Cheaper air fares to U.K. —decision this month

Press, Volume CXI, Issue 32702, 3 September 1971, Page 24

Cheaper air fares to U.K. —decision this month

(By

NIGEL WILSON,

A.A.P. correspondent, through N.Z.P.A.

LONDON, Sept. 1.

Cheap fares between Australia and Europe on scheduled air services are “just round the cor. ner” according to British aviation officials.

But just how far the prices will be lowered and under what conditions has yet to be decided.

Both the major British international carriers, British Overseas Airways Corporation and British European Airways, publicly are committed to putting forward fare-reduction proposals at a meeting of the International Air Transport Association, in Florida this month, very much as the fuddyNowadays, I.A.T.A. is seen

duddy of the agencies dealing with international aviation problems. Its status is very much less than in earlier days when it brought a measure of sanity into the provision of service standards and operating efficiency. The September meeting of I.A.T.A. might see a far greater degree of difference between the airlines than was apparent at the recent conference on Atlantic fares, in Montreal, . according to industry sources. There, after what seemed almost interminable argument, only one airline, Lufthansa, would not agree to substantially reduced fares. However, airline officials believed that the writing is now on the wall for the scheduled airlines. The reasons are not hard to find:

General low traffic-levels in nearly all operations combined with all-round inflation, particularly staff costs and fuel, have made operations on some routes almost untenable.

B.E.A.’s annua! report shows that the cost of their unit of production—the capa-city-ton-mile—has risen by nearly 11 per cent in the last year.

But in addition, charter flights are putting a stranglehold on the scheduled airlines.

Scheduled charters Charter, particularly in Europe, is almost a misnomer, since charter flights are now highly scheduled. Demand is so heavy that in peak periods many of the charter operators find themselves over-extended, and because they have no back-up aircraft, passengers are left stranded for anything up to 12 hours. The British international airlines, with their Government support and subsequent “production” targets to meet, are not happy at the charter operators. B.E.A for instance flew nearly 3.5 m empty seats around Europe last year. 8.0.A.C.’s profit fell £l6m last year and the corporation’s chairman (Mr Keith Glanville) is pleased with the result —profits of major American competitors fell by some £46m in the comparable period. But with the Government’s financial advisers ever watchful, neither airline is sanguine about forecasting good results for the present year. These adverse predictions are going to be more than substantiated for airlines flying into the United States now that President Nixon has announced his new economic moves.

Mr Granville, while saying that the measures would down-grade 8.0.A.C.’s profitability next year, added: “The full implications of this cannot be measured until the consequential actions by other major trading nations are known.” Govt support While neither airline Is openly predicting the outcome of the Miami meeting they are confident that lower fares right around the world will result.

The main source for their assertion seems to be Government backing. As Australia and Qantas knows, these days intemaional air transport is very much a product of Government agreements rather than the sum of discussions between the operators themselves.

Both 8.0.A.C. and B.E.A will argue at the September LATA, meeting for halfprice fares to be made avail-

able for passengers who book and pay four months in advance. 8.0.A.C. is wary of giving examples of what the proposals mean. Indeed, Mr Granville was most anxious that his airlines proposed fares to Australia should not become known before the I.A.TA. conference. His argument was that any revelation would only upset other operators. His opposite number at B.E.A. (Mr Henry Marking) has no such qualms. B.E.A. wants half-price return flights on the London to Amsterdam, Brussels and Paris routes —available to passengers booking the evening before the flight. Alternatively, it would offer pay-ment-in-advance fares with stiff penalties for cancellation.

8.0.A.C. which operates “early bird” flights across the Atlantic, already has this type of cut-price ticket in service.

.The real question, of course, is whether all the other members of LATA, will support the lower price proposals.

Qantas problem Airline officials believe that unanimous agreement, required under I.A.T.A. procedure, is not unattainable and possibly may be easier than expected because of the success of charters.

On the Australian run, for instance, most of the cost is contained in the leg between Asian stop-overs and the Australian terminal.

Airline officials say that this is a result of the Department of Civil Aviation’s policy on charter operators, restricting landing rights in Australia.

Qantas, having been forced to use jumbo jets on the European run because of the United States restriction, comes into direct opposition with 8.0.A.C. who planned the introduction of the jumbo on this route three years ago.

If 8.0.A.C. meets air charter operators head-on, through its subsidiary British Overseas Air Charters, Ltd, then Qantas virtually will be committed to doing the same through its recently formed air charter concern.

Charter operators believe that moves to bring in

cheaper air I] fares from scheduled operators are short-term measures designed to kill tlie pioneers. New power group In London tbJhy are mounting a campaign to publicise this belief in the hope that when the scheduled flight brought down, passengers will (Maintain their allegiance to tie charter companies. Theywargue that if air charter jjconcerns are forced out on< business, then fares will again be increased. Already, with airlines divesting thenu elves of aircraft ias large(;as Boeing 707 s the charter (operators are getting into the “big time” and facing hmany of the problems of their scheduled competitors. I; They have (given warning that prices nhjst rise inevitably,. but witji so many aircraft availan le and cutthroat competition among the charter operators the pressures to restrain costs as much as pohiible must be high. F With this ( in mind, the meeting in fliorida on September 8 might see the end of the wide differential between scheduled fares, and those officially despised, but publicly patronised, charter bookings. . According 4to a 8.0A.C. official in London, a new era in mass air transportation is approaching.}