7440
75.
76.
77.
78.
79.
80.
81.
Sir Freddie said that Laker's seat mile costs were 15% lower than Cathay's and 21% lower than BCal's primarily because Laker operated at 345 seats whereas BCal had only 270. He considered that Laker's standard of comfort for passengers was equal to Cathay's. He did not think that Cathay would compete with BA if Laker was not on the route as Cathay and BA would operate at mutually agreed fares and schedules.
The average price for fuel had been calculated at 86.98 cents per US gallon and the total fuel used would be 80,931 US gallons per round trip at a total cost of $70,395. He thought that from April onwards the minimum price would not be less than $1.33 a US gallon, but he pointed out that although the fares would probably have to be increased by not less than 10% Laker still had the 15% and 21% advantage over Cathay and BCal in terms of seat mile costs.
Sir Freddie said that Laker's forecast of a minimum potential market of 470,000 passengers for the year 1980/81 had been derived from a BA scheduled base for the year 1978/79 escalated by 19% for two years to arrive at a figure of 222,000 for 1980/81 to which had been added 44,500 sixth freedom passengers, 54,600 passengers who would be attracted to a Laker style of service, 60,000 IT passengers and 88,900 who would be attracted by low fares.
Mr T Chen said that there was a market in Hong Kong that could be stimulated by low fares and an efficient service as had been evidenced following the introduction of low fares on the routes between Hong Kong and Manila and Hong Kong and the North American markets. The majority of passengers would be VFR and businessmen travelling to either the UK or Europe and, with the opportunities now becoming available for travel to China, he envisaged a steady increase in tourist and business traffic to that country over Hong Kong.
Mr G Chen said that Hong Kong was a very attractive destination being the commercial centre of the Far East and a gateway to mainland China.
It was well known as a shopping centre and there had been many successful tour operations into Hong Kong from other parts of the world. It had experienced
30 years of relative stability and economic growth and there had been considerable growth in selling overseas into Hong Kong particularly amongst the Chinese communities in the United States.
The Hong Kong market had always reacted postively to low fare stimulation in both the scheduled and charter markets. The UK was an attractive destination for low fare tours if promoted correctly and would be popular with the families of those who were now resident in the UK. Lower fares would attract passengers from new markets such as the small businessman and junior executives. Traffic could also be generated to London over Hong Kong from the Philippines and Taiwan both of which were high growth areas and had recently listed restrictions on visits other countries.
The ordinary working people in Hong Kong who came from mainland China in 1949 had now achieved economic independence and security and were beginning to take an interest in visiting different parts of the world and would be attracted to a carrier who offered attractive low fares packages. Hong Kong was a country that thrived on free enterprise and the vast majority of the working class population had no particular preference for Cathay and took the view that, the greater the number of carriers, the lower the fares would become. Those people would support any carrier which offered them low fares. of the type proposed by Laker and, although there was a demand for first class travel, the vast majority of the general public were economy class passengers. There was a total of 48 flights each week on the Hong Kong London route by other carriers and he considered that BA with their 11 flights could only be carrying a maximum 50% of the available sixth freedom traffic.
The current Charter price was HK$ 1,850 but because of the demand for travel and current lack of capacity the introduction of a lower fare would undoubtedly attract passengers from the large untapped market that would be attracted by lower fares. Cathay was an efficient and well managed carrier and had a strong
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