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Aviation History
1984
1984 - 0395.PDF
AIR TRANSPORT Virgin Atlantic set to upset transatlantic apple cart LONDON As the UK Civil Aviation Authority hearing opened last week into Virgin Atlantic's proposal to operate a £99 single fare between London Gatwick and Newark, British Caledonian announced its plans to offer a fare as low as £50 between Gatwick and New York J. F. Kennedy. The statement followed British Atlantic Airways' announcement that Virgin Records tycoon Richard Branson was now the major shareholder in the airline, having provided a capital investment of a little over £1 million. Branson is now presi dent of newly-named Virgin Atlantic, Randolph Fields remains as chairman, but the day-to-day running of the airline will be the respon sibility of a managing direc tor whose name will be announced very shortly. The Virgin Group's investment will help the carrier get off the ground, boosting its capital to about £2 million. Fields has invested £250,000 in the paper airline already, and the remainder will be raised through the sale of shares to employees. The Virgin Group, whose turnover is in excess of £100 million, will bring "financial security" to the airline, says Fields, and it also means that the company is more than 51 per cent British- owned. Both these are important considerations in the UK Civil Aviation Authority licensing panel's eyes. British Caledonian has retaliated by announcing it will offer a fourth class service at the back of its DC-10 and Boeing 747 aircraft with fares to New York as low as £50. The carrier holds a licence for the New York route but it has been prevented from oper ating the service by the UK/USA "moratorium" which prohibits new carriers entering existing gateways until 1985. Managing director Alistair Pugh says that the BCal offer is "a totally new concept in air transport in which electronic commu nications systems will be used to put on offer a daily fare which will range between a 'floor' price of £50 one way and a 'ceiling' at the normal economy fare level depending on demand". In effect BCal will use its sophisticated computers to predict seat demand. For example, if there is to be a trade fair or exhib ition in New York and seat demand is high the fares will remain at the ordinary econ omy level, if on the other hand there are likely to be empty seats available, then the £50 fare will be offered, a spokes man said. Branson immedi ately counter-attacked BCal's proposal. "If they want to play these kind of games we will make the back seats of our service £49," he said. BCal strongly believes that the market could not stand two US airlines operating between Gatwick-Newark/ JFK. If Virgin Atlantic is licensed, Pugh says, then BCal could not justify starting its services. British Airways says of the tartan rival's £50 fare: "This would appear to be a defensive attack in response to the CAA's hearing". Unlike BCal, Heathrow-based BA is not objecting to the application. It did object initially but later withdrew. People Express is not objec ting to the service either. Although VA would be a direct competitor to its own highly successful services, chairman Donald Burr, a firm believer in deregulation, say, that another licensed carrier on the route can only serve to stimulate the market. British Midland chief Michael Bishop, however, is less optimistic. He does not believe BCal's proposed £50 fare will work on a long-term basis, nor does he think a £99 transatlantic fare is viable. BMA may begin transatlantic service next year from Manchester and Glasgow Airports. Bishop says that BMA will charge the lowest fare possible from the two provincial cities, but it certainly will not be as low as £99. Virgin Atlantic is close to settling agreement with an unnamed carrier for the lease of a Boeing 747. It will be a British Airtours will use this new 747 on North Atlantic routes t. i :' •••• • .; :. : • .'•'". •' - iilikhi "••':-'' • - 1 2 •— five-year lease with an option to purchase after two years. Tickets for the service would be available through travel agents and through any of the 60 Virgin Record shops. In flight videos and music would be provided by the Virgin Group, and its international recording artists such as Boy George and Mike Oldfield will all be encouraged to fly with the new airline. Branson is confident Virgin Atlantic will break even at 70 per cent capacity. Why did Virgin invest in British Atlantic? "We see this as a challenge, a challenge which is possible today. If we had not invested the money somebody in the United States would have done so," Branson says. The Civil Aviation Author ity is expected to announce its decision in five weeks' time. According to Randolph Fields the UK Government has given its approval to the new route saying that there is no legal impediment why the carrier should not be licensed. If VA is launched it plans to offer an initial £99 fare from June 15. From July 1 the fare will be £119 in high season and £110 in low season. It expects to carry 185,000 passengers during its first year of operation. Icao predicts oceanic twins MONTREAL 'LIGHT International, 10 March 1984 The International Civil Aviation Organisation is in the middle of a review of proposals for new safety stan dards for twin-jet airliners which would be designed to be safe on long haul oceanic routes. "If adopted," says Icao, "the new safety standards could permit the operation of twin-jets on most of the world's air routes, including the North Atlantic". The proposed new regu lations have resulted from a two-year study carried out by the Icao Secretariat with the assistance of national aviation authorities and airliner manufacturers. They cover specific requirements for engine reliability, special airworthiness requirements, and operating procedures. 617
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