FlightGlobal.com
Home
Premium
Archive
Video
Images
Forum
Atlas
Blogs
Jobs
Shop
RSS
Email Newsletters
You are in:
Home
Aviation History
1963
1963 - 1725.PDF
534 Al R FLIGHT International, 26 September 1963 COM MERCE . . . '" ".T^sW™ '- ... * -«^, HBBP^T ^ "• -«**»*«•„ 4N •T^' WnT~" 1 ~. 1 A DC-3 of the Spanish airline TASSA at Barcelona. The aircraft is unusial in having, like the Russian-built Li-2, its door on the right-hand side APARTHEID AND THE POOL OF all the pool arrangements in which British airlines are involved, none was so complex as the quadripartite agreement covering the routes commonly operated by BOAC, SAA, EAA, CAA and BUA. Yet it worked well, and the airline managements con cerned never came to blows over the basic commercial principles involved. Now, having professionally always got on very well together, they have been drawn into apartheid politics. The pool has broken up—or will do so on October 12—and is being re negotiated on a bilateral basis. SAA has been banned by virtually all the black African states and the airline has had to reroute its 707 services to Europe via Port uguese Angola, the Canary Islands and Lisbon. Tnis of course radically altered the basis of the pool agreement covering the routes between Europe and South Africa via east and central Africa. The South Africans have been preparing for this for many years; as long ago as February 1958 SAA ordered Boeing 707-320s rather than Comets to give them the necessary range to over-fly potentially hostile black African countries. SAA has probably done very well out of the pool agreement. Boeings have inevitably been too big for the traffic offering, and have operated at low load factors. Pool agreements are always a closely guarded secret, but it tis probable that SAA's Boeings have to some extent been "carried" by BOAC. Kenya, which is approaching independence, has said that the regional services of EAA to South Africa will cease; and the Minister of Justice, Mr Tom Mboya, is reported to have said that Kenya will take action against all airlines operating into South Africa, including BOAC. South Africa's Minister of Transport, Mr Ben Schoeman, has retaliated by saying that all EAA flights to South Africa will be banned from October 13. The economic effect of all this on EAA (and on Nairobi Airport) has no doubt been taken into account by Mr Mboya, who cannot expect BOAC through the pool agreement to subsidize the EAA losses that may be incurred. BOAC is reported to have tentatively planned to by-pass Nairobi with a new route to Johannesburg via the Middle East and Aden. Mr Trevor Glover, general manager, BOAC southern routes, is reported to have said: "It is possible we might consider alternative routes. I hope, however, we can keep open the present routes operated by ourselves and our partners of long standing for the good of the commerce of the whole of Africa." CAA's part in the quadripartite pool covers regional services from Salisbury to East Africa and to South Africa. The airline's long-haul services to Europe are operated by BOAC, who paid CAA £lfm in 1957 for a ten-year franchise. Presumably the CAA/ SAA regional pool will continue, adjusted to take into account the withdrawal of SAA's through services. So far there have been no threats from Kenya to CAA regional services to Nairobi, but the future of CAA is another factor that has complicated the issue. BUA are in pool with BOAC, covering the routes from London to East and Central Africa, and this pool has been separate from the quadripartite arrangements which BOAC had with SAA, EAA and CAA, so it appears that any BUA problems here will be shared and overcome with BOAC. One thing at least seems clear: if Kenya starts imposing restrictions on BOAC's and BUA's beyond- Nairobi traffic, Britain has powers of reprisal which, if it came to the point, could seriously effect EAA and Kenya's tourist industry. The hope must be that the airlines themselves, who met together in Johannesburg on September 16 to try to sort things out, will be able to reach bilateral agreements that make the best of a bad political situation. [New South African rules for flying into and between British protectorates—page 535.] AVIACO'S NEW LEASE OF LIFE THE rejuvenation of Aviaco, which started in 1960, continued without restraint in 1962 and appears to be continuing in 1963. This is the essence of the message given to shareholders in AYC's annual report for 1962. In round terms, traffic and capacity last year rose by a third as compared with 1961, this comprising an increase of one-quarter on scheduled services—which still account for four-fifths of Aviaco's business—and a doubling on charter services (for the second year running). It is not easy to assess Aviaco's financial results in conventional | terms because of the unusual way in which the company operates. In effect Aviaco leases most of its aircraft (and sometimes crews as well) from other operators and applies these to its services. Thus of last year's traffic of 23m l.t.k., Iberia aircraft carried 7m l.t.k. while Sabena Caravelles and DC-6Bs carried 6m l.t.k. This arrange ment is also evident from the operating account. This shows that salaries and wages accounted for less than a sixth of Aviaco's total expenses. Another peculiarity is that Aviaco's own fleet has until recently been overvalued because of the failure to set aside adequate depreciation reserves in the dark days of the late fifties. As a result Aviaco's recent policy has been to accelerate its amortization pro visions as much as possible. In 1962 for instance, virtually the! whole profit of Pesetas 29m (on revenues of Ps 397m) was allocated | to extra depreciation. The outstanding feature of Aviaco's policy is that the airline j enjoys one of the lowest cost levels in Europe—only 22d per c.t.m. This figure illustrates perfectly the wisdom of a policy of exploiting I with advantage the excess capacity which causes others such | embarrassment. EAA CONTINUES TO PROSPER THE latest annual report for East African Airways illustrates once again that curious correlation between volume of air traffic and political self-determination. Despite the uncertainties of the East African economy, EAA's business continues to boom. And as long as the separate territories of East Africa are prepared to forego the luxury of operating their own national airlines, the rapid political development of the area seems to assure EAA even further rapid expansion—provided Kenya's new politicians do not anta gonize EAA's partners with political sanctions. Last year's continued growth of international services, notably an increase in frequency on the UK Comet service from three to | seven flights a week, had the effect of pushing up total capacity by about a third (to 42m c.t.m.). Although the consequent increase in average length of haul was instrumental in reducing the average cost level to 32d per c.t.m., this growth in capacity was not matched by traffic and as a result load factor dropped sharply from 6! to 54 per cent. Had it not been for the receipt of substantial pool payments, EAA's profits would have slumped. As it was the ne surplus after allowing for interest payment rose sharply from jus under to just over £|m. Had the airline so wished it could have presented an even more favourable picture for development expenditure on the thrr Comet and on the new fleet of three F-27s was written off as incurred. Also, the board revised the Comet obsolescence P0,1"^' reducing the depreciation period to five years. To make good shortfall in 1960 and 1961, the airline applied the 1962 surplus ana most of the existing revenue reserves to the obsolescence reserve.^ Such prudence as this is appropriate in an organizatioi which I has taken the risk of financing its aircraft out of short-term borr In the case of the Comet fleet, the £3Jm hire-purchase^ i ings. bility has already been reduced to £2m by rapid repayments.
Sign up to
Flight Digital Magazine
Flight Print Magazine
Airline Business Magazine
E-newsletters
RSS
Events
