TNAG-0965-FCO40-1184-Air-services-between-the-UK-and-Hong-Kong-1980 — Page 32

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fares have been substantially reduced since then and it seems that the actual figure will be considerably higher than

that forecast. BA predicts 261,400 (as against its previous figure of 215,600). CPA are more conservative at about 248,000 while BCal consider it will be in the bracket 260,000

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270,000.

BA, CPA and BCal all however agree that the figures produced by the Director of Civil Aviation for traffic in August September 1980, while they do show a very substantial increase of some 50% over 1979, could not be taken at face value. The figures, they argue, reflect heavy free and non-profit traffic during the initial period, coming as it did at a normal traffic peak plus other temporary factors which make those figures unreliable as a basis for a meaningful forecast. In forwarding the relevant statistics the DCA indicated that future traffic

figures may be more helpful. However we have to consider the applications on the information now before us. Mr. Allen, a BA witness, said that if you add extra capacity at a peak period you will accentuate that peak and conversely deepen the trough. BA had a decline of about 9% in June against an anti- cipated growth of 3 4% which he considered may well have been due to passengers "holding-off" because they realised more capacity was coming on in July and August, and were also hopeful of a fare reduction, hopes which were fully justified. He also said that the airlines, in an effort to fill their aircraft, were very active in securing traffic from neighbouring countries "reverse sixth-freedoming". On the overall question of sixth freedom traffic the Authority considered that the three carrier regime had succeeded in tapping this market with their present very low fares and what was left of this traffic could never be fully captured as many passengers, for a variety of reasons, preferred the more indirect routing offered by foreign carriers. Mr. Allen went on to say that current operations assuming that BCal got Middle East rights provide 461,000 odd seats a year which even at a load factor of 65% is well beyond the capacity required. That percentage load factor was suggested as reasonable by the Authority in its 1979 decision but the response to the new low fares suggests that that may have been too low and 70 - 75% is a more realistic level. This does, however, mean a probable shortage of seats at peak periods.

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