TNAG-0965-FCO40-1184-Air-services-between-the-UK-and-Hong-Kong-1980 — Page 23

15. IT WAS AN IMPORTANT PART OF LAKER'S SUBMISSION THAT THE

LAKER STANDARD SKYTRAIN SERVICE OFFERED THE PUBLIC SOMETHING THAT

WAS NOT AVAILABLE ON THE OTHER AIRLINES AND AMOUNTED TO A DIFFERENT

PRODUCT. THE STANDARD SKYTRAIN FARE IS AVAILABLE TO PASSENGERS

ON THE DAY OF TRAVEL ON CONDITION THAT IF A PASSENGER FINDS THAT

HE CANT GET ON THE FIRST FLIGHT OUT HE IS ABLE TO BOOK ON WHATEVER

IS NEXT AVAILABLE.

THERE ARE AT LEAST 133 STANDARD SKYTRAIN SEATS ON EACH AIR CRAFT. THIS FARE DOES NOT INCLUDE THE COST OF FOOD, DRINKS AND HEADSETS WHICH IF PURCHASED BY THE PASSENGER WOULD BRING THE COST OF THE

PASSAGE VERY CLOSE TO SOME OF THE FARES OFFERED BY BA, CPA AND BCAL. HOWEVER LAKER CLAIMED THAT THIS SYSTEM OF SEAT RESERVATION HAS SUCH

APPEAL TO THE PUBLIC AS TO GIVE HIM A COMPETITIVE EDGE.

16. THE ATLA CONCLUDED AT THE PUBLIC ENQUIRY IN NOVEMBER 1979 THAT

THE ADVANTAGES OF THE SKYTRAIN SYSTEM DECREASED WITH THE LENGTH

OF THE JOURNEY INVOLVED WHEREAS THE ADVANTAGES OFFERED BY THE

OTHER AIRLINES OF BEING ABLE TO BOOK AHEAD INCREASED WITH THE

LENGTH OF THE JOURNEY INVOLVED.

17. A STRONG ARGUMENT IN FAVOUR OF LICENSING LAKER WAS THAT THE

ATLA COULD IGNORE THE INTERPLAY BETWEEN CAPACITY AND THE MARKET

DEMAND AND SIMPLY RELY ON COMMERCIAL CONSIDERATIONS TO PREVENT

UNECONOMIC OVERLAPPING OF SERVICES, WHICH THE ATLA IS BOUND TO TAKE

INTO CONSIDERATION BY VIRTUE OF REGULATION 11 OF THE AIR

TRANSPORT ( LICENSING OF AIR SERVICES) REGULATIONS. HOWEVER IT IS LAKER'S DECLARED INTENTION, IF LICENSED, TO COMMENCE WITH A DAILY SERVICE. IT WAS STATED THAT THIS WOULD COMMENCE IN DECEMBER

1980. THE ATLA HAD LITTLE DOUBT THAT IN ORDER TO COMPETE WITH A DAILY LAKER SERVICE AND THE EXISTING BA SERVICES, BOTH BCAL AND CPA, IF THEIR FREQUENCY RESTRICTIONS WERE LIFTED, WOULD BE FORCED TO MOUNT COMPETING DAILY SERVICES. THE ATLA CONSIDERED THAT THE RESULTANT ADDITIONAL CAPACITY ON THE ROUTE WOULD CONSTITUTE UNWARRANTED UNECONOMIC OVERLAPPING EVEN IF THE MARKET POTENTIAL OF THE ROUTE QUOTED BY LAKER WAS TO MATERIALISE. ALTHOUGH THE ATLA WAS PERSUADED, ON THE EVIDENCE GIVEN, THAT THE TRAFFIC DEMAND ON THE ROUTE WOULD GROW SUBSTANTIALLY OVER THE YEARS IT NEVERTHELESS DECIDED THAT IT COULD NOT PROPERLY RELY ON MARKET FORCES ALONE TO PREVENT UNECONOMIC OVERLAPPING, AND THAT IT WAS BOUND BY THE AIR TRANSPORT (LICENSING OF AIR SERVICES) REGULATIONS TO REGULATE, RATHER THAN DE-REGULATE. VAST OVER-CAPACITY ON THE ROUTE WHICH WOULD PUT INTOLERABLE FINANCIAL STRAIN ON THE AIRLINES AND CAUSE INSTABILITY AND A POSSIBLE REDUCTION IN STANDARDS SHOULD

DE AVOIDED. A DECISION ON WHICH EXISTING OPERATORS HAVE RELIED IN

MAKING MAJOR PLANNING DECISIONS, INVOLVING LARGE SUMS OF MONEY,

SHOULD NOT BE LIGHTLY CHANGED.

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/18. THE ATLA