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The 747 had the lowest break-even load factor and thus the highest profit potential. B.Cal had forecast that from day 1 their DC-10 would be operating at a year round load factor in the high 60's which allowing for their forecast growth rate meant that within a few months their aircraft would be too small. CPA had assumed a seat factor of 56% initially giving them considerably more room for expansion. The 747 had lower seat mile costs than the DC-10 which would enable them to offer a greater percentage and absolute number of seats for low fare traffic. The greater number of seats offered by the 747 would also assist in relieving the potential saturation of runway capacity at Hong Kong which was predicted by the mid 1980's.
There had been no collusion between CPA and BA relative to the application and it was totally wrong for B.Cal to assert that without them the essential element of competition would be missing. CPA competed with 15 other airlines on the Hong Kong-Tokyo route, and with BA and Qantas on the Hong Kong-Australia route where within three
On the question of years they had the largest share of the traffic. load factors he pointed out that on the Hong Kong-Tokyo sector they had achieved a year round load factor of 69.4% in spite of there being 1000 empty seats daily. Of the 33 international destinations served by B.Cal, on 11 they had a monopoly, on 17 one competitor and on only 5 did they have more than one competitor. CPA operated in 11 pools, the concept of which was entirely different from that practised within Europe, in that 5 of them were mandatory under the appropriate govenment regulations.
Mr Bluck said that the number of frequencies per week had been increased from three to four in recognition of the ATLA decision concerning the number of seats they had considered should be made available and although their profit would be reduced, Cathay was quite content to commence with four services. He did not consider that there should be more than two carriers on the route; their evidence had demonstrated that under a three carrier regime all the carriers would be operating below the break-even load factor so that overall route development would be inhibited.
He agreed that Cathay had regarded the route as a BA monopoly and that their proposal had been and still was for one additional carrier. He accepted that there were also some twelve other carriers of the sixth freedom traffic between London and Hong Kong. Cathay would be offering a superior product to that offered by BA particularly as regards the standard of in flight service, availability of tickets, interlining and stopover facilities. Although the ATLA decision had limited Cathay to three frequencies a week until 1982 it was open to them to apply for the conditions to be lifted and it had been assumed that, if the CAA granted a licence with unlimited frequency, the ATLA would grant them approval to operate four flights a week.
Laker had built their reputation on providing mass travel to mainly tourist destinations. They had achieved considerable success on several routes concentrating on the lower end of the travel market. Hong Kong was a business and financial centre and could not be regarded as a holiday resort. The majority of passengers were businesmen, Government servants, officials and people from the expatriate community which he suspected would not consider Laker as an acceptable alternative The opportunities possibly because of their reputation as mass carrier.
for Laker to develop a Far East market were very limited and the mass market on which Laker relied was in Mr Bluck's opinion not available in Hong Kong.
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