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Aviation History
1972
1972 - 0477.PDF
FLIGHT International, 2 March 1972 311 AIR TRANSPORT British Caledonian granted Atlantic scheduled licence LICENCES FOR SCHEDULED North Atlantic routes have been granted to British Caledonian Airways (as briefly • reported in Flight last week). The Air Transport Licensing Board in London licensed the airline for un restricted frequencies on the routes London-Birmingham- Manchester-Prestwick-New York and London-Chicago-Los Angeles. The licences will run for 15 years—a longer period than usual. The board said that this period, plus the unrestricted frequency, was justified by the importance of the routes and the commitments involved. Although frequency would be unlimited, the board said BCAL intended to introduce services at "a modest level." The chairman of BOAC, Keith Granville, commenting on the decision, said that 19 airlines were now flying thousands of empty seats between Europe and the USA. "Today's decision can only worsen that situation and work against BOAC's strenuous efforts to fill these seats with cheaper fares." BCAL plans to start services on April 1, 1973. The airline says it expects to announce its decision on the acquisition of wide-body aircraft "in the not-too-distant future." It expects to introduce them in 1974. Financial projections by BCAL anticipate losses on the North Atlantic scheduled services for the first three years, and profits (with full allocation of overheads) after the first five years, the airline said last week. The initial losses in the development period will not prevent the airline as a whole from achieving a net profit, it added. Initial development costs for the North Atlantic services are expected to total £3-1 million (excluding aircraft costs). Major items included in this sum are: promotion and advertising, £700,000; equipment (other than aircraft), £800,000; training (including aircrew), £464,000; training of cabin and engineering staff, £297,000; and US outstation costs, £363,000. The next step before BCAL can implement the services will be for the Department of Trade and Industry, at the airline's request, to inform the US Government of the airline's designation as a British flag carrier. There will be a CAB hearing on an application by BCAL for the neces sary permit, a procedure which will probably not be com plete for nine months or more. The United States is unlikely to raise any difficulties; four US carriers are designated to serve Britain, and BCAL already holds a charter permit from the CAB. The two objectors to BCAL's application, BOAC and Laker Airways, could yet appeal, but it will not be practi cable for them to do so in view of the impending transition on April 1 from the ATLB to the new Civil Aviation Authority. The law states that any appeals against ATLB decisions that are undecided by that date lapse auto matically. (They could admittedly be revived in effect by subsequent application to the CAA for revocation of the licences.) In its decision the ATLB recalled the previous applica tion in 1968 by Caledonian Airways (then a charter airline which had not yet taken over British United Airways) for transatlantic scheduled services. It was only narrowly that the airline's application then failed, the board said. The chief- reasons were that the airline had no experience what ever of operating scheduled services, and that it had virtually no maintenance organisation of its own (most engineering was at that time contracted to Sabena). By taking over BUA, said the ATLB, Caledonian had acquired experience of operating scheduled services on a substantial scale. All airframe maintenance was now carried out at Gatwick, and engines were overhauled at BOAC Treforest or at Rolls-Royce. Since the 1968 hearing the situation had changed in two other ways. First, "whether for good reasons or for bad," BOAC had not expanded its service between London and New York, although it had been expected to do so. "At the same time, the corporation's service of Los Angeles is clearly inadequate," the ATLB added. Secondly, it had been thought in 1968 that that would be the last opportunity to launch a second British carrier on the Atlantic; but a delay in the introduction of Concorde, plus the availability of smaller wide-body air craft which British Caledonian was financially strong enough to acquire, had put back this "last opportunity." Evidence at the hearing indicated, said the board, that BCAL's projections, especially as to its likely share of the market, were optimistic; "on this point the objectors effectively criticised some of the applicant's presentation. Against this however were two powerful considerations. First, British Caledonian were in no way dogmatic about their forecasts; their attitude was that, while the forecasts seemed to them reasonable, their validity would be sub jected continuously to management scrutiny in the light of events, and the scale and timing of the operations adjusted accordingly. "Secondly, financial information given in private and confidential letters from shareholders convinced us that British Caledonian would have little difficulty in raising the money needed to cover any shortfall on these opera tions, as compared with their predictions, that might reasonably be expected. "Taking this vital factor into account, along with the drive and skill of British Caledonian's management which impressed us most favourably, we are in no doubt that the proper course is to grant the applications now before us. We believe that the effect of so doing will be to increase the UK's share of the markets involved. "We also believe, although it was not part of the appli cant's case, that to some extent new traffic will be stimu lated, especially between London and Los Angeles and possibly between Africa and the USA over London." The ATLB said that BCAL's proposals were on the whole reasonably based; more urgency in introducing wide-body aircraft might be needed, "but we are confident that if necessary this will be done." "We believe," said the board, "that there will be a net gain for British civil aviation. There must be some damage to BOAC involved, but this will be little more than propor tionate to the corporation's share of these markets. We accept BOAC's submission that on the New York route their performance was affected by industrial disputes concerning the Boeing 747; and we accept that there was commercial sense in their seeking to develop other points of entry on traffic grounds and in view of congestion at Kennedy airport. "The very occurrence of the disputes, however, and BOAC's admitted inability to compensate for them on the New York route with additional Boeing 707 frequencies, provide not only an explanation of their performance but also a justification for licensing a second operator. Indeed, BOAC did not object to British Caledonian's application, as such, to servft New York, although the corporation argued at the hearing that a case for it had not been made out. They did object to the carriage of mail, but we found continued overleaf
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