usual annual report, EAA has now produced a glossy review of activities in 1961. It is to be hoped that in future years the report and the review will be integrated into a single document both comprehensive and attractive. Although EAA's profit margins have declined since the pheno menal achievements of 1960, the showing for last year was still well above the industry average with a profit of £|m being reported on revenues of just under £5m. As in previous years, this was the result not of low costs (1961 average, 37 pence per c.t.m.) nor of high load factors (1961 average 61 percent), but of relatively high revenue rates. Unfortunately, the mysteries of pool accountancy are such that these revenue rates cannot accurately be analysed. Another factor which has helped give the lion his well groomed look is his continued nourishment. The enlarged size of EAA has not only brought in its train various economies of scale, but the better spread of activities has made the airline less vulnerable to the vicissitudes of the East African economy. In 1961, East African Airways' capacity increased by as much as 24 per cent (to 31m c.t.m.) while traffic rose by 16 per cent (to 19m l.t.m.). The profits that have flowed from East African's participation in the long-haul market have allowed the airline to plough more resources than would otherwise have been possible back into the local network. In 1961 the domestic capacity was increased by over 20 per cent and traffic rose by a similar proportion. This growth in turn has allowed the purchase of modern equipment in the form of three F-27s, which are about to enter service on the thicker DC-3 routes. Whatever the text-book economists have to say on the subject, people in East Africa must feel that cross- subsidization is a good thing. NEW DEAL FOR TEAL AFTER twenty-one years of comfortable monopoly across the Tasman, TEAL last year had to face up for the first time to a strong dose of competition. The impact of Qantas on the routes linking Australia and New Zealand is undoubtedly the main feature of TEAL's latest annual report for the year ended March 31, 1962. Although trans-Tasman traffic grew by 15 per cent to just over 100,000 passengers, the encroachment of QEA over the second half of the year led to TEAL's traffic falling by some 4 per cent to 85,000 passengers. As these trans-Tasman routes account for about five-sixths of TEAL's business, it required a rapid expansion of traffic on its other services to Fiji, Tahiti and Norfolk Island to stop the airline from slipping back. In the event, TEAL's total carryings were virtually stationary, with a slight increase in passenger-miles being Mr L H. Langley, UK public relations manager for TWA, has been appointed UK sales manager and deputy sales director for the airline. He is the first British employee of TWA appointed to this senior post offset by reductions in mail and freight (despite the increased carriage of frozen fish on a fill-up basis). But while traffic remained at 16m l.t.m., the output of the airline's fleet of three Electras rose by 12 per cent to 29m ct.m. Under these circumstances the airline's profit margin narrowed with revenues and expenses almost converg ing respectively at just over and just under £NZ3.7m. Had it not been for a reduction in seat-mile costs—down 12 per cent to 31 pence per c.t.m., despite a rapid increase in the workforce to close on 1,000—the airline would almost certainly have been pushed into the red by this slackening in its rate of growth. Prospects for the current year, despite the comforting words of Sir Leonard Isitt in his Chairman's report, must appear to be less hopeful as TEAL will not only be facing a full year of Qantas competition, but the Australian share of capacity under the bilateral agreement will have risen from 30 to 40 per cent. Even if the Pacific routes continue to expand, it seems that TEAL will be reporting a reduction in its traffic for 1962-63. For an airline which is financed primarily by fixed interest bearing loans (the Electra purchase was largely met by a dollar loan from Morgan Guaranty Trust of New York), such a slow-down can quickly spell the difference between profit and loss. To reverse this trend will probably call for the expansion of TEAL into other directions, notably across the South Pacific to Hawaii, the US and perhaps even to Europe. This programme will call for competitive equipment, and with this in mind the airline has recently been studying the purchase of jet aircraft. An announce ment in this respect is expected early in the New Year. BUA and BEA Apply for Alicante The current issue of the ATLBs Notices includes applications from both British United and BEA for services from London to Alicante. Licence Revoked The ATLB has decided to revoke licence No A.2237 held by Boummouth Air Taxi Ltd. The licence is for a service between Bournemouth and Sandown, Isle of Wight. More Boeings for Air-India? Air-India is reported to be contem plating the purchase of two more Boeings—it is not said whether they will be 707-420s or 720Bs—to add to the existing fleet of six Boeing 707-420s. As reported on page 148, Cambrian Airways have now taken delivery of the first of five ex-BEA Viscount 701s. The fleet will be used on the independent's newly licensed Irish Sea network
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