(iii) BA calculate that the scheme is in their commercial
interests. They estimate an overall net increase in profit of £5-6m per annum, which represents a 50 per cent improvement in the profitability of this route. Although they would lose their rights to carry traffic between the Gulf, India and Singapore on the one hand and Australia on the other, the first two of these are of little significance and BA believe that the loss of the third would be considerably outweighed by the gains which they would make from taking over, with Qantas, the traffic carried by Singapore International Airways (SIA) and other intermediate carriers between London and Australia. The scheme is in keeping with BA's deliberate policy of moving towards end-to-end services without intermediate traffic stops. Low point-to-point fares have been introduced on other major traffic routes, eg London-New York, London-Los Angeles, and the proposed new low fares can be regarded as a logical progression. (The UK/Australia route in traffic terms is about the same size as UK-Los Angeles
approximately 500,000 one-way passenger journeys and about half the size of UK-New York.)
Possible Disadvantages to the UK of the Australian Scheme
6 These might be as follows:
(i)
Flights between Australia and the United Kingdom would be reduced from 34 to about 16 each week each way but a frequency of two a day for such a long journey is nevertheless good.
(ii) Laker could not operate the charter service for
to the CAA which they have made formal application and thus the stimulus of competition from a third carrier would not be present. We have told Laker in confidence of the proposals and, although we have said that we have not yet made up our minds how to respond, we have given no grounds for optimism that the decision will favour Laker. Laker are however considering modified proposals which might be saleable to the Australians as an addition rather than an integral part of the air service arrangements. (iii) The possibility of criticism from the Americans.
There is a sharp difference in concept between the Australian proposals and the more liberal line adopted by the Americans. The Australians do not think that the Americans will accept their proposals for similar arrangements on the Australia/USA route. There is little or no risk of loss of traffic by American carriers through diversion from Australia/USA/UK to the direct Australia/UK route because the number of passengers who travel by the former is very small; they do so for their own
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