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Aviation History
1976
1976 - 2829.PDF
1622 AIR TRANSPORT cated. But simplification is likely to be expensive in revenue terms: the twin problems of seasonal peaks and wasted seats will continue to demand promotional fares, which breed the complexity..However, the policy objective of increasing the total revenue per flight must be the right one, even if we find it difficult to agree the method. Knut Hammarskjold calls for consultation between governments before their airlines negotiate. This may be welcome as long as it does not freeze air-carrier bargain ing. In the past, negotiators at fares conferences have too often been faced with delegates who have been prevented from freely negotiating by their governments, a situation which makes an expensive conference virtually useless and causes delay and confusion. Hammarskjold aptly likens airlines to the children of a broken marriage, which ex plains why they may develop awkward personalities. I have serious misgivings about the proposal that each carrier should establish its agent's commission structure independently. The effect will be to encourage airlines to seek short-term gains in market share, without developing the market, but long-term increases in cost. Carriers will tend to discriminate against some agents to obtain preferential treatment from others. The government believes it will create competition; in my humble opinion it will cause instability and will also raise costs without any corresponding benefit to the public. No capacity predetermination What has the US policy to say on regulation of capacity? It admits that excess capacity has been a burden, resulting in illegal discounting etc; suggests that attention is needed on excess capacity; and concedes that when disputes arise there might be special procedures to resolve them. But essentially it regards capacity as the "principal competi tive medium." Hence it says the Bermuda system of no predetermination, and ex facto control, continues to be vital. It recognises the need to rationalise capacity only as an exception, and regulation would not be needed when business picks up. I have great difficulty with this reasoning simply because it has manifestly failed over 30 years and a surfeit of capacity has always broken down the rate structure, producing the inevitable discounting in some form or other. On the other hand, I welcome the UK policy review that there is no need for multiple designation of US carriers on all international routes. This indeed has been one of our problems. The London-US passenger market is only one-third of the total Europe-US market. American carriers have used London as their main dump for transatlantic services. This summer, half the total scheduled US capacity on passenger services between US and Europe operated to and through London. This was four-and-a-half times the capacity pro vided directly by US carriers to any other single European destination. The same sort of picture is true of cargo. We, and our American opposite-number carriers, have for far too long been risking enormous investment on routes we may at least call our own in the sense that they are our native third and fourth-freedom routes. We have believed in our competitive ability, and developed the traffic over the years, as foreseen by the Bermuda philosophy. But unforeseen—or in default—by the govern ments who made the deal, it seems we have been out flanked by a flood of "charter" capacity which has thrown out any balance there might have been within the pro visions of the agreement. If you think this is just a British Airways view, let me remind you of a speech by my respected friend Bill Seawell of Pan Am in Tokyo earlier this year: "If the airlines are to be enabled to make the most efficient use of their fleets on tra;ns-Pacific and transatlantic routes, and if the public is to receive the benefit of the lowest possible economic fares, airlines must initiate—and governments must encourage—sensible systems of capacity regulation on those routes." This thousfht and others are fully developed in the ::mmmmm FLIGHT International, 4 December 1976 excellent report by Jesse Friedman to which British Air ways subscribed. Balanced, but not intense, regulation of the whole Atlantic capacity, scheduled and non-scheduled, taken together is the only way to assure a viable industry, offering the kind of return on investment that will attract the financial investment it must have for the future. Bilateral agreements have a fundamental part to play in this regulatory framework. We do not urge intense in flexible control. We do urge recognition of the disastrous failure of the Bermuda agreement now to recognise the scale of today's investment and risks, and the ground that must be recovered. It was never designed to last so long. It gave us a good start but should now be honourably retired. • British Airways recorded a net profit of £25 • 3 million for the half-year to September 30, compared with a loss of £1-9 million last year. The fall in the value of sterling boosted revenue to £636-2 million, compared with £467 million last year, and more than offset the higher price of foreign currency and increased fuel and other operating costs at home. 727 RESERVE POWER CERTIFICATED HUGHES Airwest has taken delivery of two Advanced Boeing 727-200s powered by Pratt & Whitney JT8D-17R engines fitted with a fully certificated automatic perform ance reserve (APR). APR provides 2,00Olb more thrust after one engine has failed and allows more payload to be carried from hot, high-altitude airfields. Hughes Airwest says that its new 727s can carry 8,2001b more payload out of Guadalajara, Mexico (elevation 5,012ft), when the surface temperature is 85°F. The system monitors the speed of all three engines and, if a failure is detected, resets the fuel governors on the two remaining engines. No pilot action is required but an over ride system is available to the flight crew. The flailing contraprops of the Tupolev Tu-114—the world's biggest airliner when the Flight camera caught it at Milan in 1963—were stilled in October when the last revenue flight landed at Moscow Domodedovo from Khabarovsk. It has been replaced by the llyushin 11-62 PAN AM/TWA ROUTE SWAP TO END IN 1978 THE Civil Aeronautics Board has recommended to Presi dent Ford that the Pan Am/TWA route swap, first initiated in January 1975 and due to end about now, should be continued until March 2, 1978. After a public hearing chaired by CAB judge Arthur S. Present, the Board has adopted "almost in toto" the recommendation that the exchange—which eliminates US flag competition on certain routes to France, Germany, Portugal and Spain, and on a US-Guam route—could continue. Objections raised at the hearing by National Airlines and the Departments of Transportation and Justice in fluenced the Board in its decision to set a 1978 termina tion date, rather than 1980 as requested by Pan Am and TWA. The additional time thus allotted will give both carriers more breathing space to climb out of the "extra ordinary financial losses" which originally brought the swap into being. The CAB does not "foresee a further extension of the agreement, and would not in any event agree to one without the inclusion of competitive applications by other airlines." The board cautioned Pan Am and TWA that if they expected the pact to continue after March 1978 they should file petitions to that effect as soon as possible.
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