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Aviation History
1963
1963 - 0658.PDF
The first of Itavia's two Handley Page Dart Heralds was delivered on April 18. They will be used for charter flights from Italy to the UK and on internal routes from Rome to Milan and the Adriatic coast AIR COMMERCE "ADD-ONS" DURING the domestic fare-increase proceedings before the Air Transport Licensing Board on January 17 two objecting citizens asked the Board to consider the revenue dilution due to the discounts enjoyed by international connecting passengers. Apart from a brief explanation by BEA, this aspect was pursued no further. This might appear rather surprising, as more than 250,000 such passengers are involved per annum. Subsequent enquiries have revealed the remarkable fact that the Board has no official knowledge of these discounts; they are dealt with by the Ministry, which in practice may mean the IATA '"prorating" committee of which BEA's Mr Owen Lewis is chairman. Thus the Board is required to adjudicate on domestic fare levels when the fares for 20 per cent of the passengers are set—often at very low levels—by somebody else. The extreme case is London - Manchester, where the normal summer tourist return fare is now 220s. The 1963 IATA "prorated" fare for ITX tourists is 70s, a reduction of 2s from 1962, whereas ordinary full fare passengers are paying 26s more this year. The detailed allocation procedures may alter the relative financial appearance of BEA's domestic and international accounts, but it does not alter the overall financial results of the airline. And unrealistic allocation can lead to bad decisions, and thus affect future results. If a plain man consulted the ABC Air Guide before travelling from Manchester to Paris, he would find that the return tourist fare either on a direct flight, or via London, is £21 19s. If on the other hand he took a ticket to London (£11) and then rebooked to Paris (£18 3s) he might think that in the first case he had paid only £3 16s for the domestic sector. Though there are no reports of fisticuffs between "connecting" passengers and those sitting next to them in the same aeroplane who have paid the full fare, many of the latter, especially businessmen who cannot get seats because of tourists, resent the situation. To help customer relations it might be worthwhile for the airlines to explain what does happen. In fact, the £21 19s is split up between the domestic and international sectors by using tables of percentage "splits" argued out by the IATA "prorating" committee. In this case, the London - Manchester sector is "credited" with just over 36 per cent of the total fare, or £7 18s. Provided the passenger does not travel onwards by a foreign airline, BEA make an additional transfer to their domestic revenue account, and in 1961-62 these adjustments amounted to £112,000. Attention has been focused on the problem by a recent BOAC application to increase the "add-ons" for their Skycoach services (low fare services to "red" points on the map, e.g., Hong Kong, for British residents only). This is the first time, so far as we know, that "add-on" fares have been published in the ATLB's Notices, or indeed anywhere. Samples of the amounts to be added are:— For Journeys starting at:— Return fare add-on" Birmingham £2 12s Liverpool, Manchester, Leeds £3 12s Newcastle 5 13s Glasgow, Edinburgh, Belfast £8 Ms Published summer tourist fare £5 £7, £11 £10 £11 10s £15 8s BEA can readily make "adjustments" when it is the carrier throughout, as Mr Marking explained to the Board. But is BOAC a "foreign" airline for this purpose? And even if co-operation between the two State corporations enables this little problem to be liquidated by a cash transfer, what about Starways and BKS? And does the Board control any further adjustments ? In spite of all the tortuous adjustments, there can be no doubt that some passengers are being carried on the economically difficult domestic routes at substantially less than the published fares (apart from quantity discounts). Such passengers are particularly liable to travel during the busy hours to make their connections, and usually will tend to book their seats well in advance. Thus the revenue earned by the peak services, which govern the total capa-it\ provided, is less than it could be. The suggestion that all those travelling at peak times should pay the full fare seems to make good economic sense, even if it is administratively more convenient to apply a surcharge to a lower "standard" fare. Swissair on Costs ANY Swissair pronouncement on world air transport affairs is usually worth recording, and particularly so the words of Dr Walter Berchtold, the airline's president. In the recently published IATA account of the panel discussion which took place last November in Washington, entitled "The Economics of Air Transport" he said, inter alia:— "There is no doubt that the airlines spend their money lavishly on luxurious sales offices and on oversized sales staffs and that they give the whole world an example of bad management wherever it comes to the competitive struggle of taking passengers and cargo shipments away from each other. Not only do they seem fully to ignore the excessive cost of their over-aggressive sales organizations, but in addition they even end up in sapping the competitors' and their own revenues by granting illegal rate reductions. In doing so they further curtail the already meagre net results of their sales. If we want to cure these malpractices once and for all, we should realize that an excessive emphasis on competitive sales activity means bad management in that too much of its cost yields a poor result in revenue . . . "I am convinced that an international airline representing a normally developed country with no exaggerated ambitions in the field of air transport policy can be operated in such a way that it is not a permanent burden to the taxpayer. If management is firmly resolved and takes pride in keeping the company out of the red. it can achieve great things by training and educating the whole staff in the same spirit. Speaking of world aviation at large I firmly believe there is no valid reason on economic grounds why the international airlines could not and should not normally be operated on a self-supporting basis. What we need is firm resolution and a sound philosophy."
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