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Aviation History
1988
1988 - 1052.PDF
LETTERS SBAC takes Editorial to task SIR—I must take issue with you over your Editorial "Mythical money" (Flight, April 2). It can only be described as offensive and "going over the top". The SBAC's press release was intended to emphasise the concern that is felt in the aerospace industry that the United Kingdom is not investing sufficiently in R&D. Our study convinced us this was so, and that Government R&D statistics were not based on a correct definition of R&D. There was no suggestion that HMG was being dishonest or "cooking the books", as you put it. That, indeed, is a serious charge and is completely unjustified. I draw your attention to the second paragraph of the release—"The SBAC has long felt that the MoD accounting conventions, rather than being concerned about identi fying the funds it spends on R&D, are aimed, quite prop erly, more at controlling the costs of projects". It goes on, "But this can result in work . . . being categorised as R&D when it should not be counted as such". I stress that nowhere in our press release was any suggestion made that the MoD or HMG were being dishonest, mendacious, or deliberately misrepresenting the facts. Certainly, the Society put out the press release in the hope that it would encourage debate on the important issue of R&D investment in this country. It is regrettable that you saw fit to read into it far more than was said in the statement. I should be happy for you to publish this letter, along with the full text of the Society's press release. Sir JOHN CURTISS Director The Society of British Aerospace Companies 29 King Street St James's London SW1Y 6RD The SBAC's press release reads as follows: SBAC STUDY REVEALS ERROR IN UK R&D STATISTICS A study just completed by some of the larger member companies of the Society of British Aerospace Companies has concluded that the United Kingdom invests no more than 1 • 9 per cent of GDP in research and development, rather than the 2-3 per cent figure quoted in Government statistics. This would appear to have been the case for several years past, and the SBAC considers this is a significant cause for the UK's now huge overseas trade deficit in manufactures. The study was undertaken as many aerospace defence manu facturers of late have been unable to reconcile the value of devel opment work in their MoD contracts with the MoD's published expenditure on R&D (e.g. £2-34 billion for 1986).The SBAC has long felt that the MoD accounting conventions, rather than being concerned about iden tifying the funds it spends on R&D, are aimed, quite properly, more at controlling the costs of projects. But this can result in work which has little or no inno vative content being categorised as R&D when it should not be counted as such. Accordingly, several major aerospace defence manufacturers were asked to examine in detail their MoD development contract work, using as a yardstick a definition much in line with the internationally accepted Frascati definition. This emphasises that the basic crite rion for distinguishing R&D from related activities is the presence in R&D of an appreciable amount of innovation. Our companies in due course found that only some 25 per cent of their MoD devel opment contract work was true "R&D". The effect is virtually to halve the MoD's published R&D expenditure, reducing it by some £1-2 billion. As the MoD's R&D expendi ture is a major component of the total UK R&D investment, it follows that the latter figure is also overstated by £1-2 billion, and brings down the percentage of GDP figure from 2-3 to 1-9. Government ministers, particu- arly in recent months, have placed much emphasis on the UK figure of 2-3 per cent for R&D, comparing it, not unfavourably, with the figures for our competi tor nations, i.e USA 2-8, West Germany 2 • 7, Japan 2 • 6, and France 2 • 3. But the true figure of 1-9 places the UK well below other developed nations to the extent of £1-5 billion per year. Not only are we spending a lower percentage of GDP on R&D but, in real value terms, we have been spending relatively less and less over the years than our competitors. Indefensible fares? SIR—As recently as a month ago, Aer Lingus defended its £204 fare on the Manchester route in correspondence with us. The-ability of Aer Lingus to produce a £98 fare within hours of the announcement of the British agreement for the Ryanair service casts doubt on the credibility of the senior executives and board mem bers of Aer Lingus. The attempt of Aer Lingus to explain the Manchester fare cut by reference to a fall in fuel prices is an arithmetic impossibility. One cannot justify a £204 fare to Manchester in February and a £98 one now by reference to fuel price changes. The truth is a frequent casualty in the mouth of Aer Lingus execu tives, and for too long the poli ticians, department, and travelling public were duped. On its own figures Aer Lingus is guilty. Either it has overcharged passengers to Manchester for years, or now it is engaging in predatory pricing against Ryanair. An investigation should be instigated immediately by the EC to ascertain which is the Aer Lingus guilt. If the Aer Lingus tactic has been to overcharge, then it should lose the licence on the route. If predatory pricing is the Aer Lingus tactic, both the Government and EC should take steps to prevent it because it is not in the public interest. We believe that the EC has the expertise and duty to carry out such an evalu ation. Unfortunately, throughout the years Aer Lingus has shown itself shy of competition, which has been demonstrated by its large payment to KLM to persuade it to stay off the Amsterdam route. Because of its monopo listic position it has grown fat, overstaffed, and complacent, and the Irish public, commer cial life, and tourism have been forced to pay a very heavy price for this ineffi ciency. No doubt you will appreciate our anxiety to have the lowest possible fares avail able to the public, but also to want to see fair competition, and ensure that the prices charged on the various routes reflect the operating costs of the airline involved. Only recently the Chair man of Aer Lingus, David Kennedy, in a lettter to one of the Irish national newspapers, admitted that Aer Lingus has in the past been overstaffed and inefficient, and is now in the process of trying to reduce costs. Unfortunately Aer Lingus is, and will continue to be, a high-cost airline which has aspirations to be an inter national carrier, when in actual fact it is only a small regional feeder airline, living off the crumbs of the majors. THOMAS McDONOGH Chairman Air Transport Users Committee 7 Clare Street Dublin 2 Ireland The routes of the problem SIR—Recently you gave half a page to a recital of Mr Bishop's (London City Air ways) misfortunes at London City Airport (Flight, April 9). By all means let us feel sorry for him, but he is wrong to see me as the architect of his misery, even though his Paris business lags far behind mine. He chose, late in the day, to plunge into unexplored terri tory with me. Neither of us may like what we found, but that goes with the territory, not with the explorers. What happened in Decem ber 1987 has not been adequately aired, so people are confused about it. Salient points made (in Mr Bishop's presence) at the CAA's Inquiry on December 22, 1987, will help clear the air; they relate to the last week of operation, as follows: 1 On December 15, 1987, Capt Court (operations direc tor BMA), Capt Mitchell (FOM, Eurocity Express), and Capt Gee (FOM, Bry- mon) jointly gave 28 days' notice of dissatisfaction to Joint Commander Nats about air traffic services from London City Airport to Paris. They did so because air traffic services had not materialised as planned (few Thames/ Gatwick handovers; rare Gatwick LARS; no early, tactical, access to CAS; and LTMA restructuring post poned from Feb/Mar 1988 to 1989 at the earliest). 2 In consequence, two days later (December 17) Brymon's FLIGHT INTERNATIONAL, 23 April 1988
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