SIC.
APPLIED TO THE CAA, APPEALED TO THE SECHETARY OF STATE FOR
TRADE AND IN JUNE 1980 HE ALLOWED THE APPEALS AND LICENSED BOAL,
CPA AND LAKER IN ADDITION TO BA.
7. LAKER THEN RE-APPLIED TO THE ATLA FOR A LICENCE AND BCAL AND
CPA, IN KEEPING WITH THE SECRETARY OF STATES DECISION, APPLIED TO THE ATLA FOR THE RESTRICTION ON THEIR LICENCES TO BE LIFTED.
8. IN ITS 1979 DECISION THE ATLA FORECAST THAT THE TOTAL TRAFFIC
ON THE HONG KONG/LONDON/HONG KONG ROUTE IN 1980/81 WOULD BE
ABOUT 234,000 BASED ON THE FARES CITED TO IT AND A 12 PER CENT PER ANNUM GROWTH RATE FOR THE NEXT FOUR YEAPS.
9. WITH THE ENTRY ONTO THE ROUTE OF CFA (IN JULY 1980) AND GOAL (IN AUGUST 1930) COMPETITION HAS LED TO MUCH LOWER FAPES THAN WERE
QUOTED TO THE ATLA LAST YEAR, AND THE LOWER FARES HAVE GREATLY
STIMULATED DEMAND SINCE JULY. THE FIGURES PRODUCED BY THE
DIRECTOR OF CIVIL AVIATION FOR AUGUST-SEPTEMBER 1980 SHOW AN
INCREASE OF ABOUT 50 PER CENT OVER THOSE FOR THE CORRESPONDING PERIOD IN 1979. HOWEVER THE EXISTING CARRIERS STATED THAT THIS INCREASE
WAS NOT INDICATIVE OF THE LONG TERM PROSPECTS.
10. THE LOWEST FORECAST OF TRAFFIC FOR 1980/81 BY ANY AIRLINE
ALREADY OPERATING ON THE ROUTE IS NOW ABOUT 248,000 AND THE
HIGHEST ABOUT 270,000, BA SAID THAT THE TRAFFIC WOULD BE WITHIN PRESENT CAPACITY AND SO NO INCREASE AT ALL WAS JUSTIFIED. BCAL
AND CPA THOUGHT THAT SOME ADDITIONAL CAPACITY WAS NEEDED AND THEY
MADE IT CLEAR THAT THEY WOULD BE PREPARED TO MOUNT IT. 11. LAKER, HOWEVER, CONTENDED THAT THE RECENT INCREASE IN TRAFFIC SHOWED THAT THE ATLA HAD BEEN MISTAKEN IN ITS PREDICTIONS LAST
YEAR AND THAT THE PRESENT MARKET WARRANTED THE LICENCING OF A FOURTH CARRIER.
12. LAKER ALSO CLAIMED THAT THIS WOULD NOT CREATE OVER-CAPACITY ON
THE ROUTE BECAUSE THERE WAS A BIG UNTAPPED RESERVOIR OF PASSENGERS
WHO WOULD ONLY FLY IF LAKER WERE SERVING THE ROUTE. THEY ESTIMATED
THAT THIS POTENTIAL WAS ABOUT 182,000 IN THE FIRST YEAR OF OPERATION, MUCH OF THE DEMAND (30,000 RETURN PASSAGES) COMING FROM
PACKAGE TOUR OPERATORS. IT WAS CLAIMED THAT LAKER WOULD SELL
MORE SEATS THAN OTHER AIRLINES BECAUSE THE NAME LAKER WAS
SYNONYMOUS WITH LOW FARE TRAVEL,
13. BCAL AND CPA ALSO PRODUCED EVIDENCE OF INTENSIVE EFFORTS
TO SELL LOW-COST TOURS USING THEIR AIRCRAFT AND THE ATLA WAS NOT
CONVINCED OVERALL THAT LAKER COULD OFFER SEATS AT A PRICE WHICH THE OTHER AIRLINES COULD NOT MATCH, THAT THE SEATS THE TOUR OPERATORS REQUIRED WERE NOT AVAILABLE OR THAT, IF THE DEMAND INCREASED, THAT THE CARRIERS ALREADY OPERATING ON THE ROUTE WOULD NOT MAKE THE SEATS AVAILABLE.
14. EVIDENCE WAS GIVEN THAT THE VERY LOW FARES PREVAILING ARE QUITE
UNECONOMIC AND THAT TO PROVIDE THEM THE LOW FARE PASSENGER MUST BE
SUBSIDIZED EITHER BY THE AIRLINE, THE HIGH FARE PASSENGER OF THE
MIDDLE EAST MID POINT TRAFFIC. SIR FREDDIE LAKER ACCEPTED THAT
HE WOULD NEED TO CARRY A SUBSTANTIAL NUMBER OF FULL ECONOMY
PASSENGERS TO AVOID LOSSES. HE ALSO SAID THAT THE FAPE FOR HIS
STANDARD SKYTRAIN SERVICE, ONCE LICENSED, WOULD PROBABLY HAVE
TO BE HIGHER THAN THE DOLLARS 1,500 QUOTED IN HIS SUBMISSION.
2
/15.
IT WAS