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27.
Mr. Martin, for CPA, raised the question of retaliation, in particular by Japan, if there was
unregulated low fare traffic on the Hong Kong London route and later Mr. Miles gave evidence of a direct approach made to him along those lines. This is evidence only of a possibility but such retaliation clearly is by no means impossible and would no doubt be harmful to the general Hong Kong public interest.
28.
Sir Freddie Laker also said he considered that
the Authority had not achieved its declared object in 1979 of providing a daily competitive service to BA. This, he said, could not be done with two airlines operating a restricted frequency. We do not accept that view and the reduction of fares clearly has come from such competition, as has, in our view, the improvement in service. We did, however, accept that the present service offered by BCal and CPA does have unsatisfactory aspects because of the frequency limitations.
29.
In any
It seems quite clear, and nobody argued to the contrary, that fares on the route are now very low indeed. Mr. Stirland says they are quite uneconomic and cites the average cost of a seat at $2,400. This means that to provide seats at the present low fares of $1,661 the economy passenger must be subsidized either by the airline, the high-fare passenger or the Middle East mid-point traffic. The fares on that route are relatively high but it is doubtful how long that will remain the position. event Sir Freddie was unwilling to state either what his fares would be or to say he could offer significantly lower fares than the others. He did, however, say that whatever the basic fare, it would be higher than it is now. He accepted that he would need a substantial number of full economy (i.e. $3,500) passengers to avoid losses. In his submission the standard fare is given as $1,500, to which
is to be added the cost of food, drinks and headsets, all options but, on a long flight, desirable extras.