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Aviation History
1975
1975 - 2453.PDF
FLIGHT International, 6 November 1975 Speed for sale THE ECONOMIC characteristics of Concorde differed widely from those of the 707s and DC-8s which were con temporary with the decision to go for a single type of 100- passenger transatlantic aircraft. They are even further from those of the wide-body aircraft to which the airline industry is still adjusting. The marketing strategy worked out by British Airways' three-man Concorde team is set by the high seat-mile costs of the supersonic aircraft. The most likely fare level and the most profitable, Concorde marketing manager Mr Alan Beaves tells Flight, is first-class plus 15 per cent. The airline is "not particularly worried" about any variation of a few per cent around this figure; "you gain a little revenue and lose a few passengers," Beaves estimates, and the effects on profitability are not critical. If other carriers through the International Air Transport Associa tion started to push the surcharge up to 30 or 40 per cent "British Airways would probably take a stand," says Beaves; a surcharge of such a magnitude would be "un realistic." In any case the carrier is now taking bookings for its flights to Bahrain on the basis of first-class plus 15 per cent. Air France likewise is charging "F + 15" for the tickets it is now selling on Paris-Rio. A 20,.per cent surcharge, the airline tells Flight, would not affect gross revenue, but above that point the fare would become "incongruous." The airline does not expect that the lata meeting now in progress at Cannes will reach agreement on the surcharge, but no difficulties are anticipated in the way of bilateral negotiations with the Brazilian Government. Even at this late stage there are wide areas of uncer tainty surrounding the profitability of Concorde. The degree of slide-over from subsonic services, both first-class and economy, is difficult to predict. The top man's bargain Beaves stresses that for the current first-class passenger Concorde is a bargain. For his 15 per cent he flies faster, arrives fitter, gets better airport handling and the "more sensible scheduling" which is a by-product of speed—all this is contrasted with the few inches more space, free drinks and films and better menu which is all the subsonic first-class passenger gets for a virtually doubled fare. It seems likely that a fair amount of subsonic firstjclass will move over to Concorde. '"' It is the second-class slide-over that is more problemati cal—-"the only grey area," says Beaves—and it is likely to vary from route to route. How many economy-class passengers are ready to pay 115 per cent more for their journey, just for the sake of two extra working days on a transatlantic trip, for example? Although the availability of Concorde, according to Beaves, "makes you look at business travel in a completely different way," it has yet to be proven that US and Brjtish businessmen, for example, will take to transatlantic day trips as a regular way of doing business, at £570 a time. It is improbable that any. substantial proportion of traffic now flying on promotional fares or as part of tour groups will fly supersonic, these constituting over 70 per cent of the North Atlantic market. Air France expects "70 per cent load factors on both North and South Atlantic routes." The French carrier's best estimate of economy-class slide-over, based on a sur vey conducted two years ago, is 30 per cent of business travellers. "And of course we can rely on almost all the first-class passengers," the airline adds. British Airways clearly hopes that the availability of supersonic services will lead to increased trip frequency of the travellers who already fly first-class. This, together with diversion from other airlines, should fill Concorde seats without eroding subsonic yield too much. The carrier is looking hard at possible adjustments to its European Division timetables to give better connec tions through London with supersonic flights. Frankfurt is cited as one destination where London-New York Con- 699 corde seats might be sold; Lufthansa clearly recognises this fact and is in the front line of the airlines campaign ing for a high supersonic surcharge. "One would hope for useful generation of totally new continental business, although it varies completely by route," says Beaves; London-Bahrain, for instance, is only likely to pick up traffic from points in northern Europe, but the potential on London-New York is obviously higher. Preparations for the start of Concorde service are now well in hand. A section of the intercontinental Terminal 3 at London Heathrow is being blocked off as a Concorde check-in area( with a higher standard of furnishing than the rest of the terminal. Passengers will have a three- minute walk, claims the airline, from the Heathrow kerb- side to the aircraft, parked at the nearest pier. The depar ture lounge will be equipped with telephones, writing desks, drinks and refreshments. Matching facilities, though not on so large a scale, will be provided where the airline has its own check-in area; at other airports the local authorities are co-operating. "Concorde has to be a success from start to finish of the trip," comments Air France. It is reported that the French carrier is bringing check-in times for Concorde up to 20 or even 15 minutes before departure. Other facilities at Paris Charles de Gaulle will be in line with those at Heathrow. The novelty value of Concorde will lead to a shortage of capacity in the first days of operation, Beaves expects. Under-capacity on Bahrain will be over "a relatively short period," Beaves estimates, but if the London-New York route is opened the honeymoon is likely to be longer. "This is not the ideal time to introduce Concorde," admits Beaves; with the present recession "there is very close attention paid to the way money is spent on travel." There are reports that Trans World Airlines intends to part-charter ten seats on every Concorde flight between Paris and the USA. Air France is not in a position to con firm the reports, but points out that airlines have used the part-charter as a way into routes where they cannot supply a full service. When British Airways placed its order for Concorde, says Beaves, "the Government assured us that we would have the rights to the right places: Japan, Australia, South Africa and New York. The critical plank in that platform is New York." That still hangs in the balance; South Africa—"where Concorde must make one stop only to be competitive"—seems blocked by the denial of any landing point and Japan depends on the negotiations of a joint service with Aeroflot's Tu-144s. The last is a remote prospect unless the performance and environment-worthi ness of the Soviet SST can be improved. Negotiations on the Australia route are in progress (see page 697). Commercially British Airways will have to make some sacrifices to introduce Concorde. Concessions in terms of additional subsonic capacity for the airlines on the London- Australia route will impact on the British carrier's own subsonic services, but hopefully not too severely; "we rely on the Government not to get us into a difficult and expen sive situation." Pooling agreements with other airlines are being revised—"we have this problem with every new aircraft," says Beaves. The exact net effect of the operation of Concorde on British Airways' profits is hard to evaluate. Air France reckons to cover operational costs, but not depreciation, over the first two years. The capital costs are reduced by the means of public dividend capital, but the extent to which the operating and crew costs can be recovered and the size of the ultimate surplus will depend on Concorde generating totally new passenger trips and producing a net positive diversion to British Airways from other carriers. The unknowns are numerous and the problems are not over, but in Alan Beaves' book "there are no prob lems—only opportunities." W.S./J.G.
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