Laker Airways
Encyclopedia
Laker Airways was a wholly private
, British
independentindependent from government-owned corporation
s airline founded by Sir Freddie Laker
in 1966. It originally was a charter airline flying passengers and cargo worldwide. Its head office was located at London Gatwick Airport
in Crawley
, England
.
It became the first long-haul, low-cost, "no frills
" airline in 1977, operating low-fare scheduled services between London Gatwick Airport and New York
's John F. Kennedy Airport. The company did not survive the recession of the early 1980s
and operated its last flight on 5 February 1982, the day it went bankrupt
.
unveiled his airline — Laker Airways — to the press
in February 1966. The airline commenced commercial operations from its London Gatwick Airport base on 29 July 1966 with two former British Overseas Airways Corporation
(BOAC) Bristol Britannia
102 series turboprop
s, initially operating under contract to Air France
. The aircraft's livery
was a combination of black, red and white — an adaptation of Laker's racing colours. The Britannias were supplemented and eventually replaced by five BAC One-Eleven
300 short-haul jet aircraft
from December 1967. This included an initial order for three aircraft valued at £
4 million. Laker had placed this order directly with the manufacturer in 1966. He provided more than £200,000 of his own money for the newly ordered aircraft's deposits and arranged for the remainder to be borrowed from a consortium of City
banks led by Clydesdale Bank
. He placed a follow-on order for a fourth aircraft to be delivered in 1968 and acquired another relatively new aircraft that was originally delivered to the failed British Eagle airline from Bahamas Airways
in 1971. These were the mainstay of the fleet for its short to medium-haul charter operations to holiday resorts in the Mediterranean and the Canary Islands
for many years.
s to charter the airline's aircraft during the winter trough and a "time charter". The former helped create winter traffic to popular Mediterranean resorts while the latter gave tour operators financial incentives to charter an aircraft's capacity for an entire season. This ensured the fleet was fully utilised throughout the year, smoothing out the peaks and troughs that characterise charter airlines. It also enabled the airline to sell its One-Eleven
capacity two years ahead of delivery, thereby helping make Laker Airways the most profitable charter airline of its era in Britain.
. The company had up to three BAC One-Elevens stationed there until 1981 when these aircraft were replaced with one of its three newly acquired Airbus A300
B4 series widebodies
, at the time the largest aircraft operated out of any Berlin
airport. Its Berlin operation was staffed by 90, mainly local workers. Throughout this period, it carried thousands of holidaymakers from the Western parts of the formerly divided German
capital to resorts in the Mediterranean and Canary Islands.
, a Gatwick handling agent that has become part of the Aviance
group, with Dan-Air. Each airline owned 50% of Gatwick Handling at its inception.
-saving to reduce its engines' wear and tear
, reduce fuel consumption, and achieve greater range
than indicated by the manufacturers' range specifications.
take-off
technique it had developed for the BAC One-Eleven. Reducing the BAC One-Eleven's take-off thrust
reduced wear and tear of the Rolls-Royce Spey engines. This increased the time before overhaul, reducing costs and prolonging the engines' life. Rolls-Royce
remarked that the Spey engines Laker Airways sent for overhaul were the best-maintained of any BAC One-Eleven operator.
to encourage that aircraft's crew to climb to their upper cruising altitude as quickly as possible so that Laker's One-Elevens could attain their optimum height in the shortest possible time.
This helped Laker's One-Elevens climb faster without using too much power, thereby helping the company to reduce fuel consumption during one of the most fuel-intensive flight phases as well as reduce the engines' wear and tear.
or Berlin Tegel to Tenerife
at the time the most popular resort in the Canary Islands for British and German tourists at least in one direction, depending on the direction and strength of the winds. This helped make Laker's One-Elevens more competitive with larger, longer-range aircraft operated by rivals, especially for tour operators struggling to fill a bigger aircraft profitably. If the passenger load was greater than 70, the charterer paid for any stops, encouraging operators to keep to 70 passengers.
Alternatively, weight saved as a result of limiting free baggage could be traded for reduced fuel consumption on shorter routes well within the BAC One-Eleven's range by making the aircraft lighter, even with a full load of passengersaccommodating up to 89 at a seat pitch of 29 inches (736.6 mm).
series 10.
This DC-10
lacked the range of the series 30. It was optimised for the US
and Canadian
domestic markets and only had sufficient range to fly non-stop between the east and west coasts of North America
. The aircraft McDonnell Douglas
was offering had been built against an order placed by All Nippon Airways
(ANA). ANA had cancelled its order to switch to the L-1011 Tristar, a widebodied trijet
built by Lockheed
. Before offering the aircraft to Laker, McDonnell Douglas had asked British Caledonian
(BCal) whether it was interested. BCal was looking for a widebody replacement for its ageing Boeing 707
s and Vickers VC10
s. BCal rejected this offer because the aircraft had insufficient range to fly non-stop from Gatwick to the distant points on its network.
Despite these drawbacks, Laker Airways took the aircraft. The airline concluded it could fly non-stop from the UK
to any point east of the Rockies
by keeping the baggage limit at 15 kg and reducing single-class seating from 380ten abreast to 345nine abreast. The saving could be used to carry more fuel. The calculations had shown that even with reduced seating, it had only to fill 52% of the seats to break even
. Moreover, Laker Airways had figured that the aircraft's low break-even seat factor would enable it to operate its proposed London
— New York Skytrain with a lower break-even factor compared to the 707
, an ageing narrowbodied
aircraft whose costs were higher per passenger. The DC-10
s also had huge potential to boost the projected profitability of Skytrain. Revised estimates anticipated an average load factor of 70-75% and raised the traffic forecast for the first year of operation to 250,000 passengers each way. This was almost three times the original 707-based forecast. These factors swung the firm in favour of McDonnell Douglas's offer.
In addition, Laker Airways agreed with Japan
ese lessor Mitsui
that was going to buy the aircraft from McDonnell Douglas before leasing them to Laker to pay for the leases out of flying revenue
s only. This meant the airline was not going to pay for the aircraft if they were not revenue-earning. It proved to be effective to minimise the financial risk
an investment
on this scale posed.
A Laker Airways McDonnell Douglas DC-10 series 10 was one of four widebodies that were specially flown in for the pre-inauguration of the then new terminal building at Berlin's Tegel Airport on 23 October 1974. (A British Airways Lockheed L-1011 Tristar 1, a Pan Am Boeing 747
-100 and an Air France Airbus A300 B2 were the other widebodies specially flown in on that day to mark this occasion.)
service to link London and New York daily during the peak summer period from May to September and four times a week during the remainder of the year. This was to be marketed as Skytrain for £32.50 one-way in winter and £37.50 in summer. Two Boeing 707-138Bs were acquired from the administrator
s of British Eagle in 1969. Both were operated by Qantas
when new. They were subsequently purchased by Kleinwort Benson
, which had leased them to British Eagle until its demise in November 1968. These aircraft were earmarked for Skytrain. Laker's original Skytrain application assumed a 62.9% break-even load factor. This meant that the airline needed to sell 100 out of 158 seats at a single fare of £37.50 per seat on each flight to start making money with Skytrain. Sir Freddie announced Skytrain at a press conference
at London's Savoy Hotel
on 30 June 1971.
Since approval for Skytrain was not forthcoming for several years, Laker Airways needed alternative work to keep its long-haul planes busy. Initially, both Boeing 707s supplemented the BAC One-Elevens on Mediterranean and Canary Islands routes, such as Gatwick — Palma de Mallorca
and Gatwick—Tenerife. Both aircraft replaced Bristol Britanniasthe withdrawal of the Britannias made Laker Airways the first all-jet operator in Britain and Europe
on the airline's long-haul flights, an increasing number of which were affinity group charters to North America, primarily the US.
During summer 1970, Sir Freddie sought the UK and Australia
n authorities' permission to operate a series of affinity group charter flights to Australia
. Following his request's refusal, he flew to Australia in early 1971 to discuss his proposal for 15-day inclusive tours from Australia to the UK, including full board at first class hotels for A$935
, with the director-general
of the Australian Department of Civil Aviation
who doubled as Qantas's chairman. Sir Freddie's visit did not succeed in convincing the Australian authorities of his proposal's merits as a result of lobbying from BOAC and Qantas, both of which were estimated to have lost £11m in revenue due to competition from charter airlines on the "kangaroo route
".
From December 1970, one of Laker's two 707s was used for a once-a-week low-fare service linking Luxembourg
with Barbados
on behalf of International Caribbean Airways, a joint venture
between Barbados businessmen Norman Ricketts and Geoffrey Edwards, who enjoyed the support of the Barbados government, and Laker Airways. Laker Airways initially held a 33% stake in International Caribbean.in 1973, Sir Freddie bought out both of his Barbadian
joint venture partners, while the Barbados Government took up an option to acquire a 51% stake in the airline; this increased Laker Airways's stake to 49% The aircraft Laker Airways allocated to International Caribbean Airways sported International Caribbean as well as the Barbadian flag on both sides of the forward fuselage in place of Laker and the Union Flag
featured by the company's other aircraft. In addition to the weekly Luxembourg—Barbados schedule, which subsequently became twice weekly and was extended to London Gatwick, this aircraft operated regular charters from Canada
and West Germany
to Barbados. In January 1975, the International Air Transport Association
(IATA) designated International Caribbean Airways the flag carrier
for Barbados.
" scheme on the starboard side of the white upper forward part of the fuselage, in anticipation of approval to commence Skytrain from MDC's factory in Long Beach, California
, via Japanese lessor Mitsui.
. Laker's first ABC passengers had paid £45 return. The inaugural flight was operated under contract to Laker's Liverpool
-based in-house package
tour operator Arrowsmith Holidays, a group company since 1967. It was followed by similar ABC services from Prestwick
and a three-times-a-week Gatwick—Toronto ABC operation. The latter was operated under contract to Lord Brothers, the airline's London-based in-house tour operator that had been part of the group since 1968 and changed its name to Laker Air Travel in 1974.
A third DC-10 series 10 widebody joined the fleet in April 1974 to maintain the airline's commitments in the ABC flights market. (Laker intended to allocate two DC-10s exclusively to Skytrain in anticipation of the start of daily services between Stansted
and Newark
later that year. This aircraft was eventually used to meet growing ABC commitments.)
The new ABC rules enabled Sir Freddie to build a successful ABC flights business across the North Atlantic
over the next couple of years, making Laker Airways the market leader in transatlantic ABC flights. During the early to mid-1970s, the airline ran low-key advertising on hoardings and public transport in London, Manchester
and other large British cities under the motto "Take a Laker".
Laker's transatlantic charters provided meals, movies — new in those days that helped distinguish it from the competition — and a free bar.
The success of Laker Airways's transatlantic ABC flights resulted in an application to launch an Australian low-fare operation from Gatwick and/or Luxembourg to Sydney
and Melbourne
. Laker's application was dismissed by Peter Nixon, the Australian Transport Minister. Nixon stated that the UK—Australia scheduled air services market was to remain the preserve of British Airways and Qantas. This decision was the result of successful lobbying
by Qantas, which had exerted pressure on its government
to protect the long-established duopoly
it shared with British Airways on the "kangaroo route" under a joint revenue-sharing agreement. Nixon also maintained that the proposed service to only two Australian points would be "discriminatory" on people living in other parts of the country by denying them the benefits of low fares. These comments prompted Sir Freddie to retort that the Australian transport minister still thought the earth was flat, and that it had not come to his attention that Australia already had a number of regional airlines covering the whole of the country.
An advertising campaign featuring the slogan "I've got my name on every plane!" was developed in conjunction with a New York based company. It was successfully launched during the super bowl
interval in February 1974. "Laker to London — the end of Skyway robbery" was the follow-on campaign. The success of these campaigns resulted in Laker carrying more non-scheduled UK—USA passengers than all US carriers combined.
Despite attaining market leadership in the transatlantic ABC market, Sir Freddie considered this second best in the absence of his Skytrain service.
s such as BEA and BOAC on the other. British Caledonian (BCal), Britain's foremost wholly private, independent airline and the country's "second force" carrier as well as Laker Airways's neighbour at Gatwick, became the fiercest opponent. The fact that scheduled operations were regulated and limited opportunities existed for independent airlines on major domestic and international routes explained BCal's opposition. This also meant that most bilateral agreement
s the UK government had negotiated with overseas counterparts contained no provisions for a second British scheduled airline in addition to the incumbent UK flag carrier. The few bilateral agreements that did contain such a provision — for instance, the Bermuda II
accord governing commercial air services between Britain and the US — contained no provision for UK authorities to designate a third carrier. For this reason any licence to Laker to operate a scheduled service on a route of its choosing and nominating it as the UK's second designated flag carrier on that route prevented BCal from operating a competing service.
Another reason BCal opposed Laker's plans was that under the "second force" concept, the cornerstone of British aviation policy throughout the 1970s and first half of the 1980s, BCal was the Government's "chosen instrument of the private sector". This meant the Government supported BCal's worldwide ambitions before considering rival independent airlines. In addition, BCal, Laker and most other independents in the UK were denied access to Heathrow
, the main market for scheduled airlines in the UK, covering close to three quarters of the population in London and two thirds of the population in Southeast England. Confining these airlines to Gatwick forced them to compete for only a quarter of London's and a third of the Southeast's population. BCal felt Laker would undermine its status as the official "Second Force" and weaken it by making it difficult to become a serious competitor to the established airlines.
in 1976 in preparation for the launch of its daily London — New York Skytrain. This aircraft was the DC-10's second prototype
, which the airline had acquired direct from MDC at a knock-down price. By that time, the work force had expanded to 1,000.up from only 500 the year before
Skytrain was inaugurated between London Gatwick and New York JFK on 26 September in 1977.
In early 1979, the airline ordered a further two McDonnell Douglas DC-10 series 10 widebodiesvia Mitsui as well as five longer range McDonnell Douglas DC-10 series 30 widebodied aircraftdirect from MDC.
Laker Airways expanded to Los Angeles
, California
(1978). The company acquired two second-hand Boeing 707-351B narrowbodied long-haul aircraft from Cathay Pacific
Northwest Airlines
being the original operator to commence non-stop operations to the US West Coast
prior to receiving the first of the McDonnell Douglas DC-10 series 30 aircraft that were on order.
Following a public hearing, the Civil Aviation Authority (CAA) approved Laker's request to operate unrestricted Skytrain services at the beginning of July 1979. This enabled the airline to offer bookable seats, excursion fares and the carriage of cargo in addition to the original, non-bookable Skytrain fare from Gatwick to New York JFK and Los Angeles.
With the arrival of the series 30 DC-10s, Intasun owner Harry Goodman recognised that long-haul charters to new destinations were now available and approached Laker with a number of possibilities from the Caribbean
to Florida
. Eventually, Goodman chose Florida and Disney World charters were introduced to the UK market. The programme rapidly expanded to seven times weekly and was eventually converted into a Skytrain operation to Miami.
By October 1980, Laker introduced fully bookable Super Economy fares on all Skytrain services. These were approximately half its competitors' standard economy fares and significantly lower than those airlines' Super APEXAdvanced Purchase Excursion fares. The airline reserved about 60% of its scheduled seats for the new bookable fares. This move marked a major strategic shift in the company's fare structure.
Tampa
, Florida, was added in 1981 from Gatwick, Manchester and Prestwick, following lobbying from Bob Beckman's clientBob Beckman was Laker's American
lawyer
. By that time, the firm had sold both the older, shorter fuselage Boeing 707-138Bsone to Indonesia
and one to Africa
and disposed of one BAC One-Elevenacquired by Dan-Air
. This left it with 20 aircraft comprising 14 widebodies and six narrowbodies — 11 DC-10s,five series 30 and six series 10 aircraft three A300
s, two 707s and four One-Elevens, doubling the size within only five years. Over this period the number working for Laker Airways and associated companies doubled again to 2,000.
During the 1981 summer period, Laker operated up to three daily frequencies each way between Gatwick and JFK and Gatwick and Miami as well as twice daily round-trips between Gatwick and Los Angeles. This made Laker the fourth biggest transatlantic scheduled airline between the UK and USbehind British Airways, Pan American World Airways
(Pan Am) and Trans World Airlines
(TWA) as well as fifth biggest overall. By that time, the airline had carried over two million Skytrain passengers.
section called Pullman
. It was to operate three flights per week each to Sydney and Melbourne respectively, and one to Perth
.
The CAA took a negative view of Laker's application for a UK—Australia scheduled low-fare service and a rival application by BCal to launch a conventional, scheduled service between Gatwick and four Australian destinations via Colombo
at four flights a week each way. It considered Laker's market growth forecast overoptimistic, its stimulation factors unreal, and its
fares intentions vague. In the CAA's opinion, the Australians were unlikely to accept another UK airline without a reciprocal service from a second Australian carrier, and the traffic on the UK—Australia route would not support two additional carriers without a substantial reduction in service frequencies of the incumbent operators. (The CAA told BCal that it considered its proposal for a new, faster service to Australia superior to Laker's, and that it would therefore look favourably on its application if it wished to re-apply with specific proposals for a joint Anglo
-Australian operation.)
to competition. This was to be by a second British scheduled carrier to ease the shortage of seats passengers were experiencing at peak times on the ten-times-a-week monopoly
service by British Airways from Heathrow.
A race ensued when BCal, Laker and Cathay Pacific, Hong Kong's home town airline as well as its de facto
"flag carrier", filed their applications with the CAA in London.
Laker proposed a daily Skytrain linking Gatwick and Hong Kong via Sharjah
to be operated with single-class, 380-seat McDonnell Douglas DC-10-30s. At the CAA hearing the airline proposed larger, higher capacity Boeing 747s as soon as this was justified by increased demand. The company tried to convince the CAA that its additional all-economy class
discount
service was the best option to alleviate the shortage of seats on this route. Its analysis showed the bottom end of the economy market was the most under-served segment because of the scarcity of low fares. The other airlines used Laker's analysis in support of their claims that Skytrain would flood the market with cheap seats that risked undermining profitability without doing anything to alleviate the shortage of premium seats. Laker retorted that low fares would stimulate the market by meeting untapped demand from people who could not afford to fly this route because of British Airways's high fares, rather than taking market share from competitors. It pointed to the success of its transatlantic Skytrain in helping create demand while maintaining that its rivals' proposals would do little to meet the unsatisfied demand for low-fare seats.
The CAA awarded a licence to operate unlimited scheduled services between London and Hong Kong to BCal, which had proposed running a conventional service from Gatwick via Dubai
, using its growing fleet of McDonnell Douglas DC-10-30 widebodies in a three-class configuration featuring a first and an executive class
in addition to economy. BCal had also agreed to offer a number of low fares that would match the lowest fares Laker had proposed. The CAA rejected Cathay Pacific's and Laker's applications, clearing the way for BCal to become the second British scheduled carrier on that route.
However, Hong Kong's Air Transport Licensing Authority (ATLA) refused to endorse BCal because many felt upset that Cathay Pacific was excluded from one of the world's most lucrative routes. This caused a row between the UK government in London and the colonial administration in Hong Kong. Cathay Pacific began lobbying in the Crown Colony
as well as in London, stressing it had invested millions in the British economy at a time of high unemployment
in the UK by placing large orders for Rolls-Royce RB211
-powered Boeing 747s. The UK government allowed Cathay Pacific to join Laker in appealing to John Nott
, the UK Secretary of State for Trade and Industry, against the CAA's award of a licence exclusively to BCal. The Secretary of State overturned the CAA's decision and opened the route to all three airlines without placing restrictions on frequencies of service. For Laker Airways this turned out to be a partial victory because the ATLA continued to refuse a reciprocal permit, without which Laker's service remained grounded.
Cathay Pacific commenced a thrice-weekly service between Hong Kong and Gatwick via Bahrain
on 17 July 1980 using a Rolls-Royce RB211-powered Boeing 747-200B ahead of BCal, which began a four-times-a-week Gatwick — Hong Kong service via Dubai on 1 August 1980 using a McDonnell Douglas DC-10-30.
to create the first daily round-the-world through service by a British airline in both directions.at the time Pan Am was the only airline to operate such a service This was to be marketed under the trademark Globetrain.
Cathay Pacific was among airlines attacking Laker's plans. The established transpacific airlines were concerned that Laker was likely to create excess capacity, threatening the profitability as well as long-term viability of these routes. Sir Freddie said Cathay seemed concerned about sharing the Hong Kong — Tokyo route with a competitor because this route was the main source of profits for Cathay Pacific's Asia
n and transpacifc operation.
Laker abandoned Globetrain due to its inability to obtain regulatory approvals.
an Skytrain routes. The majority of the low-fare network was not going to touch the UK, making it the first pan-European
commercial airline.
Laker's European Skytrain plans were opposed by BCal, which was keen to expand its European network beyond routes linking Gatwick with Paris Charles de Gaulle, Amsterdam
Schiphol, Brussels
National (Zaventem
) and Genoa
. BCal needed to develop its connecting traffic at Gatwick by growing the European network to include Germany
, Switzerland
, Scandinavia
and Southern Europe
to help it increase loads on flights to Africa, South America
and the US as well as improve profitability. BCal came up with its own proposal, Miniprix, to counter Laker. This alternative was less ambitious than Laker's. Excluding BCal's existing four European routes, it envisaged linking Gatwick with 20 additional points on the Continent
. Services were to be operated during off-peak times with BAC One-Eleven 500s and Boeing 707-320Cs. BCal was considering both the McDonnell Douglas MD-80 narrowbody as well as the Airbus A310
widebody as long-term replacements for its existing narrowbodied aircraft on these proposed routes.
Dan-Air and Britannia Airways
, the UK's leading charter airlines, feared that without reciprocal foreign regulatory approvals Laker would be forced to dump this additional widebody capacity on the European charter market, creating excess capacity that would collapse charter rates.
The CAA heard Laker's as well as BCal's and other UK independent airlines' proposals. It rejected Laker. It subsequently awarded two scheduled licences to Laker Airways, one for Gatwick — Berlin Tegel and the other for Gatwick—Zürich
, following British Airways's decision to abandon short-haul routes it had been operating from Gatwick at low frequencies since the late 1970s and to surrender unused licences to the CAA. By the time the CAA awarded Laker these licences, the airline was experiencing financial difficulties and had to dispose of three A300 widebodies to cut costs by reducing the number of aircraft types as well as its overall size. Laker Airways intended to commence operations on both routes during the spring of 1982, operating two flights a day each way utilising spare capacity on its remaining BAC One-Elevens. The airline ceased to exist before the inaugural date.both routes were subsequently operated by Dan-Air
Laker did introduce a short-lived scheduled service between Manchester and Zürich during 1981, which it operated at one flight per day in each direction using a newly delivered A300 widebody. This route, the airline's only short-haul scheduled operation, had come about after British Airways's decision to abandon its loss-making Manchester—Zürich services. Laker's application to have BA's licence transferred to itself resulted in its becoming the UK flag carrier between Manchester and Zürich. The airline's subsequent withdrawal and its demise in turn resulted in Dan-Air becoming the UK flag carrier between Manchester and Zürich.
BCal began offering Miniprix fares on off-peak services on Gatwick—Amsterdam after it had obtained approval from the UK authorities and their Dutch
counterparts.
, Detroit, San Francisco, Seattle and Washington DC. The company did not have aircraft to use these licences immediately. Its deteriorating financial position did not let it add more aircraft. By the time Laker Airways went out of business, those licences remained unused. They were eventually allocated to other airlines.
and competition by the established scheduled airlines. Swiss
aviation enthusiasts' magazine Interavia had reported in a 1978 issue that Laker's issued share capital
was £10,000. As per the airline's 1980 balance sheet
, the paid-up share capital was £504,000. These figures compared unfavourably with BCal and British Airways, whose issued share capital stood at £12m and £100m respectively.as per the relevant 1978 Interavia edition As long ago as June 1971, when Skytrain was first announced, it was revealed that Laker Airways had net assets
of £1.68m and tax equalisation reserves of £450,000. Although this amounted to over £2m, it could not disguise the fact that Laker Airways was a financial minnow compared with most of the established flag carriers and BCal. The weak financial position was underlined by the fact that 90% of the share capital was held by Sir Freddie and the remainder by Joan Laker, a former spouse, while Laker Airways was a subsidiary
of Laker Airways (Leasing), which in turn was a subsidiary of Jersey
-incorporated
Laker Airways (International). This had served the firm well since it allowed it to take advantage of lower tax
es and more employer-friendly labour legislation in the Channel Islands
.compared with the UK However, the fact that the airline's ultimate holding company
was in an off-shore
tax haven
outside the jurisdiction
of UK law increased lenders' risk to get their money back.
In addition to undercapitalisation and weak finances, Laker Airways was not backed by any significant asset
s. The bulk of its fleetincluding all widebodies was leased, as was the maintenance hangar at Gatwick that also housed the airline's offices. The only financial back-up that Laker Airways had was Sir Freddie's stud farm
and his personal wealth.
, characterised by negative/low growth
, high unemployment, high inflation
and high interest rate
s. During that period the company was expanding to sustain commercial success generally and that of Skytrain in particular. Laker Airways needed to position itself to take advantage of additional opportunities to expand its business to maintain its status as Britain's second largest independent airline and third principal long-haul operatorbehind British Airways and BCal. Eventually, the company borrowed at high interest rates. The high interest rates were a major cause for the increase in the firm's borrowing costs as well as its debt
s.
Although the Laker Airways fleet contained a greater proportion of modern widebodied aircraft than most of its competitors, which made it cheaper to operate and maintain, the airline felt the sudden tripling of the price
of crude oil in the aftermath of the Shah of Iran
's fall from power. Laker Airways needed to pay the high spot market oil prices because it could not hedge
its future supplies by negotiating fixed-rate, forward purchases. Such financial derivatives were non-existent.
The airline did attempt to protect itself against sterling-dollar exchange rate
fluctuations by buying US dollars at a fixed rate. This was a necessity as most of its costs were in dollars whereas most of its income
was in pounds sterling. The company's growing problems were exacerbated by wrongly anticipating the sterling-dollar exchange rate for the 1981/2 winter season. During all 1980 and the better part of 1981 the rate was 1:2. The pound could buy two dollars because sterling was kept high by Britain's North Sea
oil export
s and the importance these exports assumed against high crude oil prices. Laker Airways did not anticipate the speed of sterling's subsequent decline. This meant that it needed to pay more for dollars than it had originally budget
ed, leading to an outflow of funds at a time of financial crisis.
. This was a market the established transatlantic scheduled carriers had ignored, mainly because it was not profitable given their high cost structures and complex organisations.
Although Laker Airways had lower costs and a simpler organisation, it needed high year-round loads to make money at discount prices. Most of the passengers were likely to travel during the summer peak period. This made it challenging to achieve high loads during the winter.
British Airways and TWA, Laker's other transatlantic competitors, dropped their fares by a similar amount. As a result, Laker's loads and cash inflow halved between October 1981 and February 1982.
(GE), the suppliers of DC-10 widebodied aircraft and its CF6 engines to Laker as well as BCal, had put together.GECAS, a unit of GE, were lessors of some of the widebodied aircraft in Laker's fleet BCal wrote to other operators of the DC-10/CF6 in Europe saying that BCal on behalf of all European operators warned McDonnell Douglas and GE that in the event of the rescue for Laker being approved, none of these airlines would do business with those companies. McDonnell Douglas and GE did not to go ahead. Laker Airways collapsed during the early morning of 5 February 1982 with debts of £270m, the biggest corporate failure in Britain.
Sir Freddie sued British Airways, BCal, Pan Am, TWA, Lufthansa
, Air France
, Swissair
and other airlines for conspiracy to put his airline out of business by predatory pricing
. They settled out of court for US$
50m, which let Laker Airways pay its debts. British Airways reached a separate out-of-court agreement with Sir Freddie personally for £8m.
Following Laker Airways's demise at the end of the first week of February in 1982, a number of aircraft the airline had operated at that time were quickly re-allocated to other operators. These included two McDonnell Douglas DC-10-10 widebodies that joined the fleet of British Caledonian Charter, BCal's charter division, four BAC One-Eleven 300 narrowbodies that replaced the seven One-Eleven 200s BCal had inherited from British United Airways
at the time of its formation and two Airbus A300 B4 widebodies that were placed with Air Jamaica
.
' Northeast corridor and on the Eastern shores of Australia.
Laker Airways's most important legacy was that pioneering low-fare services across the Atlantic helped pave the way for low-cost airlines such as EasyJet
and Ryanair
, liberating the industry from the regulatory straitjacket IATA had imposed for decades in collusion with governments. These governments invariably were sole or majority owners of most IATA airlines. This was Laker Airways's greatest contribution to its industry's future development.
Sir Freddie Laker became an inspiration and cautionary tale for Sir Richard Branson and Virgin Atlantic Airways
, when they set about deciding their long-term strategy.
Private sector
In economics, the private sector is that part of the economy, sometimes referred to as the citizen sector, which is run by private individuals or groups, usually as a means of enterprise for profit, and is not controlled by the state...
, British
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
independentindependent from government-owned corporation
Government-owned corporation
A government-owned corporation, state-owned company, state-owned entity, state enterprise, publicly owned corporation, government business enterprise, or parastatal is a legal entity created by a government to undertake commercial activities on behalf of an owner government...
s airline founded by Sir Freddie Laker
Freddie Laker
Sir Frederick Alfred Laker was a British airline entrepreneur, best known for founding Laker Airways in 1966, which went bankrupt in 1982...
in 1966. It originally was a charter airline flying passengers and cargo worldwide. Its head office was located at London Gatwick Airport
London Gatwick Airport
Gatwick Airport is located 3.1 miles north of the centre of Crawley, West Sussex, and south of Central London. Previously known as London Gatwick,In 2010, the name changed from London Gatwick Airport to Gatwick Airport...
in Crawley
Crawley
Crawley is a town and local government district with Borough status in West Sussex, England. It is south of Charing Cross, north of Brighton and Hove, and northeast of the county town of Chichester, covers an area of and had a population of 99,744 at the time of the 2001 Census.The area has...
, England
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
.
It became the first long-haul, low-cost, "no frills
Low-cost carrier
A low-cost carrier or low-cost airline is an airline that generally has lower fares and fewer comforts...
" airline in 1977, operating low-fare scheduled services between London Gatwick Airport and New York
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
's John F. Kennedy Airport. The company did not survive the recession of the early 1980s
Early 1980s recession
The early 1980s recession describes the severe global economic recession affecting much of the developed world in the late 1970s and early 1980s. The United States and Japan exited recession relatively early, but high unemployment would continue to affect other OECD nations through at least 1985...
and operated its last flight on 5 February 1982, the day it went bankrupt
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
.
The formative years
Freddie LakerFreddie Laker
Sir Frederick Alfred Laker was a British airline entrepreneur, best known for founding Laker Airways in 1966, which went bankrupt in 1982...
unveiled his airline — Laker Airways — to the press
Mass media
Mass media refers collectively to all media technologies which are intended to reach a large audience via mass communication. Broadcast media transmit their information electronically and comprise of television, film and radio, movies, CDs, DVDs and some other gadgets like cameras or video consoles...
in February 1966. The airline commenced commercial operations from its London Gatwick Airport base on 29 July 1966 with two former British Overseas Airways Corporation
British Overseas Airways Corporation
The British Overseas Airways Corporation was the British state airline from 1939 until 1946 and the long-haul British state airline from 1946 to 1974. The company started life with a merger between Imperial Airways Ltd. and British Airways Ltd...
(BOAC) Bristol Britannia
Bristol Britannia
The Bristol Type 175 Britannia was a British medium-to-long-range airliner built by the Bristol Aeroplane Company in 1952 to fly across the British Empire...
102 series turboprop
Turboprop
A turboprop engine is a type of turbine engine which drives an aircraft propeller using a reduction gear.The gas turbine is designed specifically for this application, with almost all of its output being used to drive the propeller...
s, initially operating under contract to Air France
Air France
Air France , stylised as AIRFRANCE, is the French flag carrier headquartered in Tremblay-en-France, , and is one of the world's largest airlines. It is a subsidiary of the Air France-KLM Group and a founding member of the SkyTeam global airline alliance...
. The aircraft's livery
Aircraft livery
Aircraft livery is a paint scheme applied to an aircraft, generally to fuselage, wings, empennage , or jet engines. Most airlines have a standard paint scheme for their aircraft fleet, usually prominently displaying the airline logo or name. From time to time special liveries are introduced, for...
was a combination of black, red and white — an adaptation of Laker's racing colours. The Britannias were supplemented and eventually replaced by five BAC One-Eleven
BAC One-Eleven
The British Aircraft Corporation One-Eleven, also known as the BAC-111, BAC-1-11 or BAC 1-11, was a British short-range jet airliner of the 1960s and 1970s...
300 short-haul jet aircraft
Jet aircraft
A jet aircraft is an aircraft propelled by jet engines. Jet aircraft generally fly much faster than propeller-powered aircraft and at higher altitudes – as high as . At these altitudes, jet engines achieve maximum efficiency over long distances. The engines in propeller-powered aircraft...
from December 1967. This included an initial order for three aircraft valued at £
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
4 million. Laker had placed this order directly with the manufacturer in 1966. He provided more than £200,000 of his own money for the newly ordered aircraft's deposits and arranged for the remainder to be borrowed from a consortium of City
City of London
The City of London is a small area within Greater London, England. It is the historic core of London around which the modern conurbation grew and has held city status since time immemorial. The City’s boundaries have remained almost unchanged since the Middle Ages, and it is now only a tiny part of...
banks led by Clydesdale Bank
Clydesdale Bank
Clydesdale Bank is a commercial bank in Scotland, a subsidiary of the National Australia Bank Group. In Scotland, Clydesdale Bank is the third largest clearing bank, although it also retains a branch network in London and the north of England...
. He placed a follow-on order for a fourth aircraft to be delivered in 1968 and acquired another relatively new aircraft that was originally delivered to the failed British Eagle airline from Bahamas Airways
Bahamasair
Bahamasair Holdings Limited, operating as Bahamasair, is an airline based in the Bahamasair House in Nassau, Bahamas. It is the national airline and operates domestic scheduled services to 15 destinations and regional scheduled services to Havana and four cities in Florida. Its main base is Lynden...
in 1971. These were the mainstay of the fleet for its short to medium-haul charter operations to holiday resorts in the Mediterranean and the Canary Islands
Canary Islands
The Canary Islands , also known as the Canaries , is a Spanish archipelago located just off the northwest coast of mainland Africa, 100 km west of the border between Morocco and the Western Sahara. The Canaries are a Spanish autonomous community and an outermost region of the European Union...
for many years.
New commercial developments
The introduction of several new, short-haul jetliners into a small airline's fleet over a short time necessitated more efficient marketing. Laker Airways came up with a 30% discount offer to encourage tour operatorTour operator
A tour operator typically combines tour and travel components to create a holiday. The most common example of a tour operator's product would be a flight on a charter airline plus a transfer from the airport to a hotel and the services of a local representative, all for one price. Niche tour...
s to charter the airline's aircraft during the winter trough and a "time charter". The former helped create winter traffic to popular Mediterranean resorts while the latter gave tour operators financial incentives to charter an aircraft's capacity for an entire season. This ensured the fleet was fully utilised throughout the year, smoothing out the peaks and troughs that characterise charter airlines. It also enabled the airline to sell its One-Eleven
BAC One-Eleven
The British Aircraft Corporation One-Eleven, also known as the BAC-111, BAC-1-11 or BAC 1-11, was a British short-range jet airliner of the 1960s and 1970s...
capacity two years ahead of delivery, thereby helping make Laker Airways the most profitable charter airline of its era in Britain.
An overseas base
August 1968 saw the establishment of its first overseas base at Tegel Airport in what used to be West BerlinWest Berlin
West Berlin was a political exclave that existed between 1949 and 1990. It comprised the western regions of Berlin, which were bordered by East Berlin and parts of East Germany. West Berlin consisted of the American, British, and French occupation sectors, which had been established in 1945...
. The company had up to three BAC One-Elevens stationed there until 1981 when these aircraft were replaced with one of its three newly acquired Airbus A300
Airbus A300
The Airbus A300 is a short- to medium-range widebody jet airliner. Launched in 1972 as the world's first twin-engined widebody, it was the first product of Airbus Industrie, a consortium of European aerospace companies, wholly owned today by EADS...
B4 series widebodies
Wide-body aircraft
A wide-body aircraft is a large airliner with two passenger aisles, also known as a widebody aircraft or twin-aisle aircraft. The typical fuselage diameter is . In the typical wide-body economy cabin, passengers are seated seven to ten abreast, allowing a total capacity of 200 to 850 passengers...
, at the time the largest aircraft operated out of any Berlin
Berlin
Berlin is the capital city of Germany and is one of the 16 states of Germany. With a population of 3.45 million people, Berlin is Germany's largest city. It is the second most populous city proper and the seventh most populous urban area in the European Union...
airport. Its Berlin operation was staffed by 90, mainly local workers. Throughout this period, it carried thousands of holidaymakers from the Western parts of the formerly divided German
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
capital to resorts in the Mediterranean and Canary Islands.
Branching out into the ground handling business
In 1972, Laker Airways co-founded Gatwick HandlingGatwick Handling
Gatwick Handling Limited was an aircraft ground handling agent headquartered at London Gatwick Airport.Gatwick Handling was originally established in the late-1960s as a new company jointly owned by Airbourne Aviation and Messrs Metcalfe and Foukes...
, a Gatwick handling agent that has become part of the Aviance
Aviance UK
Aviance UK was an aircraft ground handling agent, operating at 15 airports in the UK and many more, as part of its alliance, worldwide. It was a subsidiary of the Go-Ahead Group, a rail, bus and aviation services provider across the UK...
group, with Dan-Air. Each airline owned 50% of Gatwick Handling at its inception.
Cost saving
Laker Airways pioneered costCost
In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost. In this...
-saving to reduce its engines' wear and tear
Wear and tear
Wear and tear is damage that naturally and inevitably occurs as a result of normal wear or aging. It is used in a legal context for such areas as warranty contracts from manufacturers, which usually stipulate that damage due to wear and tear will not be covered.Wear and tear is a form of...
, reduce fuel consumption, and achieve greater range
Range (aircraft)
The maximal total range is the distance an aircraft can fly between takeoff and landing, as limited by fuel capacity in powered aircraft, or cross-country speed and environmental conditions in unpowered aircraft....
than indicated by the manufacturers' range specifications.
Reduced thrust take-off technique
Laker Airways was first to use the reduced thrustFlex temp
Flex temp is a technique used to reduce engine wear in large airliners by performing take-off at less than full power.For Airbus and Fokker aircraft the technique is known as flex temp or just flex...
take-off
Takeoff
Takeoff is the phase of flight in which an aerospace vehicle goes from the ground to flying in the air.For horizontal takeoff aircraft this usually involves starting with a transition from moving along the ground on a runway. For balloons, helicopters and some specialized fixed-wing aircraft , no...
technique it had developed for the BAC One-Eleven. Reducing the BAC One-Eleven's take-off thrust
Thrust
Thrust is a reaction force described quantitatively by Newton's second and third laws. When a system expels or accelerates mass in one direction the accelerated mass will cause a force of equal magnitude but opposite direction on that system....
reduced wear and tear of the Rolls-Royce Spey engines. This increased the time before overhaul, reducing costs and prolonging the engines' life. Rolls-Royce
Rolls-Royce plc
Rolls-Royce Group plc is a global power systems company headquartered in the City of Westminster, London, United Kingdom. It is the world’s second-largest maker of aircraft engines , and also has major businesses in the marine propulsion and energy sectors. Through its defence-related activities...
remarked that the Spey engines Laker Airways sent for overhaul were the best-maintained of any BAC One-Eleven operator.
Faster climbs
In the days when airports and air space were relatively uncongested, Laker Airways instructed departing One-Eleven crews to tune in to other jet aircraft taking off ahead of them, and to begin a conversation with the other aircraft's crew while continuing their climb. The aim was to obtain information about the other aircraft's altitudeAltitude
Altitude or height is defined based on the context in which it is used . As a general definition, altitude is a distance measurement, usually in the vertical or "up" direction, between a reference datum and a point or object. The reference datum also often varies according to the context...
to encourage that aircraft's crew to climb to their upper cruising altitude as quickly as possible so that Laker's One-Elevens could attain their optimum height in the shortest possible time.
This helped Laker's One-Elevens climb faster without using too much power, thereby helping the company to reduce fuel consumption during one of the most fuel-intensive flight phases as well as reduce the engines' wear and tear.
Increasing range by introducing weight-saving measures
Among the weight-saving measures Laker Airways used to make its aircraft fly longer without refuelling was a baggage allowance limit of 15 kg rather than the more usual 20 kg as well as carrying fewer passengers than the aircraft could hold. This policy was first employed when the airline began operating its BAC One-Elevens. By limiting the free baggage allowance and restricting passengers, the company used the weight saved to carry additional fuel, increasing range. This was sufficient to permit non-stop flights from London GatwickLondon Gatwick Airport
Gatwick Airport is located 3.1 miles north of the centre of Crawley, West Sussex, and south of Central London. Previously known as London Gatwick,In 2010, the name changed from London Gatwick Airport to Gatwick Airport...
or Berlin Tegel to Tenerife
Tenerife
Tenerife is the largest and most populous island of the seven Canary Islands, it is also the most populated island of Spain, with a land area of 2,034.38 km² and 906,854 inhabitants, 43% of the total population of the Canary Islands. About five million tourists visit Tenerife each year, the...
at the time the most popular resort in the Canary Islands for British and German tourists at least in one direction, depending on the direction and strength of the winds. This helped make Laker's One-Elevens more competitive with larger, longer-range aircraft operated by rivals, especially for tour operators struggling to fill a bigger aircraft profitably. If the passenger load was greater than 70, the charterer paid for any stops, encouraging operators to keep to 70 passengers.
Alternatively, weight saved as a result of limiting free baggage could be traded for reduced fuel consumption on shorter routes well within the BAC One-Eleven's range by making the aircraft lighter, even with a full load of passengersaccommodating up to 89 at a seat pitch of 29 inches (736.6 mm).
Introduction of DC-10 aircraft
Weight-saving measures adopted to boost the BAC One-Eleven's range stood Laker Airways in good stead when the airline introduced the McDonnell Douglas DC-10McDonnell Douglas DC-10
The McDonnell Douglas DC-10 is a three-engine widebody jet airliner manufactured by McDonnell Douglas. The DC-10 has range for medium- to long-haul flights, capable of carrying a maximum 380 passengers. Its most distinguishing feature is the two turbofan engines mounted on underwing pylons and a...
series 10.
This DC-10
McDonnell Douglas DC-10
The McDonnell Douglas DC-10 is a three-engine widebody jet airliner manufactured by McDonnell Douglas. The DC-10 has range for medium- to long-haul flights, capable of carrying a maximum 380 passengers. Its most distinguishing feature is the two turbofan engines mounted on underwing pylons and a...
lacked the range of the series 30. It was optimised for the US
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
and Canadian
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
domestic markets and only had sufficient range to fly non-stop between the east and west coasts of North America
North America
North America is a continent wholly within the Northern Hemisphere and almost wholly within the Western Hemisphere. It is also considered a northern subcontinent of the Americas...
. The aircraft McDonnell Douglas
McDonnell Douglas
McDonnell Douglas was a major American aerospace manufacturer and defense contractor, producing a number of famous commercial and military aircraft. It formed from a merger of McDonnell Aircraft and Douglas Aircraft in 1967. McDonnell Douglas was based at Lambert-St. Louis International Airport...
was offering had been built against an order placed by All Nippon Airways
All Nippon Airways
, also known as or ANA, is one of the largest airlines in Japan. It is headquartered at the Shiodome City Center in the Shiodome area in Minato, Tokyo, Japan. It operates services to 49 destinations in Japan and 35 international routes and employed over 14,000 employees as of May 2009...
(ANA). ANA had cancelled its order to switch to the L-1011 Tristar, a widebodied trijet
Trijet
A Trijet is an aircraft powered by three jet engines. Early twin-jet designs were limited by the FAA's "60-minute rule", whereby the flight path of twin-engined jetliners was restricted to within 60 minutes' flying time from a suitable airport, in case of engine failure. In 1964 this rule was...
built by Lockheed
Lockheed Corporation
The Lockheed Corporation was an American aerospace company. Lockheed was founded in 1912 and later merged with Martin Marietta to form Lockheed Martin in 1995.-Origins:...
. Before offering the aircraft to Laker, McDonnell Douglas had asked British Caledonian
British Caledonian
British Caledonian was a private, British independentindependent from government-owned corporations airline, operating out of Gatwick Airport in the 1970s and 1980s...
(BCal) whether it was interested. BCal was looking for a widebody replacement for its ageing Boeing 707
Boeing 707
The Boeing 707 is a four-engine narrow-body commercial passenger jet airliner developed by Boeing in the early 1950s. Its name is most commonly pronounced as "Seven Oh Seven". The first airline to operate the 707 was Pan American World Airways, inaugurating the type's first commercial flight on...
s and Vickers VC10
Vickers VC10
The Vickers VC10 is a long-range British airliner designed and built by Vickers-Armstrongs Ltd, and first flown in 1962. The airliner was designed to operate on long-distance routes with a high subsonic speed and also be capable of hot and high operations from African airports...
s. BCal rejected this offer because the aircraft had insufficient range to fly non-stop from Gatwick to the distant points on its network.
Despite these drawbacks, Laker Airways took the aircraft. The airline concluded it could fly non-stop from the UK
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
to any point east of the Rockies
Rocky Mountains
The Rocky Mountains are a major mountain range in western North America. The Rocky Mountains stretch more than from the northernmost part of British Columbia, in western Canada, to New Mexico, in the southwestern United States...
by keeping the baggage limit at 15 kg and reducing single-class seating from 380ten abreast to 345nine abreast. The saving could be used to carry more fuel. The calculations had shown that even with reduced seating, it had only to fill 52% of the seats to break even
Break Even
Break Even are an Australian hardcore band from Perth, Western Australia.-History:Forming in the suburbs of Perth in 2005, Break Even have released two successful releases and toured with the biggest names in local and international hardcore....
. Moreover, Laker Airways had figured that the aircraft's low break-even seat factor would enable it to operate its proposed London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
— New York Skytrain with a lower break-even factor compared to the 707
Boeing 707
The Boeing 707 is a four-engine narrow-body commercial passenger jet airliner developed by Boeing in the early 1950s. Its name is most commonly pronounced as "Seven Oh Seven". The first airline to operate the 707 was Pan American World Airways, inaugurating the type's first commercial flight on...
, an ageing narrowbodied
Narrow-body aircraft
A narrow-body aircraft is an airliner with a fuselage aircraft cabin width typically of 3 to 4 metres , and airline seat arranged 2 to 6 abreast along a single aisle...
aircraft whose costs were higher per passenger. The DC-10
McDonnell Douglas DC-10
The McDonnell Douglas DC-10 is a three-engine widebody jet airliner manufactured by McDonnell Douglas. The DC-10 has range for medium- to long-haul flights, capable of carrying a maximum 380 passengers. Its most distinguishing feature is the two turbofan engines mounted on underwing pylons and a...
s also had huge potential to boost the projected profitability of Skytrain. Revised estimates anticipated an average load factor of 70-75% and raised the traffic forecast for the first year of operation to 250,000 passengers each way. This was almost three times the original 707-based forecast. These factors swung the firm in favour of McDonnell Douglas's offer.
In addition, Laker Airways agreed with Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
ese lessor Mitsui
Mitsui
is one of the largest corporate conglomerates in Japan and one of the largest publicly traded companies in the world.-History:Founded by Mitsui Takatoshi , who was the fourth son of a shopkeeper in Matsusaka, in what is now today's Mie prefecture...
that was going to buy the aircraft from McDonnell Douglas before leasing them to Laker to pay for the leases out of flying revenue
Revenue
In business, revenue is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries, such as the United Kingdom, revenue is referred to as turnover....
s only. This meant the airline was not going to pay for the aircraft if they were not revenue-earning. It proved to be effective to minimise the financial risk
Risk
Risk is the potential that a chosen action or activity will lead to a loss . The notion implies that a choice having an influence on the outcome exists . Potential losses themselves may also be called "risks"...
an investment
Investment
Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...
on this scale posed.
A Laker Airways McDonnell Douglas DC-10 series 10 was one of four widebodies that were specially flown in for the pre-inauguration of the then new terminal building at Berlin's Tegel Airport on 23 October 1974. (A British Airways Lockheed L-1011 Tristar 1, a Pan Am Boeing 747
Boeing 747
The Boeing 747 is a wide-body commercial airliner and cargo transport, often referred to by its original nickname, Jumbo Jet, or Queen of the Skies. It is among the world's most recognizable aircraft, and was the first wide-body ever produced...
-100 and an Air France Airbus A300 B2 were the other widebodies specially flown in on that day to mark this occasion.)
Beginning of the battle for Skytrain
The early 1970s saw the airline and its owner battle with aviation authorities in the UK and US to gain approval for a low-cost, "no frills" transatlanticTransatlantic flight
Transatlantic flight is the flight of an aircraft across the Atlantic Ocean. A transatlantic flight may proceed east-to-west, originating in Europe or Africa and terminating in North America or South America, or it may go in the reverse direction, west-to-east...
service to link London and New York daily during the peak summer period from May to September and four times a week during the remainder of the year. This was to be marketed as Skytrain for £32.50 one-way in winter and £37.50 in summer. Two Boeing 707-138Bs were acquired from the administrator
Administration (insolvency)
As a legal concept, administration is a procedure under the insolvency laws of a number of common law jurisdictions. It functions as a rescue mechanism for insolvent entities and allows them to carry on running their business. The process – an alternative to liquidation – is often known as going...
s of British Eagle in 1969. Both were operated by Qantas
Qantas
Qantas Airways Limited is the flag carrier of Australia. The name was originally "QANTAS", an initialism for "Queensland and Northern Territory Aerial Services". Nicknamed "The Flying Kangaroo", the airline is based in Sydney, with its main hub at Sydney Airport...
when new. They were subsequently purchased by Kleinwort Benson
Kleinwort Benson
Kleinwort Benson is a leading Private Bank that offers a wide range of financial services to private and corporate clients from offices throughout the United Kingdom and Channel Islands. The bank has its headquarters on St George Street in Mayfair, and is supported by seven UK regional and two...
, which had leased them to British Eagle until its demise in November 1968. These aircraft were earmarked for Skytrain. Laker's original Skytrain application assumed a 62.9% break-even load factor. This meant that the airline needed to sell 100 out of 158 seats at a single fare of £37.50 per seat on each flight to start making money with Skytrain. Sir Freddie announced Skytrain at a press conference
News conference
A news conference or press conference is a media event in which newsmakers invite journalists to hear them speak and, most often, ask questions. A joint press conference instead is held between two or more talking sides.-Practice:...
at London's Savoy Hotel
Savoy Hotel
The Savoy Hotel is a hotel located on the Strand, in the City of Westminster in central London. Built by impresario Richard D'Oyly Carte with profits from his Gilbert and Sullivan operas, the hotel opened on 6 August 1889. It was the first in the Savoy group of hotels and restaurants owned by...
on 30 June 1971.
Since approval for Skytrain was not forthcoming for several years, Laker Airways needed alternative work to keep its long-haul planes busy. Initially, both Boeing 707s supplemented the BAC One-Elevens on Mediterranean and Canary Islands routes, such as Gatwick — Palma de Mallorca
Palma de Mallorca
Palma is the major city and port on the island of Majorca and capital city of the autonomous community of the Balearic Islands in Spain. The names Ciutat de Mallorca and Ciutat were used before the War of the Spanish Succession and are still used by people in Majorca. However, the official name...
and Gatwick—Tenerife. Both aircraft replaced Bristol Britanniasthe withdrawal of the Britannias made Laker Airways the first all-jet operator in Britain and Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
on the airline's long-haul flights, an increasing number of which were affinity group charters to North America, primarily the US.
During summer 1970, Sir Freddie sought the UK and Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
n authorities' permission to operate a series of affinity group charter flights to Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
. Following his request's refusal, he flew to Australia in early 1971 to discuss his proposal for 15-day inclusive tours from Australia to the UK, including full board at first class hotels for A$935
Australian dollar
The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu...
, with the director-general
Director-general
The term director-general is a title given the highest executive officer within a governmental, statutory, NGO, third sector or not-for-profit institution.-European Union:...
of the Australian Department of Civil Aviation
Airservices Australia
Airservices Australia is an Australian Government agency, responsible for providing safe and environmentally sound air traffic control management and related airside services to the aviation industry within the Australian Flight Information Region...
who doubled as Qantas's chairman. Sir Freddie's visit did not succeed in convincing the Australian authorities of his proposal's merits as a result of lobbying from BOAC and Qantas, both of which were estimated to have lost £11m in revenue due to competition from charter airlines on the "kangaroo route
Kangaroo route
The Kangaroo Route traditionally refers to air routes flown by Qantas between the countries of Australia and the United Kingdom, via the Eastern Hemisphere. The term is trademarked by Qantas, although it is used in the media and by airline competitors....
".
From December 1970, one of Laker's two 707s was used for a once-a-week low-fare service linking Luxembourg
Luxembourg
Luxembourg , officially the Grand Duchy of Luxembourg , is a landlocked country in western Europe, bordered by Belgium, France, and Germany. It has two principal regions: the Oesling in the North as part of the Ardennes massif, and the Gutland in the south...
with Barbados
Barbados
Barbados is an island country in the Lesser Antilles. It is in length and as much as in width, amounting to . It is situated in the western area of the North Atlantic and 100 kilometres east of the Windward Islands and the Caribbean Sea; therein, it is about east of the islands of Saint...
on behalf of International Caribbean Airways, a joint venture
Joint venture
A joint venture is a business agreement in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets...
between Barbados businessmen Norman Ricketts and Geoffrey Edwards, who enjoyed the support of the Barbados government, and Laker Airways. Laker Airways initially held a 33% stake in International Caribbean.in 1973, Sir Freddie bought out both of his Barbadian
Barbados
Barbados is an island country in the Lesser Antilles. It is in length and as much as in width, amounting to . It is situated in the western area of the North Atlantic and 100 kilometres east of the Windward Islands and the Caribbean Sea; therein, it is about east of the islands of Saint...
joint venture partners, while the Barbados Government took up an option to acquire a 51% stake in the airline; this increased Laker Airways's stake to 49% The aircraft Laker Airways allocated to International Caribbean Airways sported International Caribbean as well as the Barbadian flag on both sides of the forward fuselage in place of Laker and the Union Flag
Union Flag
The Union Flag, also known as the Union Jack, is the flag of the United Kingdom. It retains an official or semi-official status in some Commonwealth Realms; for example, it is known as the Royal Union Flag in Canada. It is also used as an official flag in some of the smaller British overseas...
featured by the company's other aircraft. In addition to the weekly Luxembourg—Barbados schedule, which subsequently became twice weekly and was extended to London Gatwick, this aircraft operated regular charters from Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
and West Germany
West Germany
West Germany is the common English, but not official, name for the Federal Republic of Germany or FRG in the period between its creation in May 1949 to German reunification on 3 October 1990....
to Barbados. In January 1975, the International Air Transport Association
International Air Transport Association
The International Air Transport Association is an international industry trade group of airlines headquartered in Montreal, Quebec, Canada, where the International Civil Aviation Organization is also headquartered. The executive offices are at the Geneva Airport in SwitzerlandIATA's mission is to...
(IATA) designated International Caribbean Airways the flag carrier
Flag carrier
A flag carrier is a transportation company, such as an airline or shipping company, that, being locally registered in a given country, enjoys preferential rights or privileges, accorded by the government, for international operations. It may be a state-run, state-owned or private but...
for Barbados.
Widebody era
In November 1972, Laker became the first airline outside North America to operate the McDonnell Douglas DC-10 widebody when it took delivery of a pair of new series 10 aircraftthese aircraft incorporated Skytrain titles in a hybrid "Union Jack / Stars and StripesFlag of the United States
The national flag of the United States of America consists of thirteen equal horizontal stripes of red alternating with white, with a blue rectangle in the canton bearing fifty small, white, five-pointed stars arranged in nine offset horizontal rows of six stars alternating with rows...
" scheme on the starboard side of the white upper forward part of the fuselage, in anticipation of approval to commence Skytrain from MDC's factory in Long Beach, California
Long Beach, California
Long Beach is a city situated in Los Angeles County in Southern California, on the Pacific coast of the United States. The city is the 36th-largest city in the nation and the seventh-largest in California. As of 2010, its population was 462,257...
, via Japanese lessor Mitsui.
Simplified charter rules across the Atlantic
On 1 April 1973, new charter regulations in the UK, the US and Canada replaced the complicated "affinity group" rules with simplified rules termed "Advanced Booking Charters", popularly known as ABC. The following day, a Laker Airways McDonnell Douglas DC-10 flew the world's inaugural ABC flight from Manchester to TorontoToronto
Toronto is the provincial capital of Ontario and the largest city in Canada. It is located in Southern Ontario on the northwestern shore of Lake Ontario. A relatively modern city, Toronto's history dates back to the late-18th century, when its land was first purchased by the British monarchy from...
. Laker's first ABC passengers had paid £45 return. The inaugural flight was operated under contract to Laker's Liverpool
Liverpool
Liverpool is a city and metropolitan borough of Merseyside, England, along the eastern side of the Mersey Estuary. It was founded as a borough in 1207 and was granted city status in 1880...
-based in-house package
Package holiday
A package holiday or package tour consists of transport and accommodation advertised and sold together by a vendor known as a tour operator. Other services may be provided like a rental car, activities or outings during the holiday. Transport can be via charter airline to a foreign country...
tour operator Arrowsmith Holidays, a group company since 1967. It was followed by similar ABC services from Prestwick
Glasgow Prestwick International Airport
Glasgow Prestwick Airport is an international airport serving the Greater Glasgow urban area, situated northeast of the town of Prestwick in South Ayrshire and 32 miles from the city centre of Glasgow....
and a three-times-a-week Gatwick—Toronto ABC operation. The latter was operated under contract to Lord Brothers, the airline's London-based in-house tour operator that had been part of the group since 1968 and changed its name to Laker Air Travel in 1974.
A third DC-10 series 10 widebody joined the fleet in April 1974 to maintain the airline's commitments in the ABC flights market. (Laker intended to allocate two DC-10s exclusively to Skytrain in anticipation of the start of daily services between Stansted
London Stansted Airport
-Cargo:-Statistics:-Infrastructure:-Terminal and satellite buildings:Stansted is the newest passenger airport of all the main London airports. The terminal is an oblong glass building, and is separated in to three areas: Check-in concourse, arrivals and departures...
and Newark
Newark Liberty International Airport
Newark Liberty International Airport , first named Newark Metropolitan Airport and later Newark International Airport, is an international airport within the city limits of both Newark and Elizabeth, New Jersey, United States...
later that year. This aircraft was eventually used to meet growing ABC commitments.)
The new ABC rules enabled Sir Freddie to build a successful ABC flights business across the North Atlantic
Atlantic Ocean
The Atlantic Ocean is the second-largest of the world's oceanic divisions. With a total area of about , it covers approximately 20% of the Earth's surface and about 26% of its water surface area...
over the next couple of years, making Laker Airways the market leader in transatlantic ABC flights. During the early to mid-1970s, the airline ran low-key advertising on hoardings and public transport in London, Manchester
Manchester
Manchester is a city and metropolitan borough in Greater Manchester, England. According to the Office for National Statistics, the 2010 mid-year population estimate for Manchester was 498,800. Manchester lies within one of the UK's largest metropolitan areas, the metropolitan county of Greater...
and other large British cities under the motto "Take a Laker".
Laker's transatlantic charters provided meals, movies — new in those days that helped distinguish it from the competition — and a free bar.
The success of Laker Airways's transatlantic ABC flights resulted in an application to launch an Australian low-fare operation from Gatwick and/or Luxembourg to Sydney
Sydney
Sydney is the most populous city in Australia and the state capital of New South Wales. Sydney is located on Australia's south-east coast of the Tasman Sea. As of June 2010, the greater metropolitan area had an approximate population of 4.6 million people...
and Melbourne
Melbourne
Melbourne is the capital and most populous city in the state of Victoria, and the second most populous city in Australia. The Melbourne City Centre is the hub of the greater metropolitan area and the Census statistical division—of which "Melbourne" is the common name. As of June 2009, the greater...
. Laker's application was dismissed by Peter Nixon, the Australian Transport Minister. Nixon stated that the UK—Australia scheduled air services market was to remain the preserve of British Airways and Qantas. This decision was the result of successful lobbying
Lobbying
Lobbying is the act of attempting to influence decisions made by officials in the government, most often legislators or members of regulatory agencies. Lobbying is done by various people or groups, from private-sector individuals or corporations, fellow legislators or government officials, or...
by Qantas, which had exerted pressure on its government
Government of Australia
The Commonwealth of Australia is a federal constitutional monarchy under a parliamentary democracy. The Commonwealth of Australia was formed in 1901 as a result of an agreement among six self-governing British colonies, which became the six states...
to protect the long-established duopoly
Duopoly
A true duopoly is a specific type of oligopoly where only two producers exist in one market. In reality, this definition is generally used where only two firms have dominant control over a market...
it shared with British Airways on the "kangaroo route" under a joint revenue-sharing agreement. Nixon also maintained that the proposed service to only two Australian points would be "discriminatory" on people living in other parts of the country by denying them the benefits of low fares. These comments prompted Sir Freddie to retort that the Australian transport minister still thought the earth was flat, and that it had not come to his attention that Australia already had a number of regional airlines covering the whole of the country.
An advertising campaign featuring the slogan "I've got my name on every plane!" was developed in conjunction with a New York based company. It was successfully launched during the super bowl
Super Bowl
The Super Bowl is the championship game of the National Football League , the highest level of professional American football in the United States, culminating a season that begins in the late summer of the previous calendar year. The Super Bowl uses Roman numerals to identify each game, rather...
interval in February 1974. "Laker to London — the end of Skyway robbery" was the follow-on campaign. The success of these campaigns resulted in Laker carrying more non-scheduled UK—USA passengers than all US carriers combined.
Despite attaining market leadership in the transatlantic ABC market, Sir Freddie considered this second best in the absence of his Skytrain service.
Redrawing traditional battle lines
A feature characterising the long battle over Skytrain was that the main protagonists were two private airlines, rather than the independents on one side and corporationGovernment-owned corporation
A government-owned corporation, state-owned company, state-owned entity, state enterprise, publicly owned corporation, government business enterprise, or parastatal is a legal entity created by a government to undertake commercial activities on behalf of an owner government...
s such as BEA and BOAC on the other. British Caledonian (BCal), Britain's foremost wholly private, independent airline and the country's "second force" carrier as well as Laker Airways's neighbour at Gatwick, became the fiercest opponent. The fact that scheduled operations were regulated and limited opportunities existed for independent airlines on major domestic and international routes explained BCal's opposition. This also meant that most bilateral agreement
Bilateral Air Transport Agreement
A bilateral air transport agreement is an agreement which two nations sign to allow international commercial air transport services between their territories....
s the UK government had negotiated with overseas counterparts contained no provisions for a second British scheduled airline in addition to the incumbent UK flag carrier. The few bilateral agreements that did contain such a provision — for instance, the Bermuda II
Bermuda II
Bermuda II was a bilateral air transport agreement between the governments of the United Kingdom and the United States signed on 23 July 1977 as a renegotiation of the original 1946 Bermuda air services agreement...
accord governing commercial air services between Britain and the US — contained no provision for UK authorities to designate a third carrier. For this reason any licence to Laker to operate a scheduled service on a route of its choosing and nominating it as the UK's second designated flag carrier on that route prevented BCal from operating a competing service.
Another reason BCal opposed Laker's plans was that under the "second force" concept, the cornerstone of British aviation policy throughout the 1970s and first half of the 1980s, BCal was the Government's "chosen instrument of the private sector". This meant the Government supported BCal's worldwide ambitions before considering rival independent airlines. In addition, BCal, Laker and most other independents in the UK were denied access to Heathrow
London Heathrow Airport
London Heathrow Airport or Heathrow , in the London Borough of Hillingdon, is the busiest airport in the United Kingdom and the third busiest airport in the world in terms of total passenger traffic, handling more international passengers than any other airport around the globe...
, the main market for scheduled airlines in the UK, covering close to three quarters of the population in London and two thirds of the population in Southeast England. Confining these airlines to Gatwick forced them to compete for only a quarter of London's and a third of the Southeast's population. BCal felt Laker would undermine its status as the official "Second Force" and weaken it by making it difficult to become a serious competitor to the established airlines.
Skytrain takes to the air
Laker Airways had taken delivery of a fourth McDonnell Douglas DC-10 series 10 widebodied jetJet aircraft
A jet aircraft is an aircraft propelled by jet engines. Jet aircraft generally fly much faster than propeller-powered aircraft and at higher altitudes – as high as . At these altitudes, jet engines achieve maximum efficiency over long distances. The engines in propeller-powered aircraft...
in 1976 in preparation for the launch of its daily London — New York Skytrain. This aircraft was the DC-10's second prototype
Prototype
A prototype is an early sample or model built to test a concept or process or to act as a thing to be replicated or learned from.The word prototype derives from the Greek πρωτότυπον , "primitive form", neutral of πρωτότυπος , "original, primitive", from πρῶτος , "first" and τύπος ,...
, which the airline had acquired direct from MDC at a knock-down price. By that time, the work force had expanded to 1,000.up from only 500 the year before
Skytrain was inaugurated between London Gatwick and New York JFK on 26 September in 1977.
In early 1979, the airline ordered a further two McDonnell Douglas DC-10 series 10 widebodiesvia Mitsui as well as five longer range McDonnell Douglas DC-10 series 30 widebodied aircraftdirect from MDC.
Laker Airways expanded to Los Angeles
Los Ángeles
Los Ángeles is the capital of the province of Biobío, in the commune of the same name, in Region VIII , in the center-south of Chile. It is located between the Laja and Biobío rivers. The population is 123,445 inhabitants...
, California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
(1978). The company acquired two second-hand Boeing 707-351B narrowbodied long-haul aircraft from Cathay Pacific
Cathay Pacific
Cathay Pacific is the flag carrier of Hong Kong, with its head office and main hub located at Hong Kong International Airport, although the airline's registered office is on the 33rd floor of One Pacific Place...
Northwest Airlines
Northwest Airlines
Northwest Airlines, Inc. was a major United States airline founded in 1926 and absorbed into Delta Air Lines by a merger approved on October 29, 2008, making Delta the largest airline in the world...
being the original operator to commence non-stop operations to the US West Coast
West Coast of the United States
West Coast or Pacific Coast are terms for the westernmost coastal states of the United States. The term most often refers to the states of California, Oregon, and Washington. Although not part of the contiguous United States, Alaska and Hawaii do border the Pacific Ocean but can't be included in...
prior to receiving the first of the McDonnell Douglas DC-10 series 30 aircraft that were on order.
Following a public hearing, the Civil Aviation Authority (CAA) approved Laker's request to operate unrestricted Skytrain services at the beginning of July 1979. This enabled the airline to offer bookable seats, excursion fares and the carriage of cargo in addition to the original, non-bookable Skytrain fare from Gatwick to New York JFK and Los Angeles.
With the arrival of the series 30 DC-10s, Intasun owner Harry Goodman recognised that long-haul charters to new destinations were now available and approached Laker with a number of possibilities from the Caribbean
Caribbean
The Caribbean is a crescent-shaped group of islands more than 2,000 miles long separating the Gulf of Mexico and the Caribbean Sea, to the west and south, from the Atlantic Ocean, to the east and north...
to Florida
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...
. Eventually, Goodman chose Florida and Disney World charters were introduced to the UK market. The programme rapidly expanded to seven times weekly and was eventually converted into a Skytrain operation to Miami.
By October 1980, Laker introduced fully bookable Super Economy fares on all Skytrain services. These were approximately half its competitors' standard economy fares and significantly lower than those airlines' Super APEXAdvanced Purchase Excursion fares. The airline reserved about 60% of its scheduled seats for the new bookable fares. This move marked a major strategic shift in the company's fare structure.
Tampa
Tâmpa
Tâmpa may refer to several villages in Romania:* Tâmpa, a village in Băcia Commune, Hunedoara County* Tâmpa, a village in Miercurea Nirajului, Mureş County* Tâmpa, a mountain in Braşov city...
, Florida, was added in 1981 from Gatwick, Manchester and Prestwick, following lobbying from Bob Beckman's clientBob Beckman was Laker's American
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
lawyer
Lawyer
A lawyer, according to Black's Law Dictionary, is "a person learned in the law; as an attorney, counsel or solicitor; a person who is practicing law." Law is the system of rules of conduct established by the sovereign government of a society to correct wrongs, maintain the stability of political...
. By that time, the firm had sold both the older, shorter fuselage Boeing 707-138Bsone to Indonesia
Indonesia
Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...
and one to Africa
Africa
Africa is the world's second largest and second most populous continent, after Asia. At about 30.2 million km² including adjacent islands, it covers 6% of the Earth's total surface area and 20.4% of the total land area...
and disposed of one BAC One-Elevenacquired by Dan-Air
Dan-Air
Dan-Air was a leading private, independentindependent from government-owned corporations airline based in the United Kingdom....
. This left it with 20 aircraft comprising 14 widebodies and six narrowbodies — 11 DC-10s,five series 30 and six series 10 aircraft three A300
Airbus A300
The Airbus A300 is a short- to medium-range widebody jet airliner. Launched in 1972 as the world's first twin-engined widebody, it was the first product of Airbus Industrie, a consortium of European aerospace companies, wholly owned today by EADS...
s, two 707s and four One-Elevens, doubling the size within only five years. Over this period the number working for Laker Airways and associated companies doubled again to 2,000.
During the 1981 summer period, Laker operated up to three daily frequencies each way between Gatwick and JFK and Gatwick and Miami as well as twice daily round-trips between Gatwick and Los Angeles. This made Laker the fourth biggest transatlantic scheduled airline between the UK and USbehind British Airways, Pan American World Airways
Pan American World Airways
Pan American World Airways, commonly known as Pan Am, was the principal and largest international air carrier in the United States from 1927 until its collapse on December 4, 1991...
(Pan Am) and Trans World Airlines
Trans World Airlines
Trans World Airlines was an American airline that existed from 1925 until it was bought out by and merged with American Airlines in 2001. It was a major domestic airline in the United States and the main U.S.-based competitor of Pan American World Airways on intercontinental routes from 1946...
(TWA) as well as fifth biggest overall. By that time, the airline had carried over two million Skytrain passengers.
Plans for a new low-fare Australian service
In 1980, Laker Airways withdrew its application to run ABC flights to Australia. Instead, the airline proposed a scheduled low-fare service from London Gatwick with one stop. It was to be one flight a day in each direction using the airline's five McDonnell Douglas DC-10-30 widebodies. In contrast to Skytrain, this was to feature a first classFirst class (aviation)
First class is a luxury travel class on some airliners that exceeds business class, premium economy, and economy class. On a passenger jetliner, first class refers to a limited number of seats or cabins located in the front of the aircraft which are notable for their comfort, service, and privacy...
section called Pullman
Pullman (car or coach)
In the United States, Pullman was used to refer to railroad sleeping cars which were built and operated on most U.S. railroads by the Pullman Company from 1867 to December 31, 1968....
. It was to operate three flights per week each to Sydney and Melbourne respectively, and one to Perth
Perth, Western Australia
Perth is the capital and largest city of the Australian state of Western Australia and the fourth most populous city in Australia. The Perth metropolitan area has an estimated population of almost 1,700,000....
.
The CAA took a negative view of Laker's application for a UK—Australia scheduled low-fare service and a rival application by BCal to launch a conventional, scheduled service between Gatwick and four Australian destinations via Colombo
Colombo
Colombo is the largest city of Sri Lanka. It is located on the west coast of the island and adjacent to Sri Jayawardenapura Kotte, the capital of Sri Lanka. Colombo is often referred to as the capital of the country, since Sri Jayawardenapura Kotte is a satellite city of Colombo...
at four flights a week each way. It considered Laker's market growth forecast overoptimistic, its stimulation factors unreal, and its
fares intentions vague. In the CAA's opinion, the Australians were unlikely to accept another UK airline without a reciprocal service from a second Australian carrier, and the traffic on the UK—Australia route would not support two additional carriers without a substantial reduction in service frequencies of the incumbent operators. (The CAA told BCal that it considered its proposal for a new, faster service to Australia superior to Laker's, and that it would therefore look favourably on its application if it wished to re-apply with specific proposals for a joint Anglo
Anglo
Anglo is a prefix indicating a relation to the Angles, England or the English people, as in the terms Anglo-Saxon, Anglo-American, Anglo-Celtic, Anglo-African and Anglo-Indian. It is often used alone, somewhat loosely, to refer to people of British Isles descent in The Americas, Australia and...
-Australian operation.)
Second designated UK carrier to Hong Kong
The UK government decided in 1979 to open the route between London and Hong KongHong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
to competition. This was to be by a second British scheduled carrier to ease the shortage of seats passengers were experiencing at peak times on the ten-times-a-week monopoly
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...
service by British Airways from Heathrow.
A race ensued when BCal, Laker and Cathay Pacific, Hong Kong's home town airline as well as its de facto
De facto
De facto is a Latin expression that means "concerning fact." In law, it often means "in practice but not necessarily ordained by law" or "in practice or actuality, but not officially established." It is commonly used in contrast to de jure when referring to matters of law, governance, or...
"flag carrier", filed their applications with the CAA in London.
Laker proposed a daily Skytrain linking Gatwick and Hong Kong via Sharjah
Sharjah (city)
Sharjah is the third largest and most populous city in the United Arab Emirates. It is located along the southern coast of the Persian Gulf on the Arabian Peninsula.Sharjah is the seat of government of the emirate of Sharjah...
to be operated with single-class, 380-seat McDonnell Douglas DC-10-30s. At the CAA hearing the airline proposed larger, higher capacity Boeing 747s as soon as this was justified by increased demand. The company tried to convince the CAA that its additional all-economy class
Economy class
__FORCETOC__Economy class, also called coach class , steerage, or standard class, is the lowest class of seating in air travel, rail travel, and sometimes ferry or maritime travel....
discount
Discounts and allowances
Discounts and allowances are reductions to a basic price of goods or services.They can occur anywhere in the distribution channel, modifying either the manufacturer's list price , the retail price , or the list price Discounts and allowances are reductions to a basic price of goods or services.They...
service was the best option to alleviate the shortage of seats on this route. Its analysis showed the bottom end of the economy market was the most under-served segment because of the scarcity of low fares. The other airlines used Laker's analysis in support of their claims that Skytrain would flood the market with cheap seats that risked undermining profitability without doing anything to alleviate the shortage of premium seats. Laker retorted that low fares would stimulate the market by meeting untapped demand from people who could not afford to fly this route because of British Airways's high fares, rather than taking market share from competitors. It pointed to the success of its transatlantic Skytrain in helping create demand while maintaining that its rivals' proposals would do little to meet the unsatisfied demand for low-fare seats.
The CAA awarded a licence to operate unlimited scheduled services between London and Hong Kong to BCal, which had proposed running a conventional service from Gatwick via Dubai
Dubai
Dubai is a city and emirate in the United Arab Emirates . The emirate is located south of the Persian Gulf on the Arabian Peninsula and has the largest population with the second-largest land territory by area of all the emirates, after Abu Dhabi...
, using its growing fleet of McDonnell Douglas DC-10-30 widebodies in a three-class configuration featuring a first and an executive class
Business class
Business class is a travel class available on many commercial airlines and rail lines, known by brand names which vary by airline or rail company. In the airline industry, it was originally intended as an intermediate level of service between economy class and first class, but many airlines now...
in addition to economy. BCal had also agreed to offer a number of low fares that would match the lowest fares Laker had proposed. The CAA rejected Cathay Pacific's and Laker's applications, clearing the way for BCal to become the second British scheduled carrier on that route.
However, Hong Kong's Air Transport Licensing Authority (ATLA) refused to endorse BCal because many felt upset that Cathay Pacific was excluded from one of the world's most lucrative routes. This caused a row between the UK government in London and the colonial administration in Hong Kong. Cathay Pacific began lobbying in the Crown Colony
Crown colony
A Crown colony, also known in the 17th century as royal colony, was a type of colonial administration of the English and later British Empire....
as well as in London, stressing it had invested millions in the British economy at a time of high unemployment
Unemployment
Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...
in the UK by placing large orders for Rolls-Royce RB211
Rolls-Royce RB211
The Rolls-Royce RB211 is a family of high-bypass turbofan engines made by Rolls-Royce plc and capable of generating 37,400 to 60,600 pounds-force thrust. Originally developed for the Lockheed L-1011 , it entered service in 1972 and was the only engine to power this aircraft type...
-powered Boeing 747s. The UK government allowed Cathay Pacific to join Laker in appealing to John Nott
John Nott
Sir John William Frederic Nott KCB is a former British Conservative Party politician prominent in the late 1970s and early 1980s...
, the UK Secretary of State for Trade and Industry, against the CAA's award of a licence exclusively to BCal. The Secretary of State overturned the CAA's decision and opened the route to all three airlines without placing restrictions on frequencies of service. For Laker Airways this turned out to be a partial victory because the ATLA continued to refuse a reciprocal permit, without which Laker's service remained grounded.
Cathay Pacific commenced a thrice-weekly service between Hong Kong and Gatwick via Bahrain
Bahrain
' , officially the Kingdom of Bahrain , is a small island state near the western shores of the Persian Gulf. It is ruled by the Al Khalifa royal family. The population in 2010 stood at 1,214,705, including 235,108 non-nationals. Formerly an emirate, Bahrain was declared a kingdom in 2002.Bahrain is...
on 17 July 1980 using a Rolls-Royce RB211-powered Boeing 747-200B ahead of BCal, which began a four-times-a-week Gatwick — Hong Kong service via Dubai on 1 August 1980 using a McDonnell Douglas DC-10-30.
Globetrain
Laker Airways planned to link its Gatwick — Los Angeles Skytrain with the proposed Gatwick—Hong Kong Skytrain across the Pacific via Honolulu and TokyoTokyo
, ; officially , is one of the 47 prefectures of Japan. Tokyo is the capital of Japan, the center of the Greater Tokyo Area, and the largest metropolitan area of Japan. It is the seat of the Japanese government and the Imperial Palace, and the home of the Japanese Imperial Family...
to create the first daily round-the-world through service by a British airline in both directions.at the time Pan Am was the only airline to operate such a service This was to be marketed under the trademark Globetrain.
Cathay Pacific was among airlines attacking Laker's plans. The established transpacific airlines were concerned that Laker was likely to create excess capacity, threatening the profitability as well as long-term viability of these routes. Sir Freddie said Cathay seemed concerned about sharing the Hong Kong — Tokyo route with a competitor because this route was the main source of profits for Cathay Pacific's Asia
Asia
Asia is the world's largest and most populous continent, located primarily in the eastern and northern hemispheres. It covers 8.7% of the Earth's total surface area and with approximately 3.879 billion people, it hosts 60% of the world's current human population...
n and transpacifc operation.
Laker abandoned Globetrain due to its inability to obtain regulatory approvals.
666 new Skytrain routes to Europe proposed
In September 1978, Laker Airways became the UK launch customer for the twin-engined Airbus A300 short-to-medium-haul widebodied jet. The airline ordered 10 series B4 aircraft in a 314-seat single-class configuration to serve a network of up to 666 EuropeEurope
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
an Skytrain routes. The majority of the low-fare network was not going to touch the UK, making it the first pan-European
Pan-European
Pan-European can refer to:*Pan-European identity*International Paneuropean Union, a European unification group*Honda ST series motorcycles, sold as the Pan-European in the UK and Europe...
commercial airline.
Laker's European Skytrain plans were opposed by BCal, which was keen to expand its European network beyond routes linking Gatwick with Paris Charles de Gaulle, Amsterdam
Amsterdam
Amsterdam is the largest city and the capital of the Netherlands. The current position of Amsterdam as capital city of the Kingdom of the Netherlands is governed by the constitution of August 24, 1815 and its successors. Amsterdam has a population of 783,364 within city limits, an urban population...
Schiphol, Brussels
Brussels
Brussels , officially the Brussels Region or Brussels-Capital Region , is the capital of Belgium and the de facto capital of the European Union...
National (Zaventem
Zaventem
Zaventem is a municipality in the province of Flemish Brabant, in Flanders, one of the three regions of Belgium. The municipality comprises the towns of Nossegem, Sint-Stevens-Woluwe, Sterrebeek and Zaventem proper. On January 1, 2006 Zaventem had a total population of 28,651...
) and Genoa
Genoa
Genoa |Ligurian]] Zena ; Latin and, archaically, English Genua) is a city and an important seaport in northern Italy, the capital of the Province of Genoa and of the region of Liguria....
. BCal needed to develop its connecting traffic at Gatwick by growing the European network to include Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
, Switzerland
Switzerland
Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....
, Scandinavia
Scandinavia
Scandinavia is a cultural, historical and ethno-linguistic region in northern Europe that includes the three kingdoms of Denmark, Norway and Sweden, characterized by their common ethno-cultural heritage and language. Modern Norway and Sweden proper are situated on the Scandinavian Peninsula,...
and Southern Europe
Southern Europe
The term Southern Europe, at its most general definition, is used to mean "all countries in the south of Europe". However, the concept, at different times, has had different meanings, providing additional political, linguistic and cultural context to the definition in addition to the typical...
to help it increase loads on flights to Africa, South America
South America
South America is a continent situated in the Western Hemisphere, mostly in the Southern Hemisphere, with a relatively small portion in the Northern Hemisphere. The continent is also considered a subcontinent of the Americas. It is bordered on the west by the Pacific Ocean and on the north and east...
and the US as well as improve profitability. BCal came up with its own proposal, Miniprix, to counter Laker. This alternative was less ambitious than Laker's. Excluding BCal's existing four European routes, it envisaged linking Gatwick with 20 additional points on the Continent
Continent
A continent is one of several very large landmasses on Earth. They are generally identified by convention rather than any strict criteria, with seven regions commonly regarded as continents—they are : Asia, Africa, North America, South America, Antarctica, Europe, and Australia.Plate tectonics is...
. Services were to be operated during off-peak times with BAC One-Eleven 500s and Boeing 707-320Cs. BCal was considering both the McDonnell Douglas MD-80 narrowbody as well as the Airbus A310
Airbus A310
The Airbus A310 is a medium- to long-range twin-engine widebody jet airliner. Launched in July 1978, it was the second aircraft created by Airbus Industrie,a consortium of European aerospace companies, Airbus is now fully owned by EADS and since 2001 has been known as Airbus SAS. the consortium of...
widebody as long-term replacements for its existing narrowbodied aircraft on these proposed routes.
Dan-Air and Britannia Airways
Britannia Airways
Britannia Airways was the largest charter airline in the United Kingdom, rebranded as Thomsonfly in 2005. Its main bases were Gatwick, London Luton, Birmingham, Manchester, Newcastle and Glasgow...
, the UK's leading charter airlines, feared that without reciprocal foreign regulatory approvals Laker would be forced to dump this additional widebody capacity on the European charter market, creating excess capacity that would collapse charter rates.
The CAA heard Laker's as well as BCal's and other UK independent airlines' proposals. It rejected Laker. It subsequently awarded two scheduled licences to Laker Airways, one for Gatwick — Berlin Tegel and the other for Gatwick—Zürich
Zürich
Zurich is the largest city in Switzerland and the capital of the canton of Zurich. It is located in central Switzerland at the northwestern tip of Lake Zurich...
, following British Airways's decision to abandon short-haul routes it had been operating from Gatwick at low frequencies since the late 1970s and to surrender unused licences to the CAA. By the time the CAA awarded Laker these licences, the airline was experiencing financial difficulties and had to dispose of three A300 widebodies to cut costs by reducing the number of aircraft types as well as its overall size. Laker Airways intended to commence operations on both routes during the spring of 1982, operating two flights a day each way utilising spare capacity on its remaining BAC One-Elevens. The airline ceased to exist before the inaugural date.both routes were subsequently operated by Dan-Air
Laker did introduce a short-lived scheduled service between Manchester and Zürich during 1981, which it operated at one flight per day in each direction using a newly delivered A300 widebody. This route, the airline's only short-haul scheduled operation, had come about after British Airways's decision to abandon its loss-making Manchester—Zürich services. Laker's application to have BA's licence transferred to itself resulted in its becoming the UK flag carrier between Manchester and Zürich. The airline's subsequent withdrawal and its demise in turn resulted in Dan-Air becoming the UK flag carrier between Manchester and Zürich.
BCal began offering Miniprix fares on off-peak services on Gatwick—Amsterdam after it had obtained approval from the UK authorities and their Dutch
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
counterparts.
Additional Skytrain routes to the United States
Laker Airways sought to strengthen its position as a transatlantic airline by applying to the CAA and the Civil Aeronautics Board (CAB) for licences to serve additional US cities under the Bermuda II UK-US accord. Both the CAA and the CAB approved the application to commence daily Skytrain services from Gatwick, Manchester and Prestwick to ChicagoChicago
Chicago is the largest city in the US state of Illinois. With nearly 2.7 million residents, it is the most populous city in the Midwestern United States and the third most populous in the US, after New York City and Los Angeles...
, Detroit, San Francisco, Seattle and Washington DC. The company did not have aircraft to use these licences immediately. Its deteriorating financial position did not let it add more aircraft. By the time Laker Airways went out of business, those licences remained unused. They were eventually allocated to other airlines.
Bankruptcy
Laker Airways did not have the financial strength to survive the early 1980s recessionEarly 1980s recession
The early 1980s recession describes the severe global economic recession affecting much of the developed world in the late 1970s and early 1980s. The United States and Japan exited recession relatively early, but high unemployment would continue to affect other OECD nations through at least 1985...
and competition by the established scheduled airlines. Swiss
Switzerland
Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....
aviation enthusiasts' magazine Interavia had reported in a 1978 issue that Laker's issued share capital
Issued share capital
The issued share capital of a company is the total nominal value of the shares of a company which have been issued to shareholders and which remain outstanding . These shares, along with the share premium account, represent the capital invested by the shareholders in the company...
was £10,000. As per the airline's 1980 balance sheet
Balance sheet
In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership or a company. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A...
, the paid-up share capital was £504,000. These figures compared unfavourably with BCal and British Airways, whose issued share capital stood at £12m and £100m respectively.as per the relevant 1978 Interavia edition As long ago as June 1971, when Skytrain was first announced, it was revealed that Laker Airways had net assets
Net assets
Net assets, sometimes referred to as net worth, is the shareholders' equity = assets minus liabilities. The term net assets is commonly used with charities or not for profit entities -- a measurement of their ability to reinvest profits toward their mission....
of £1.68m and tax equalisation reserves of £450,000. Although this amounted to over £2m, it could not disguise the fact that Laker Airways was a financial minnow compared with most of the established flag carriers and BCal. The weak financial position was underlined by the fact that 90% of the share capital was held by Sir Freddie and the remainder by Joan Laker, a former spouse, while Laker Airways was a subsidiary
Subsidiary
A subsidiary company, subsidiary, or daughter company is a company that is completely or partly owned and wholly controlled by another company that owns more than half of the subsidiary's stock. The subsidiary can be a company, corporation, or limited liability company. In some cases it is a...
of Laker Airways (Leasing), which in turn was a subsidiary of Jersey
Jersey
Jersey, officially the Bailiwick of Jersey is a British Crown Dependency off the coast of Normandy, France. As well as the island of Jersey itself, the bailiwick includes two groups of small islands that are no longer permanently inhabited, the Minquiers and Écréhous, and the Pierres de Lecq and...
-incorporated
Incorporation (business)
Incorporation is the forming of a new corporation . The corporation may be a business, a non-profit organisation, sports club, or a government of a new city or town...
Laker Airways (International). This had served the firm well since it allowed it to take advantage of lower tax
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
es and more employer-friendly labour legislation in the Channel Islands
Channel Islands
The Channel Islands are an archipelago of British Crown Dependencies in the English Channel, off the French coast of Normandy. They include two separate bailiwicks: the Bailiwick of Guernsey and the Bailiwick of Jersey...
.compared with the UK However, the fact that the airline's ultimate holding company
Holding company
A holding company is a company or firm that owns other companies' outstanding stock. It usually refers to a company which does not produce goods or services itself; rather, its purpose is to own shares of other companies. Holding companies allow the reduction of risk for the owners and can allow...
was in an off-shore
Offshore financial centre
An offshore financial centre , though not precisely defined, is usually a small, low-tax jurisdiction specializing in providing corporate and commercial services to non-resident offshore companies, and for the investment of offshore funds....
tax haven
Tax haven
A tax haven is a state or a country or territory where certain taxes are levied at a low rate or not at all while offering due process, good governance and a low corruption rate....
outside the jurisdiction
Jurisdiction
Jurisdiction is the practical authority granted to a formally constituted legal body or to a political leader to deal with and make pronouncements on legal matters and, by implication, to administer justice within a defined area of responsibility...
of UK law increased lenders' risk to get their money back.
In addition to undercapitalisation and weak finances, Laker Airways was not backed by any significant asset
Asset
In financial accounting, assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset...
s. The bulk of its fleetincluding all widebodies was leased, as was the maintenance hangar at Gatwick that also housed the airline's offices. The only financial back-up that Laker Airways had was Sir Freddie's stud farm
Stud farm
A stud farm or stud in animal husbandry, is an establishment for selective breeding of livestock. The word "stud" comes from the Old English stod meaning "herd of horses, place where horses are kept for breeding" Historically, documentation of the breedings that occur on a stud farm leads to the...
and his personal wealth.
Economic climate
Both the UK and US were in recession in the early 1980sEarly 1980s recession
The early 1980s recession describes the severe global economic recession affecting much of the developed world in the late 1970s and early 1980s. The United States and Japan exited recession relatively early, but high unemployment would continue to affect other OECD nations through at least 1985...
, characterised by negative/low growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
, high unemployment, high inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
and high interest rate
Interest rate
An interest rate is the rate at which interest is paid by a borrower for the use of money that they borrow from a lender. For example, a small company borrows capital from a bank to buy new assets for their business, and in return the lender receives interest at a predetermined interest rate for...
s. During that period the company was expanding to sustain commercial success generally and that of Skytrain in particular. Laker Airways needed to position itself to take advantage of additional opportunities to expand its business to maintain its status as Britain's second largest independent airline and third principal long-haul operatorbehind British Airways and BCal. Eventually, the company borrowed at high interest rates. The high interest rates were a major cause for the increase in the firm's borrowing costs as well as its debt
Debt
A debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...
s.
Although the Laker Airways fleet contained a greater proportion of modern widebodied aircraft than most of its competitors, which made it cheaper to operate and maintain, the airline felt the sudden tripling of the price
Price
-Definition:In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services.In modern economies, prices are generally expressed in units of some form of currency...
of crude oil in the aftermath of the Shah of Iran
Mohammad Reza Pahlavi
Mohammad Rezā Shāh Pahlavi, Shah of Iran, Shah of Persia , ruled Iran from 16 September 1941 until his overthrow by the Iranian Revolution on 11 February 1979...
's fall from power. Laker Airways needed to pay the high spot market oil prices because it could not hedge
Hedge (finance)
A hedge is an investment position intended to offset potential losses that may be incurred by a companion investment.A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, many types of...
its future supplies by negotiating fixed-rate, forward purchases. Such financial derivatives were non-existent.
The airline did attempt to protect itself against sterling-dollar exchange rate
Exchange rate
In finance, an exchange rate between two currencies is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in terms of another currency...
fluctuations by buying US dollars at a fixed rate. This was a necessity as most of its costs were in dollars whereas most of its income
Income
Income is the consumption and savings opportunity gained by an entity within a specified time frame, which is generally expressed in monetary terms. However, for households and individuals, "income is the sum of all the wages, salaries, profits, interests payments, rents and other forms of earnings...
was in pounds sterling. The company's growing problems were exacerbated by wrongly anticipating the sterling-dollar exchange rate for the 1981/2 winter season. During all 1980 and the better part of 1981 the rate was 1:2. The pound could buy two dollars because sterling was kept high by Britain's North Sea
North Sea
In the southwest, beyond the Straits of Dover, the North Sea becomes the English Channel connecting to the Atlantic Ocean. In the east, it connects to the Baltic Sea via the Skagerrak and Kattegat, narrow straits that separate Denmark from Norway and Sweden respectively...
oil export
Export
The term export is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to as an "exporter" who is based in the country of export whereas the overseas based buyer is referred to as an "importer"...
s and the importance these exports assumed against high crude oil prices. Laker Airways did not anticipate the speed of sterling's subsequent decline. This meant that it needed to pay more for dollars than it had originally budget
Budget
A budget is a financial plan and a list of all planned expenses and revenues. It is a plan for saving, borrowing and spending. A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods...
ed, leading to an outflow of funds at a time of financial crisis.
Strategic mistakes
The Skytrain concept was targeting people clamouring for discounted air fares across the AtlanticAtlantic Ocean
The Atlantic Ocean is the second-largest of the world's oceanic divisions. With a total area of about , it covers approximately 20% of the Earth's surface and about 26% of its water surface area...
. This was a market the established transatlantic scheduled carriers had ignored, mainly because it was not profitable given their high cost structures and complex organisations.
Although Laker Airways had lower costs and a simpler organisation, it needed high year-round loads to make money at discount prices. Most of the passengers were likely to travel during the summer peak period. This made it challenging to achieve high loads during the winter.
The beginning of the end
The beginning of the end came when Pan Am, a transatlantic competitor, decided in October 1981 to drop its lowest economy fares where it was in competition with Skytrain by up to 66%. Laker retaliated by introducing a cut-price premium cabin branded Regency Class. Following the end of the 1981/2 winter peak, there was insufficient traffic to support four airlines competing across the North Atlantic between January and March. At this point, state-ownedPublic sector
The public sector, sometimes referred to as the state sector, is a part of the state that deals with either the production, delivery and allocation of goods and services by and for the government or its citizens, whether national, regional or local/municipal.Examples of public sector activity range...
British Airways and TWA, Laker's other transatlantic competitors, dropped their fares by a similar amount. As a result, Laker's loads and cash inflow halved between October 1981 and February 1982.
The final blow
The final blow came when British Caledonian (BCal) found out about a rescue package that McDonnell Douglas and General ElectricGeneral Electric
General Electric Company , or GE, is an American multinational conglomerate corporation incorporated in Schenectady, New York and headquartered in Fairfield, Connecticut, United States...
(GE), the suppliers of DC-10 widebodied aircraft and its CF6 engines to Laker as well as BCal, had put together.GECAS, a unit of GE, were lessors of some of the widebodied aircraft in Laker's fleet BCal wrote to other operators of the DC-10/CF6 in Europe saying that BCal on behalf of all European operators warned McDonnell Douglas and GE that in the event of the rescue for Laker being approved, none of these airlines would do business with those companies. McDonnell Douglas and GE did not to go ahead. Laker Airways collapsed during the early morning of 5 February 1982 with debts of £270m, the biggest corporate failure in Britain.
Sir Freddie sued British Airways, BCal, Pan Am, TWA, Lufthansa
Lufthansa
Deutsche Lufthansa AG is the flag carrier of Germany and the largest airline in Europe in terms of overall passengers carried. The name of the company is derived from Luft , and Hansa .The airline is the world's fourth-largest airline in terms of overall passengers carried, operating...
, Air France
Air France
Air France , stylised as AIRFRANCE, is the French flag carrier headquartered in Tremblay-en-France, , and is one of the world's largest airlines. It is a subsidiary of the Air France-KLM Group and a founding member of the SkyTeam global airline alliance...
, Swissair
Swissair
Swissair AG was the former national airline of Switzerland.It was formed from a merger between Balair and Ad Astra Aero , in 1931...
and other airlines for conspiracy to put his airline out of business by predatory pricing
Predatory pricing
In business and economics, predatory pricing is the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors. If competitors or potential competitors cannot sustain equal or lower prices...
. They settled out of court for US$
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
50m, which let Laker Airways pay its debts. British Airways reached a separate out-of-court agreement with Sir Freddie personally for £8m.
Following Laker Airways's demise at the end of the first week of February in 1982, a number of aircraft the airline had operated at that time were quickly re-allocated to other operators. These included two McDonnell Douglas DC-10-10 widebodies that joined the fleet of British Caledonian Charter, BCal's charter division, four BAC One-Eleven 300 narrowbodies that replaced the seven One-Eleven 200s BCal had inherited from British United Airways
British United Airways
British United Airways was a private, independentindependent from government-owned corporations British airline formed as a result of the merger of Airwork Services and Hunting-Clan Air Transport in July 1960, making it the largest wholly private airline based in the United Kingdom at the time...
at the time of its formation and two Airbus A300 B4 widebodies that were placed with Air Jamaica
Air Jamaica
Air Jamaica is the current national airline of Jamaica. It is has been owned and operated by Caribbean Airlines since 26 May 2011. The airline, headquartered in Piarco, Trinidad and Tobago also has administrative offices located in Norman Manley International Airport in Kingston, Jamaica...
.
Lasting impact on the industry
While Laker Airways failed, low fares and buying meals on board are becoming popular. Similarly, buying tickets on the day of travel has been adopted by airline shuttles plying the United StatesUnited States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
' Northeast corridor and on the Eastern shores of Australia.
Laker Airways's most important legacy was that pioneering low-fare services across the Atlantic helped pave the way for low-cost airlines such as EasyJet
EasyJet
EasyJet Airline Company Limited is a British airline headquartered at London Luton Airport. It carries more passengers than any other United Kingdom-based airline, operating domestic and international scheduled services on 500 routes between 118 European, North African, and West Asian airports...
and Ryanair
Ryanair
Ryanair is an Irish low-cost airline. Its head office is at Dublin Airport and its primary operational bases at Dublin Airport and London Stansted Airport....
, liberating the industry from the regulatory straitjacket IATA had imposed for decades in collusion with governments. These governments invariably were sole or majority owners of most IATA airlines. This was Laker Airways's greatest contribution to its industry's future development.
Sir Freddie Laker became an inspiration and cautionary tale for Sir Richard Branson and Virgin Atlantic Airways
Virgin Atlantic Airways
Virgin Atlantic Airways Limited is a British airline owned by Sir Richard Branson's Virgin Group and Singapore Airlines...
, when they set about deciding their long-term strategy.
Incidents and accidents
There are three recorded non-fatal incidents involving Laker Airways aircraft.- The first incident occurred on 17 August 1969. It involved a BAC One-Eleven 320L (registration: G-AVBX) operating a charter flight from KlagenfurtKlagenfurt-Name:Carinthia's eminent linguists Primus Lessiak and Eberhard Kranzmayer assumed that the city's name, which literally translates as "ford of lament" or "ford of complaints", had something to do with the superstitious thought that fateful fairies or demons tend to live around treacherous waters...
, AustriaAustriaAustria , officially the Republic of Austria , is a landlocked country of roughly 8.4 million people in Central Europe. It is bordered by the Czech Republic and Germany to the north, Slovakia and Hungary to the east, Slovenia and Italy to the south, and Switzerland and Liechtenstein to the...
, to Berlin Tegel, Germany, under contract to West Berlin package holidayPackage holidayA package holiday or package tour consists of transport and accommodation advertised and sold together by a vendor known as a tour operator. Other services may be provided like a rental car, activities or outings during the holiday. Transport can be via charter airline to a foreign country...
company Flug-Union Berlin. The aircraft made an emergency landingEmergency landingAn emergency landing is a landing made by an aircraft in response to a crisis which either interferes with the operation of the aircraft or involves sudden medical emergencies necessitating diversion to the nearest airport.-Types of emergency landings:...
at Hanover Airport because of an electrical fire in an aerial tuning unit in the forward cabin area behind the flight deck. The fire started when the aircraft was 30 nautical miles (55.6 km) from HanoverHanoverHanover or Hannover, on the river Leine, is the capital of the federal state of Lower Saxony , Germany and was once by personal union the family seat of the Hanoverian Kings of Great Britain, under their title as the dukes of Brunswick-Lüneburg...
, filling the cabin with fumes. This reduced visibility on the flight deck to 18 inches (45.7 cm). Forward vision was nil. Using the emergency oxygen systemEmergency oxygen systemAircraft emergency oxygen systems are emergency equipment fitted to commercial aircraft, intended for use when the cabin pressurisation system has failed and the level of oxygen in the cabin atmosphere drops below a safe level...
, the captainPilot in commandThe pilot in command of an aircraft is the person aboard the aircraft who is ultimately responsible for its operation and safety during flight. This would be the "captain" in a typical two- or three-pilot flight crew, or "pilot" if there is only one certified and qualified pilot at the controls of...
began his emergency descentDescent (aircraft)A descent during air travel is any portion where an aircraft decreases altitude, and is the opposite of an ascent or climb. Descents are an essential component of an approach to landing...
from FLFlight levelA Flight Level is a standard nominal altitude of an aircraft, in hundreds of feet. This altitude is calculated from the International standard pressure datum of 1013.25 hPa , the average sea-level pressure, and therefore is not necessarily the same as the aircraft's true altitude either...
250 under radar guidance from Hanover air traffic controlAir traffic controlAir traffic control is a service provided by ground-based controllers who direct aircraft on the ground and in the air. The primary purpose of ATC systems worldwide is to separate aircraft to prevent collisions, to organize and expedite the flow of traffic, and to provide information and other...
(ATC), while the co-pilot depressurised the aircraft and attempted to open a side window to clear the smoke. The cabin crew were deprived of both their public address system and intercom with the flight deck during the descent. Due to lack of time before landing, emergency procedures were abandoned. Following the successful emergency landing, the aircraft came to a rapid halt clear of the runway. By the time the last of the 89 occupants (five crew and 84 passengers) had evacuated the aircraft, the fire had burned through the pressure hull and was being fed by oxygen. There were no injuries. The fire was extinguished on the ground. Following the incident, the aircraft manufacturer issued several service bulletins (SBs) listing action to be taken as mandated by the UK's Airworthiness Requirements Board (ARB). These SBs were circulated to all One-Eleven operators. The ARB also issued a more general warning to all One-Eleven operators regarding the need to ensure that oxygen leaks do not create fire hazards, and that oxygen lines are routed away from potential fire sources. As a result of this incident, the ARB also began to pay close attention to the fire resistance of aircraft fittings and furnishings due to their potential to form major hazards in oxygen-fed inflight fires. The flight deck crew subsequently received the Queen's Commendation for Valuable Service in the AirQueen's Commendation for Valuable ServiceThe Queen's Commendation for Valuable Service is a British military award that recognises meritorious service during, or in support of, operations...
, while the cabin crew were commended for their action during the emergency. The citationAwardAn award is something given to a person or a group of people to recognize excellence in a certain field; a certificate of excellence. Awards are often signifiedby trophies, titles, certificates, commemorative plaques, medals, badges, pins, or ribbons...
for the Queen's Award stated that "the crew displayed a high standard of airmanshipAirmanshipAirmanship is skill and knowledge applied to aerial navigation, similar to seamanship in maritime navigation. Airmanship covers a broad range of desirable behaviors and abilities in an aviator...
in circumstances which could have had very serious consequences".
- The second incident occurred on 21 March 1981. It involved a McDonnell-Douglas DC-10-30 operating a scheduled service from Barbados to London Gatwick on behalf of Caribbean Airways. The aircraft suffered tyreburst on takeoff from BarbadosGrantley Adams International AirportGrantley Adams International Airport , is found in Seawell, Christ Church on the island of Barbados. The former name of the airport was Seawell Airport before being dedicated in honour of the first Premier of Barbados, Sir Grantley Herbert Adams in 1976. The airport's timezone is GMT –4, and is...
, as a result of hitting an uneven patch on the runway. This caused most overhead lockers to open. Rather than returning to Barbados, the flight deck crew decided to continue to London Gatwick. Due to the flight's early arrival over the UK, ATC instructed the flight deck crew to holdHolding (aviation)In aviation, holding is a maneuver designed to delay an aircraft already in flight while keeping it within a specified airspace.-Implementation:...
for 25 minutes, following which the aircraft landed safely at Gatwick. There were no injuries among the 340 passengers. According to an airline spokesman, the hot rubber from the burst tyres had caused wiring short-circuits. These in turn had affected some flightdeck instruments.
- The third incident occurred on 7 May 1981. It involved an Airbus A300B4 operating a charter flight from LanzaroteLanzaroteLanzarote , a Spanish island, is the easternmost of the autonomous Canary Islands, in the Atlantic Ocean, approximately 125 km off the coast of Africa and 1,000 km from the Iberian Peninsula. Covering 845.9 km2, it stands as the fourth largest of the islands...
to London Gatwick. Following the failure of the aircraft's port engine soon after takeoff from Lanzarote, the flightdeck crew decided to divert to Las PalmasLas Palmas de Gran CanariaLas Palmas de Gran Canaria commonly known as Las Palmas is the political capital, jointly with Santa Cruz, the most populous city in the Autonomous Community of the Canary Islands and the ninth largest city in Spain, with a population of 383,308 in 2010. Nearly half of the people of the island...
for a single-engine landing. The aircraft landed safely. There were no injuries among the 305 occupants (ten crew and 295 passengers).
Other Laker Airways operations
- Laker Airways (Bahamas)Laker Airways (Bahamas)-History:Laker Airways was a US-registered airline based in the Bahamas to which Sir Freddie Laker lent his name and operational expertise. The airline was established in 1992 with financial assistance from Oscar Wyatt, a Texas oilman and business partner of Sir Freddie Laker. The initial fleet...
was an airline based in the Bahamas to which Sir Freddie Laker lent his name and operational expertise. The airline was established in 1992 with financial assistance from Oscar WyattOscar WyattOscar Sherman Wyatt, Jr. is an American businessman. He was the founder of Coastal Corporation. In 2007 he pled guilty in a U.S. federal court to illegally sending payments to Iraq under the Oil for Food program.-Early history:...
, a TexasTexasTexas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...
oilman and business partner of Sir Freddie Laker. The fleet comprised two Boeing 727Boeing 727The Boeing 727 is a mid-size, narrow-body, three-engine, T-tailed commercial jet airliner, manufactured by Boeing. The Boeing 727 first flew in 1963, and for over a decade more were built per year than any other jet airliner. When production ended in 1984 a total of 1,832 aircraft had been produced...
-200 Advanced narrowbodied jet aircraft. Laker Airways (Bahamas) was wound up in 2005. - Laker Airways, Inc was a US-registered airline Sir Freddie Laker co-owned with Oscar Wyatt. The company commenced operations in April 1996 with a leased fleet of four McDonnell Douglas DC-10-30 widebodied jets and 300 employees. Twice-weekly low-fare, high-quality scheduled services linking Fort Lauderdale in Florida with London Gatwick were inaugurated on 5 July 1996, followed by similar services linking OrlandoOrlando, FloridaOrlando is a city in the central region of the U.S. state of Florida. It is the county seat of Orange County, and the center of the Greater Orlando metropolitan area. According to the 2010 US Census, the city had a population of 238,300, making Orlando the 79th largest city in the United States...
with Manchester and Glasgow PrestwickGlasgow Prestwick International AirportGlasgow Prestwick Airport is an international airport serving the Greater Glasgow urban area, situated northeast of the town of Prestwick in South Ayrshire and 32 miles from the city centre of Glasgow....
. These flights featured an executive classBusiness classBusiness class is a travel class available on many commercial airlines and rail lines, known by brand names which vary by airline or rail company. In the airline industry, it was originally intended as an intermediate level of service between economy class and first class, but many airlines now...
with leather seats, seat back TVs and inflight catering marketed as Regency Class Service. A daily Miami-Gatwick service was to start in March 1997. Laker Airways, Inc ceased operations in 1998.