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146.
Laker proposed one daily DC10 service in each direction. Despite the fact that the evidence of the Hong Kong Government showed that more capacity was needed for all categories of demand including economy and first class passengers, the Laker proposal was aimed specifically at "the forgotten men and women at the bottom end of the market". Laker assumed that these forgotten men and women constituted a large potential demand, but offered no convincing evidence as to its size. Indeed the starting point for Laker's passenger forecast seems to be the number of passengers it would need to carry in order to achieve a viable service rather than any serious quantitative calculation of what demand might be, with the result that the final forecasts of total market size and rates of growth exceed any reasonable expectation by a very wide margin. The Authority must also doubt the existence of a "forgotten man", at least in any significant. numbers, who might account for Laker's massive increase in forecast traffic. On the North Atlantic it seems that Skytrain caters mainly for those passengers who previously travelled on charter flights. The rate of traffic growth on the North Atlantic does not suggest the generation of any significant additional traffic: the rate of growth in the period after the introduction of Skytrain was consistent with that of the two previous years, taking scheduled and charter together, and there was no dramatic increase. The dramatic effect of the introduction of Skytrain onto the North Atlantic was the transfer from charter to scheduled services. As far as Hong Kong is concerned, there is no significant charter market from which scheduled services can divert traffic. The Authority must regretfully regard the forgotten man as a myth: there is certainly no evidence that he is waiting hopefully for the opportunity to travel between London and Hong Kong. The Authority also has very considerable doubt whether Hong Kong attractive as it is as a place to visit is likely to draw the kind and volume of holiday traffic envisaged in Mr Goodman's ebullient forecast.
147. Although at present capacity on the London-Hong Kong route does not fully meet
demand, all the parties other than Laker argued and the Authority agrees that demand is by no means unlimited. A greater frequency of service on the route at attractive fares, with wider consumer choice and an improved availability of seats at short notice should lead to a modest generation of additional traffic and to the recapture of some traffic from sixth-freedom competitors. But further traffic stimulation through low fares is likely to be limited insofar as a significant proportion of past growth is already attributable to the low fares that have been introduced in recent years particular orange is unlikely to hold an endless supply of juice. If the additional demand is indeed limited, then the fact that Laker would cater for only one category of that demand detracts yet further from the merits of the proposal but forward. On this occasion, the Authority believes that Laker has failed to make out a convincing case for a licence.
148.
that
Cathay proposed to serve the route with Boeing 747 aircraft and to offer fares catering for a wide range of demand. It wanted to be the only licensed carrier on the route, apart from BA. Assuming BA would be operating seven 747 services Cathay considered that at the outset traffic would warrant only three services a week by Cathay, although they were willing to start with four and build up the number of services if they thought the market justified their doing so. They forecast that in 1980/81 with four services a week they would achieve an operating ratio of 110.8 and by the third year 113.8, which if achieved would meet the Authority's usual standards for a new entrant on a route. BA argued however that Cathay's traffic forecasts were optimistic and that in addition their revenue assumptions were exaggerated: they believed that on four services a week Cathay would achieve an operating ratio of only 88.4 in the first year and 88.6 in the third.
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