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Aviation History
1963
1963 - 1453.PDF
FLIGHT International, 22 August 1963 269 AIR CO E R C E Lord Douglas on BEA-BOAC Merger Rumours LORD DOUGLAS is strongly opposed, and so is the entire BEA board, to a merger between BEA and BOAC. In the current BEA Magazine the chairman sets forth his reasons, reproduced here in full, for the information of his staff; and a letter along similar lines has been sent to about 50 MPs. Previous Consideration of the Organization of Civil Aviation March 1945—White Paper "British Air Transport" recommended separate organizations. December 1945—White Paper "British Air Services" Cmnd. 6712 —ditto. 1946—Civil Aviation Act set up separate corporations. 1952—Cabinet considered whole issue and decided against merger. 1954—Merger considered within responsible Department, and decision against (Q.2249 H. of C. Select Committee 1959). 1959—Select Committee of House of Commons Report on Nationalized Industries, para 233: "The Ministry last examined the proposal for a merger about five years ago (Q.2249). They have kept the matter under fairly constant review, and will doubtless continue to do so. They can, of course, by their influence and, if necessary, by the Minister's power of direction do much to prevent overlapping and encour age co-operation. For the time being it seems to your committee best for each corporation to concentrate on improving their results, and to miss no opportunity of greater co-operation which will help to this end." 1962—Select Commifiee of H. of C. on Nationalized Industries con firmed decision of 1959 Committee against merger. Stability Since 1949 BEA has had one chairman and one deputy chairman. In this time BOAC has had four chairmen, and there have been seven Ministers responsible for civil aviation, and six Permanent Secretaries. Possible Ways of Changing the Corporations' Board Structure (1) Do away with the present two boards, and create one board for the two corporations. This would require legislation. (2) Appoint the same persons to be board members of both BEA and BOAC. This would not require legislation. (3) Create a "super board," consisting of some members of both corpor ations' boards with an outside chairman, to co-ordinate and direct general policy. This would need legislation. Arguments Against a Common Board for BEA and BOAC (1) BEA's success has been due in large part to stability in its direction, and to a refusal to be deflected from its primary aim of operating as a strictly commercial concern. (2) The best commercial interests of BEA and BOAC may not always run parallel. If there was common board membership, there would be a conflict of interest, in which the interest of BEA might be sacrificed to that of BOAC, or vice versa. (3) If BEA is to conduct its affairs on a proper commercial basis it must be left free to do so. Once other considerations—such as a requirement for BEA to do, or not to do, something because of its effect on BOAC— are allowed to creep in, the incentive to run the business profitably begins to die. (4) At present matters of common interest and concern to BEA and BOAC are dealt with at regular monthly meetings of the Airline Chairmen's Committee, consisting of the two chairmen, deputy chair men and chief executives. This is the forum for settling such differences as may arise between the corporations; it has worked well in practice for many years. When differences cannot be resolved they are referred to the Minister, but this has happened only once or twice in 15 years. (5) Common membership of the two boards would be likely to lead eventually to full merger of the corporations. Arguments Against Merger (1) Profits which can be earned on the BEA routes are never likely to be sufficient to offset the loss from the BOAC operations if their present rate of loss were to continue. Therefore, a merged corporation would be likely to be in a state of deficit for as long as BOAC made a loss. On the other hand, if BOAC becomes so healthy that it can be profitable on its own, the reason for the merger disappears. (2) There is a need for specialization in short-hual operations needing tailor-made aircraft, e.g. Viscount, Trident. (3) There would be no savings in operating costs, and administrative savings would be small. BEA's operations would in effect become just the European Division of BOAC. Such savings as might be possible from combining ancillary services would be far outweighed by loss of revenue (see (4) below). Moreover, as regards cost, with two manage ments one can act as a brake on the other on labour and wages policy. (4) Loss of interline revenue would result, particularly dollars, because BEA is not a North Atlantic competitor, e.g. one major US airline has issued a directive to all its sales points that they are to give BEA priority in all interline sales; the reason the airline has given to its sales staff is that BEA is not a competitor on the North Atlantic route. (5) Traffic carried by a merged BEA/BOAC from USA to the Continent would not increase substantially if they operated through services, because there are direct Continent/USA services, and passengers don't like an intermediate stop at London, unless they stop over in London, in which case a through service is of no advantage. (6) A merged corporation would be very large (BEA 16,000 + BOAC 22,000 = 38,000 staff). (7) A merged airline with two quite separate functions (short and long- haul) would be difficult to control by one board and one management, who could not devote enough time and attention to the particular problems of each. (8) Staff morale would suffer catastropically. Continued stability is essential for success and good staff morale. An Aviation Traders Carvair has been leased by British United Air Ferries to Alisud—Compagnia Aerea Meridionale of Naples. The lease is for a minimum of four months and Alisud have an option to purchase the aircraft. On August 15 this company opened Italy's first cor-ferry air service, between Naples and Palermo, Sicily. Flying time on the Tirrenian Air Bridge—as the service is co//ed—is "ir lOmin compared with over 9hr by sea. The single fare for an average car is about £13 compared with £11 by sea. Alisud is planning a big network of car-ferry services linking Naples and Rome with points in Sicily and Sardinia
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