British Caledonian

From Wikipedia, the free encyclopedia

Contents 1 The rise and fall of the Second Force 1.1 A new chapter in British commercial aviation 1.2 A force to be reckoned with 1.3 Plan S 1.4 Moving the goal posts 1.5 Joining the widebody club 1.6 A new transatlantic air services agreement 1.7 The Gatwick Year 1.7.1 Reaching new financial heights 1.7.2 Linking Heathrow and Gatwick by air 1.7.3 Supersonic ambitions 1.8 Further diversification and expansion at the end of the 1970s 1.8.1 Launching a new widebodied aircraft 1.8.2 A helicopter subsidiary 1.9 The 1980s roller coaster 1.9.1 Accelerated expansion at the beginning of the 1980s 1.9.1.1 Expanding eastwards 1.9.1.2 An engine overhaul plant 1.9.2 An unexpected setback 1.9.2.1 A charter arm 1.9.2.2 A commuter division 1.9.2.3 Further expansion into Europe 1.9.3 Launching a new narrowbodied plane 1.9.4 A flight training academy 1.9.5 Changing the game plan 1.9.6 A major crisis 1.9.6.1 Launching the DC-10's successor 1.9.6.2 Rapidly deteriorating financial performance 1.9.6.3 Diminishing future prospects 1.9.7 Three-way battle to gain control of crisis-stricken airline 1.9.7.1 British Airways' agreed takeover bid 1.9.7.2 Air Europe's unsolicited counter bid 1.9.7.3 A new twist 1.9.7.4 British Airways' revised bid backed up by bullying tactics carries the day 1.9.8 End of a tale 1.10 Reasons for the failure of the Second Force concept and for British Caledonian's demise 2 Facts of interest 3 Incidents and accidents 4 Coding data 5 External links

[edit] The rise and fall of the Second Force

[edit] A new chapter in British commercial aviation

British Caledonian Airways Ltd. (BCal) was formed on St. Andrews Day (November 30) in 1970 when Caledonian Airways acquired British United Airways (BUA) from its previous owner, the British and Commonwealth group. This effectively constituted a "reverse takeover" of the bigger airline by the smaller one.

The deal concerning Caledonian's acquisition of BUA from British and Commonwealth did not include the assets of BUIA, BUA's regional affiliate, which BUA's former parent company continued to own.

BCal itself was established as a wholly owned subsidiary of Caledonian Airways (Prestwick) Ltd.. A number of other wholly owned subsidiaries were established as well. These included British Caledonian Aircraft Trading, which was set up to acquire and dispose of aircraft on behalf of the airline. It became one of the most profitable parts of the business. BCal also owned two package tour companies - Blue Sky Holidays and Golden Lion Tours - as well as several hotels in Spain and Sierra Leone. In addition, BCal inherited BUA's minority stakes in Gambia Airways and Sierra Leone Airways (SLA).

The airline's formation followed the publication of the Edwards Committee report entitled An Inquiry into the Future of British Civil Aviation in 1969. It recommended the creation of a so-called "Second Force", private sector carrier to take on the state-owned Corporations, i.e. British European Airways (BEA) and British Overseas Airways Corporation (BOAC), by providing competing domestic and international scheduled services on trunk routes.

The new airline established its headquarters and operational base at Gatwick Airport and the late Sir Adam Thomson, one of the two co-founders as well as one of the main shareholders of Caledonian Airways, became its chairman and chief executive.

The fleet inherited from both of its predecessors comprised 31 jet aircraft consisting of eleven long-haul aircraft (seven ex-Caledonian Boeing 707-320Cs and four ex-BUA Vickers VC-10-1103/1109s) as well as 20 short-haul planes (twelve BAC 1-11-500s [eight ex-BUA and four ex-Caledonian] and eight BAC 1-11-200s [all ex-BUA]). The merged entity's paid-up share capital was £12m - more than that of any other wholly privately owned, independent British airline at the time - and its combined workforce numbered 4,500. This made BCal the UK's foremost independent airline at the time. (Although Dan-Air and Britannia Airways eventually exceeded BCal's total annual passenger numbers from 1975 onwards, BCal maintained its position as Britain's leading independent international scheduled airline, in terms of both the number of scheduled passengers carried each year as well as in terms of its total yearly scheduled capacity measured in passenger kilometers - the distance covered by its scheduled operation multiplied by the number of scheduled passengers carried within a twelve-month period, throughout its 17-year existence.) The newly created company's output measured in available capacity tonne kilometers - a figure arrived at by multiplying the number of [metric] tonnes available for the carriage of revenue load (passengers, cargo and mail) on each flight sector by the sector's distance in kilometers - was greater than that of some of the smaller, contemporary European flag carriers, such as Aer Lingus, SABENA or Swissair.

The institutional investors that had been instrumental in helping the late Sir Adam Thomson and the late John de la Haye in launching Caledonian Airways back in 1961 were also among the sharehoders of the newly constituted airline. They included the AA, GUS, Hogarth Shipping, Lyle Shipping, Investors in Industry (as 3i used to be known then), Kleinwort Benson (now part of Dresdner Kleinwort Wasserstein) and the Royal Bank of Scotland (RBS).

The merged entity initially traded under the interim name Caledonian//BUA before adopting the British Caledonian name on September 1, 1971. It carried a total of 2.6m passengers during its first year of operation.

During the interim period the VC-10s, five of the eight former BUA 1-11-500s as well as the eight 1-11-200s were operating the merged entities' scheduled services as these aircraft were already configured in a lower density scheduled seating arrangement, with some of the aircraft - notably the long-haul VC-10s - featuring a contemporary standard first and economy, two-class configuration. These aircraft were allocated to the airline's "BUA Division", which was responsible for all scheduled passenger operations, pending full integration. All former Caledonian aircraft as well as three former BUA 1-11-500s featured a high density, single class seating arrangement. Some of the 707s had an all-cargo configuration. These aircraft were allocated to the company's "Caledonian Division", which was responsible for all charter and all-cargo (both scheduled and non-scheduled) operations during that period. This meant that at that time roughly 55% of the firm's combined aircraft fleet was allocated to its scheduled passenger division whereas the remaining 45% of the fleet was allocated to the charter and all-cargo division. However, as the charter division's aircraft were configured in a higher density seating configuration than the scheduled division's planes and charter flights generally tended to have higher load factors than scheduled services, two-thirds of all passengers - representing the bulk of the new carrier's passenger business - were carried on its charter flights during that time.

Former BUA air hostesses still wearing that airline's blue uniforms were working alongside their tartan-clad, former Caledonian counterparts in the cabins of all passenger flights - scheduled as well as non-scheduled - during the interim period. Eventually, the attractive Caledonian tartan uniforms became BCal's standard uniform for all female cabin crew members.

Following the end of the interim period, all former BUA aircraft were repainted adopting Caledonian's livery featuring a prominent Scottish Lion Rampant on its aircraft's fins.

The "Second Force" inherited BUA's extensive network of scheduled routes serving the British Isles, Continental Europe, Africa and South America. The newly formed airline's future scheduled ambitions received a major boost when the UK Government agreed to transfer BOAC's West African trunk routes to Nigeria and Ghana as well as its North African route to Libya to it. (These routes represented 3% of BOAC's annual, world-wide turnover.) The Government also agreed to transfer an unused BEA route licence to serve Casablanca in Morocco. Furthermore, the Government agreed to license BCal to operate non-stop scheduled services between London and Paris and to begin negotiations with the French authorities to secure reciprocal approval for BCal to be able to commence scheduled operations on what was then the busiest air route in Europe. BCal moreover received Government assurances that it would be designated as the UK's sole flag carrier on all routes transferred to it and that it would be assisted in obtaining traffic rights for additional, selected scheduled routes where it wished to compete with the Corporations, including the lucrative London-New York and London-Los Angeles routes. [1]

Another important concession by the Government designed to improve the competitiveness of the "Second Force" was to permit it to provide a first class cabin on its East African routes. (BUA, from whom BCal inherited these routes, had been prevented from offering a first class on its East African "Skycoach" schedules. To compensate for this loss of competitiveness, the late Sir Freddie Laker, BUA's managing director from 1960 to 1965, had come up with the novel idea of designing a cargo door to be installed on the right-hand side of the forward fuselage of that airline's long-haul VC-10s, where the first class cabin was normally located. This modification permitted the carriage of additional freight instead of first class passengers on the East African routes. [2]

In addition, BCal became the Government's "chosen instrument of the private sector". This meant that the Government agreed to accord preferential status to BCal's worldwide scheduled ambitions, especially in the award of additional licences to operate scheduled services on major domestic and international trunk routes. The Government hoped that putting BCal's requirements ahead of other UK-based Independent airlines' rival scheduled ambitions would help the new "Second Force" develop into a fully fledged, major international scheduled airline, thereby enabling it to acquire the "critical mass" to challenge the Corporation's near-monopoly among UK-based scheduled airlines.

The Central London air terminal at Victoria Station in London's West End, which the "Second Force" inherited from BUA as well, allowed passengers to complete all check-in formalities - including dropping off their hold luggage - before boarding their train to the airport. [3]

[edit] A force to be reckoned with

BCal commenced scheduled operations from Gatwick to Lagos and Accra on April 1, 1971. Scheduled services from Gatwick to Tripoli began on July 1, 1971. On each of these routes BCal replaced BOAC as the designated UK flag carrier. On November 1, 1971 BCal inaugurated scheduled flights between London Gatwick and Paris Le Bourget Airport, where it competed with BEA's London Heathrow-Paris Orly Airport service. This was the first time ever that a wholly privately owned, Independent UK airline commenced a fully fledged scheduled service on a major international European trunk route.

On November 1, 1972 BCal extended its East African network to the Seychelles.

The same year BCal also introduced a new Edinburgh-Newcastle-Copenhagen regional scheduled service to live up to its claim of being "Scotland's international airline". This service complemented the Glasgow-Newcastle-Amsterdam regional route BCal had inherited from BUA.

1972 was also the year BCal introduced the UK's first-ever "walk-on", "walk-off" type of operation - including a reduced, "no frills" style on-board service - on the two main domestic trunk routes linking London and Scotland, at the time the only profitable scheduled services plying UK mainland domestic trunk routes. The airline introduced simultaneous night-time departures from Gatwick as well as Glasgow and Edinburgh resulting in an overall frequency increase to six daily round-trips on each route. The company charged very low fares on these night-time services, which were marketed under the "Moonjet" trademark. ("Moonjet" was one of several trademarks BCal had begun using to market specific services during the early 1970s. Other trademarks used at the time included "Interjet" for the airline's domestic jet schedules and "Eurojet" for the company's jet-operated, international European scheduled services. However, these trademarks were dropped some time during the late '70s.) This move, which was modelled on the high-frequency-low-fares operation run by Pacific Southwest Airlines (PSA), the original "no frills" airline, on the busy San Diego-L.A.-San Francisco air corridor in California, boosted passenger numbers as well as the profitability on both routes. (Interestingly, Jet Airways, India's leading private sector airline, introduced a similar operation between Mumbai and Delhi as well as Delhi and Bangalore respectively, two of the busiest domestic trunk routes in India, during the 1990s.)

During that year larger capacity, longer range and more fuel-efficient Boeing 707s that had been re-configured featuring a lower density, two-class scheduled configuration began replacing VC-10s on BCal's South American routes, where the 707's greater range enabled the airline to commence non-stop flights between London Gatwick and Rio de Janeiro, as well as on the West African trunk routes to Nigeria and Ghana.

To support its ambitious expansion plans, BCal acquired a number of additional, second-hand Boeing 707s from various sources through its British Caledonian Aircraft Trading subsidiary during the early 1970s. This included a pair of 320C series aircraft procured on a long-term lease from Britannia Airways featuring a two-class, "widebody look" interior. These aircraft were used to inaugurate the airline's transatlantic scheduled routes to New York and L.A. where the established competition was operating widebodied aircraft, such as the Boeing 747 "jumbo jet". It was thought that the aircraft's widebody style interiors would leave passengers under the impression that BCal was operating widebodied aircraft as well when in fact they were operating older generation, narrowbodied planes. During that time BCal also acquired two additional, second-hand BAC 1-11-500s, which were sourced from Court Line and Transbrasil respectively. (At the same time the airline sold the original pair of Boeing 707-399Cs [-99 being Boeing's customer designator for Caledonian] that were delivered to Caledonian Airways direct from the manufacturer's plant in 1967 to PIA. In addition, a VC-10 and a 1-11-200 were sold to the RAE, which was using the aircraft as testbeds.)

BCal inaugurated its two transatlantic "flagship" services from London Gatwick to New York JFK and from Gatwick to Los Angeles International Airport on April 1, 1973. Again, this occasion marked the first time that an independent British airline commenced transatlantic scheduled operations on what are sometimes referred to as two of aviation's "Blue Riband" routes linking the UK and the US. (Although British Eagle had managed to get a licence for a daily London Heathrow - New York JFK scheduled service due to commence in 1965, its inaugural flight was cancelled when the then UK Minister of Transport revoked its licence as a result of BOAC's last minute intervention.)

In 1973 BCal also inaugurated its fourth scheduled mainland domestic route between London Gatwick and Manchester (in addition to the Gatwick-Glasgow, Gatwick-Edinburgh and Gatwick-Belfast routes inherited from BUA). The new service was subcontracted to British Island Airways (BIA), BUIA's successor, which was operating two daily return trips on that route using its Handley Page Dart Herald turboprops.

On March 20, 1974 BCal switched its Gatwick-Paris services to the then brand-new Charles de Gaulle airport near the Northern Paris suburb of Roissy-en-France, thus becoming the first scheduled carrier to operate between London and the new Paris airport.

To further extend the network's reach and its connectivity, BCal agreed to host Dan-Air's new, twice daily Gatwick-Newcastle flights, which commenced in March 1974, in its computerised reservation system (CRS).

June 1974 saw the launch of BCal's non-stop Gatwick-Brussels scheduled route, the third European trunk route on which the airline operated scheduled services in competition with the incumbent flag carriers' established services from Heathrow. (In addition to Gatwick-Paris, the company already operated daily non-stop Gatwick-Amsterdam scheduled services, the route being one of the European routes inherited from BUA.)

[edit] Plan S

The creation of British Airways (BA) as a result of the 1974 BEA-BOAC merger (one of the other two recommendations contained in the 1969 Edwards Report on the future of British civil aviation) came against the background of the first global oil crisis in the wake of the 1973 Arab-Israeli War, which led to the quadrupling of the price of a barrel of oil as a consequence of OPEC's decision to boycott the West in retaliation for its support of Israel during that war. This meant that the newly merged Corporation's original revenue and profit projections were far too optimistic. During that time BA began exerting pressure on the Government, at the time its sole owner as well as the regulator for all UK airlines, to curtail the activities of its Independent competitors generally and of the "Second Force" in particular.

The difficult operating environment at the time did not affect BA alone. In fact, the major scheduled airlines were all losing horrendous amounts of money at the time. The sudden spike in the oil price caused a major recession during the second half of 1974 as well as the first half of 1975 with much reduced demand for air travel. This, in turn, led to the collapse of a number of prominent travel companies and their associated airlines - most notably the Court Line group and Horizon Holidays, the latter having provided work for three BCal short-haul aircraft prior to its collapse. There was also massive overcapacity on the North Atlantic.

These circumstances forced BCal to put in place a major programme of retrenchment, known internally as Plan "S" ("S" for "survival") at the time, to avoid finding itself in a Court Line type of situation. [4] [5]

Plan "S" began to be implemented from November 1, 1974 onwards. It resulted in route cut-backs - including the suspension of the transatlantic "flagship" services, the immediate withdrawal and subsequent disposal of the remaining VC-10 long-haul aircraft, the temporary grounding of a number of short-haul aircraft pending disposal as well as several hundred redundancies among the company's staff (800 out of a total workforce of 5,600).

In addition to withdrawing from the prestigious long-haul routes to New York and L.A. after only 18 months, other specific measures the airline took at the time to ensure its survival included dropping all scheduled flights to Belfast, Copenhagen, Gibraltar, Ibiza, Malaga, Palma de Mallorca and Tunis as well as cutting the number of frequencies on the company's Gatwick-Glasgow and Gatwick-Edinburgh routes from six to four daily round trips. The firm furthermore retired its remaining two VC-10s. One of these aircraft was sold to Air Malawi enabling it to take over the Gatwick-Nairobi-Blantyre route, which BCal had been contracted to operate. (The other aircraft was acquired by the Omani government.) Moreover, eight of the 14-strong 1-11-500 fleet were temporarily grounded. Four of these aircraft were subsequently sold. (Dan-Air acquired two and Monarch Airlines one of these aircraft in 1975.) A fifth aircraft was disposed of to Philippine Airlines in 1976. Two of the temporarily grounded aircraft that remained in BCal's fleet were leased out to Air Malta and Austrian Airlines respectively for the duration of the 1975 summer timetable period. Another aircraft was stationed at West Berlin's Tegel Airport during the month of July of that year to fulfill a short-term charter contract to carry Turkish migrant workers to and from Istanbul on behalf of a local tour operator. BCal also decided to increase its 707 freighter fleet from one to four aircraft and to acquire a five-seater Piper PA-23 "Aztec" for serving the rapidly growing executive charter market. These changes to the composition of the BCal fleet left the airline with 25 operational aircraft for the 1975 summer season, comprising eleven Boeing 707-320C long-haul aircraft (including four pure freighters) and 13 BAC 1-11 short-haul planes (six larger series 500 and seven smaller series 200 models) as well as a single Piper "Aztec". In a further move to reduce its operating costs, BCal decided to contract out its scheduled operations between Gatwick and Le Touquet as well as between Gatwick and Rotterdam to BIA. The reason for replacing BCal's 1-11-200 jet aircraft with that airline's Herald turboprops on these routes with the beginning of the 1975 summer timetable period was the high price of jet fuel, which had made BCal's own jet operation on the aforesaid routes uneconomic.

Even during this period of severe retrenchment, BCal continued launching scheduled services to new destinations. Dakar joined the airline's network on November 1, 1974, followed by Kinshasa on April 1, 1975. From 1975 onwards, the BIA-operated BCal service to Manchester was extended to Blackpool and the Isle of Man during the peak summer travel period. Furthermore, BCal agreed to continue holding details of the Gatwick-Belfast service - an important feeder route for its long-haul services, which had been taken over by British Midland Airways (as bmi used to be known then) following BCal's withdrawal from that route - in its CRS.

As a result of the "success" of Plan "S", BCal's fortunes quickly recovered and the airline managed to end its financial year ended September 30, 1975 with a small profit of £250,000 after having lost £5.6m - almost half of its paid-up share capital - the year before.

[edit] Moving the goal posts

The then Secretary of State for Trade Peter Shore, conducted a review of the Government's aviation policy and in 1976 announced a new "spheres of influence" policy that ended "dual designation" for British airlines on all long-haul routes. As a result of this new aviation policy BA and BCal were no longer permitted to run competing scheduled services on the same long-haul routes and the latter was forced to withdraw from the East African routes inherited from BUA as well as the London-New York and London-Los Angeles routes, leading to the revocation of BCal's Gatwick-JFK and Gatwick-L.A. licences. In return, BCal became the sole British flag carrier to the entire South American mainland by taking over the former BA routes to Colombia, Peru and Venezuela. The Government's new "spheres of influence" aviation policy effectively confined BCal's long-haul scheduled operations to two continents only, i.e. Africa and South America. [6] The loss of BCal's East African routes enabled the airline to replace the one-stop scheduled service via Nairobi to Lusaka with non-stop flights.

During 1976 BCal's recovery continued leading to the introduction of two new scheduled routes to Algiers and Oran and the reinstatement of scheduled services to Tunis. It also led to BCal's decision to bring the operation of its Gatwick-Manchester service back in-house by replacing the two daily round-trips BIA had operated with its Herald turboprops on that route since the route's launch in 1973 with a three-times-daily BCal 1-11 schedule starting January 1, 1977.

[edit] Joining the widebody club

Following an exhaustive, three-week evaluation of the Boeing 747, the McDonnell Douglas DC-10 and the Lockheed L-1011 "Tristar" during the summer of 1976, BCal chose the DC-10 as the widebodied aircraft best suited to serve its expanding long-haul route network. The airline placed an order for two long range series 30 aircraft with an option on another two. To ensure an early delivery, the company took over a delivery slot for two aircraft that had originally been booked by China Airlines.

BCal made its widebody debut on February 13, 1977 when the first of the two DC-10s on firm order arrived at the airline's Gatwick base after a non-stop delivery flight from the manufacturer's Long Beach plant in California. This occasion marked the first time ever a widebodied aircraft wore the company's livery.

The aircraft, which was configured in a 265-seat, two-class layout, entered commercial airline service on BCal's busy West African trunk routes to Nigeria and Ghana the following month, replacing the airline's Boeing 707 narrowbodies on six of the seven weekly services on these routes.

The second aircraft, which arrived at Gatwick in early May of that year, was initially configured in a 295-seat, single-class configuration. It entered service later that month on BCal's "Advanced Booking Charter" (ABC) routes to the US and Canada. The aircraft was re-configured in the airline's contemporary, 265-seat, two-class scheduled configuration at the end of the summer period. It began replacing Boeing 707s on two of BCal 's three weekly South Atlantic schedules to Brazil, Argentina and Chile as well as on one of the company's two weekly mid-Atlantic schedules to Venezuela, Colombia and Peru from the beginning of the 1977/'78 winter timetable period.

The introduction of the DC-10 widebodies also resulted in a reduction of BCal's 707 narrowbody fleet from eleven to nine aircraft. BCal had arranged a trade-in for these aircraft with McDonnell Douglas.

The DC-10's superior operating economics - compared with the 707 - enabled BCal to operate the aircraft non-stop from Buenos Aires to Gatwick with a viable payload.

Although the introduction of the DC-10 resulted in a huge increase in BCal's long-haul passenger and cargo capacity, the actual loads exceeded the airline's forecasts and helped it grow its traffic volumes on its scheduled services to West Africa and South America.

BCal was so pleased with the DC-10's performance that it decided to convert both of the options it had taken when placing the original order for two aircraft during 1976 into firm orders for delivery during the spring and autumn respectively of 1978. However, a subsequent strike at the manufacturer's Long Beach plant meant that McDonnell Douglas could not honour the delivery schedule on which it had agreed with BCal. This necessitated the temporary sub-lease of a Boeing 747-100 from British Airways. (BA itself operated the aircraft in question under a long-term lease arranged with Aer Lingus.) The aircraft, which wore a slightly modified BCal livery, was operating the Gatwick-Houston schedule during the 1978/'79 winter timetable period to cover for the late delivery of the airline's third DC-10. BCal's third and fourth DC-10 were eventually delivered during the spring and autumn of 1979 operating the airline's Houston and mid-Atlantic routes. These aircraft featured a 241-seat first-executive-economy, three-class configuration, which was a novelty at the time. This new three-class arrangement became BCal's standard long-haul configuration. The delivery of the third and fourth DC-10 resulted in the disposal of two further 707s reducing the long-haul, narrowbodied fleet to seven aircraft.

The same year itself BCal ordered a further four DC-10s, three of which were delivered during 1980. The final aircraft was delivered during the first quarter of 1981 giving BCal a fleet of eight DC-10-30 long-haul, widebodied aircraft. These aircraft formed the airline's core long-haul fleet until its takeover by BA in December 1987. (Interestingly, six of the same aircraft as well as two subsequently acquired, second-hand examples continued to form BA's core long-haul fleet at Gatwick until their retirement during the late 1990s.) BCal's additional DC-10s were used to expand the airline's schedule to Nigeria and Ghana to ten weekly round-trips as well as to replace most of the remaining 707s on the airline's other long-haul routes. They were also used to launch a new Gatwick-Dubai-Hong Kong schedule during the summer of 1980 as well as to re-establish BCal's presence as a scheduled carrier on the Gatwick-L.A. route in 1982 following the withdrawal of the Laker Airways "Skytrain" operation on that route in the aftermath of that airline's spectacular bankruptcy.

Following the delivery of the last DC-10 series 30 aircraft BCal had ordered directly from the manufacturer, the airline retired its last remaining passenger-configured 707 in 1982.

1982 was also the year BCal acquired its first and only two DC-10 series 10 aircraft from the estate of the defunct Laker Airways. These aircraft were operated by British Caledonian Charter, a dedicated charter subsidiary set up to fulfill some of the charter contracts BCal had agreed to take over in the wake of Laker Airways' collapse.

During 1985 BCal acquired a further two, second-hand DC-10-30s, which were sourced from Air Zaire and Ariana Afghan Airlines respectively. They were the final examples of this aircraft type to join BCal's fleet. Both of the aircraft replaced two, originally brand-new Airbus A310 widebodies BCal had primarily operated on its medium-haul routes to North Africa as well as on some of its newly launched Middle Eastern services for a brief period during the mid-1980s. They were also used to operate the Saudi Arabian schedules, which BCal had obtained from BA in return for its South American services.

The first Boeing 747 to enter commercial airline service with BCal on a long-term basis was a series 230B aircraft acquired from defunct US carrier and erstwhile transatlantic competitor Braniff Airways. The aircraft, which originally belonged to Lufthansa when new, entered service on the airline's Nigerian route in 1982 replacing its DC-10s. A second, second-hand 747-200B was acquired from Royal Jordanian Airlines in 1985. This was the first and only 747 to join BCal's fleet in a mixed passenger-cum-freight "Combi" configuration. It was used to re-establish a scheduled BCal operation between London Gatwick and New York JFK, three years after the original Laker Airways "Skytrain" operation on that route had ceased. BCal acquired an additional three second-hand 747-200s from various sources during the second half of the 1980s, which it used to replace the DC-10s on its Gatwick-Dubai-Hong Kong schedule as well as to launch a new Far Eastern schedule to Tokyo during the summer of 1987, the last year of the airline's existence.

[edit] A new transatlantic air services agreement

In July 1976 Edmund Dell, the then Secretary of State for Transport, renounced the original Bermuda air services agreement of 1946 and initiated bilateral negotiations with his US counterparts on a new air services agreement, which resulted in the Bermuda II treaty of 1977.

This presented BCal with new transatlantic opportunities to begin scheduled services to additional gateway cities in the US.

Under the new agreement, BCal had its licences to commence scheduled services from its Gatwick base to both Houston and Atlanta confirmed and was designated as the UK's exclusive flag carrier on both routes. (The CAA, which had come into being in 1972 following one of the three recommendations contained in the 1969 Edwards report, had awarded BCal these route licences during the so-called "cannon ball" hearings of the same year. However, the airline was unable to use them at that time as there was no provision in the original 1946 Bermuda air services agreement to operate direct scheduled services to any of these destinations from the UK.) It also obtained a licence and sole UK flag carrier status to commence scheduled services from Gatwick to Dallas/Fort Worth. (BCal had faced stiff competiton from British Airways for this licence. BA had proposed to run a Heathrow-Dallas/Ft. Worth service instead. However, the BAA, Heathrow's and Gatwick's owner and operator, had thrown its full weight behind the BCal application to serve this route from Gatwick as it sought to support BCal in its efforts to develop a fully fledged network of high-yield business routes from that airport in order to transform the airport's financial performance. [At the time Gatwick was still underutilised as well as losing money.]) In addition, BCal also obtained a licence and sole UK flag carrier status to commence scheduled all cargo flights between Gatwick and Houston - including an optional stop-over at Manchester or Prestwick in either direction.

During the Bermuda II negotiations the UK side succeeded in having a clause stating that Gatwick - rather than Heathrow - was to be nominated as the designated US flag carrier's London gateway airport whenever BCal was going to be the sole designated UK flag carrier on the same route inserted into the new air services agreement. This clause was meant to support the growth of BCal's scheduled operation at Gatwick as well as to redress the competitive imbalance between it and its much bigger, more powerful rivals. (Bermuda II's access restrictions to Heathrow are still in force almost 30 years after the agreement took effect. They are the reason the so-called "Heathrow Four", i.e. BA and Virgin Atlantic as well as American Airlines and United Airlines are the only airlines permitted to use London's primary airport as well as the UK's main international gateway for their scheduled services to and from the US. [BA's access rights to Heathrow under Bermuda II derive from the fact that it is BOAC's legal heir on all routes that airline used to operate between Heathrow and various points in the US under the original Bermuda agreement. American's and United's access rights to Heathrow under Bermuda II derive from the fact that they are TWA's and Pan Am's respective legal heirs on all routes these airlines used to operate between various points in the US and Heathrow under the original Bermuda agreement.] They are also the reason BA [as BCal's legal heir between London and Houston, London and Dallas as well as London and Atlanta] and American [as Braniff's legal heir between Dallas and London] are obliged to continue using Gatwick as their UK gateway for all non-stop scheduled operations between London and Houston, London and Dallas as well as London and Atlanta as long as Bermuda II remains in force.)

The UK side furthermore succeeded in negotiating a three-year "exclusivity" period for the incumbent operator on any new route with their US counterparts.

For Gatwick-based BCal this meant that it did not have to face any competitor that was using Heathrow, a more accessible airport with a bigger catchment area and a far greater number of passengers connecting between flights, on any of the new routes it was planning to launch to the US. It also meant that it had any new route to the US completely to itself for the first three years of operation, which most airline industry analysts reckon is sufficiently long for a brand-new scheduled air service to become profitable.

At British insistence Bermuda II furthermore contained clauses that made it illegal for any airline operating scheduled flights between the UK and the US to resort to predatory pricing or capacity dumping. Air fares were only approved if they reflected the actual cost of providing these services. Similarly, capacity increases were sanctioned on a reciprocal basis only. The reason for insisting on the inclusion of these provisions in the Bermuda II agreement was to prevent the much bigger, better financed and commercially far more aggressive US carriers from undercutting BCal with "loss-leading" fares cross-subsidised with profits those carriers' vast domestic networks generated as well as to stop them from "marginalising" the UK carrier by adding capacity far in excess of what the market could sustain.

In 1981, in an annexe to Bermuda II, both sides agreed to automatically nominate Gatwick as the gateway airport for London for any London-US route that did not already exist under the original 1946 Bermuda agreement.

Moreover, both sides agreed to continue dual designation, i.e. designating two UK flag carriers as well as two US flag carriers, on the London-New York and London-Los Angeles routes. The principle of dual designation was to be extended to another two high-volume routes. In the event, the UK side chose to designate a second carrier on London-Miami, while the US side chose London-Boston for the same purpose. This meant that a second British airline was permitted to commence scheduled services on the former route while another American carrier could do the same on the latter route.

However, the UK Government chose to designate Laker Airways rather than BCal as the second UK flag carrier to New York to enable that airline to inaugurate its long-planned "Skytrain" operation on that route. The UK Government subsequently chose to designate Laker Airways as the second UK flag carrier on the L.A. and Miami routes as well. The Government's decision to designate Laker Airways as the UK's second flag carrier on Gatwick-L.A. as well (in addition to Gatwick-JFK) particularly irked BCal's senior management because it felt that this constrained the airline's future expansion plans, thereby undermining its ability to achieve the critical mass it felt it needed to become a serious competitor to the generally much bigger, established scheduled airlines. BCal's senior management also felt that Laker Airways' designation as the second UK flag carrier on these routes had undermined the "Second Force" concept itself and that it had made the Government's earlier undertaking to make BCal its "chosen instrument" of the private sector meaningless. (Prior to the CAA's decision to award a licence to Laker Airways to run a daily "Skytrain" service between Gatwick and L.A. and the Government's decision to designate that airline as the UK's second flag carrier on the London-Los Angeles route, BCal had submitted an alternative proposal to the CAA. This had been based on a daily, full-service, three-class scheduled operation featuring a "no frills" cabin at the back of the plane, rather than a "standard" economy class. BCal had proposed to launch the new service in 1978 [the same year as Laker Airways] and to commence operations with Boeing 707 narrowbodied equipment prior to the delivery of additional DC-10 widebodied aircraft.)

BCal resumed scheduled transatlantic services on October 23, 1977. On that day the airline became the first UK carrier to launch a daily, non-stop Gatwick-Houston scheduled service as well as a weekly, direct all-cargo service on the same route, which was operated via Prestwick on the outbound leg and via Manchester on the return leg. BCal inaugurated the daily scheduled passenger flights with a Boeing 707-320C narrowbodied aircraft that had been re-configured in a three-class layout, which featured a dedicated "Executive" cabin in addition to a first and economy class section. This was the first time a scheduled airline had offered a "third" class specifically aimed at the business traveller since the beginning of the jet age. BCal operated the weekly all-cargo service with one of its dedicated 707 pure freighters. It was intended to replace the 707s operating the all-passenger services with a brand-new, larger capacity as well as more fuel-efficient DC-10 widebodied aircraft at the start of the 1978 summer timetable period. However, it became necessary to sublease a BA 747 for six months to cover the 1978/'79 winter timetable period due to the delayed delivery of BCal's third DC-10 as a result of a strike at the manufacturer's plant.

(BCal's resumption of scheduled services across the North Atlantic in October 1977 coincided with the launch of a new domestic scheduled service linking the airline's Gatwick base with Aberdeen, the centre of the North Sea oil industry. This service was operated by BA's regional division twice a day [Monday to Friday] using a BAC 1-11-400 jetliner. BCal agreed to hold details of BA's new Gatwick-Aberdeen link in its CRS as this service constituted an important feeder operation for oil industry executives and personnel whose work commitments required them to travel regularly between Aberdeen and Houston, Dallas, Lagos and Tripoli. [At the time of inauguration of BCal's scheduled Gatwick-Houston flights, the airline was already well-established on the Gatwick-Lagos and Gatwick-Tripoli routes, which were by far its most profitable scheduled air services.)

On June 1, 1980 a BCal DC-10 inaugurated the first-ever non-stop scheduled air service operated by a British airline between Gatwick and Atlanta, initially at a frequency of six weekly round-trips.

Dallas/Ft. Worth joined BCal's long-haul scheduled route network as an extension of the short-lived St. Louis service on October 26, 1980, at a frequency of four flights a week. Daily non-stop services to Dallas began at the start of the 1981 summer timetable period. (The delay in commencing non-stop scheduled air services to Dallas was a result of bilateral restrictions enshrined in Bermuda II. BCal needed to wait for Braniff's three-year "exclusivity" period as the first-ever scheduled operator authorised to fly non-stop between Dallas and London to come to an end, before it was permitted to compete on that route. [Braniff had begun operating on this route in March 1978.] Similarly, Pan Am, the designated US flag carrier to fly non-stop between Houston and London needed to wait until the end of the 1980 winter timetable period before it could follow BCal on to that route. [BCal itself had followed Delta Air Lines, the designated US flag carrier to operate non-stop between Atlanta and London since May 1978, on to the Gatwick-Atlanta route.])

During April 1980 BCal inaugurated its four-times-a-week non-stop Gatwick-St. Louis scheduled service, at the time operated with one of the airline's remaining 707s.

BCal also obtained a licence to commence scheduled services to San Juan, Puerto Rico. Scheduled services to San Juan were inaugurated at the start of the 1980/'81 winter timetable period. San Juan became a stop-over on BCal's twice weekly mid-Atlantic schedule from Gatwick to Caracas, Bogotá and Lima.

Following Laker Airways' collapse during the first quarter of 1982, BCal immediately applied to the CAA to have the failed carrier's licence for a daily non-stop London Gatwick-Los Angeles scheduled operation tranferred to itself. BCal also requested the Government to designate it as the UK's second flag carrier between London and Los Angeles. The CAA granted BCal a temporary licence, pending the award of a permanent licence for that route. The Government agreed to designate BCal as the UK's second flag carrier on the aforesaid route. This enabled BCal to take over the Gatwick-L.A. route at the start of the 1982 summer timetable period when it commenced scheduled operations with a three-class McDonnell Douglas DC-10-30 widebodied trijet. Later that year the CAA awarded BCal a permanent licence for this route.

BCal also regained a licence for a daily Gatwick-JFK scheduled operation. However, it decided to postpone the route's re-launch for several years due to the competitive situation on that route. At the time, People Express, a rapidly expanding "post-deregulation era" discount airline had announced its intention to begin daily low-fare flights between its base at Newark Liberty International Airport and BCal's base at London Gatwick using Boeing 747s from May 1983, thus filling the void left by Laker Airways' departure. Moreover, Virgin Atlantic Airways, a new UK carrier, was proposing to launch scheduled services on the same route as well, which began in earnest during June 1984. BCal's senior management was of the opinion that all this additional capacity far exceeded what the London-New York market could profitably sustain at the time, especially when taking into account Gatwick's smaller catchment area (compared with Heathrow) where all the extra capacity was going to be concentrated. Eventually, BCal decided that the market had grown sufficiently and that profitablilty had recovered to an acceptable level to go ahead with the route's re-launch during the summer of 1985 when the airline inaugurated a daily scheduled service between London Gatwick and New York JFK using a second-hand Boeing 747-200B "Combi". This aircraft featured BCal's contemporary three-class seating arrangement for its passengers as well as a main deck cargo-carrying capability. (The latter feature was unique among the entire BCal fleet.)

During the early 1980s the CAA also awarded BCal further licences to commence scheduled operations to additional US gateway airports - including Denver, Orlando and Tampa. However, BCal did not launch scheduled services to any of these destinations. (The airline eventually handed over its unused Denver licence to BA along with its remaining South American route network in exchange for BA's Saudi-Arabian routes in 1985.)

In 1987 BCal applied to the CAA for a licence to extend its daily Gatwick-Los Angeles service to San Diego. By the time the CAA awarded the licence, BCal had ceased to exist as BA had assumed responsibility for its erstwhile competitor's world-wide scheduled operation upon completing the takeover of its former rival in April 1988.

Both the Houston and Dallas routes eventually produced good profits, largely as a result of a steady stream of high-yield, oil-related business traffic. The re-launched New York and Los Angeles routes made a positive contribution as well as a result of a good mix of business and leisure traffic. However, BCal never made any money on the St. Louis route and the airline struggled to make the Atlanta route profitable. (On both of the latter routes BCal had entered into so-called "buddy" agreements with Ozark Airlines and Eastern Air Lines, the second-largest operators at St. Louis and Atlanta respectively. These agreements aimed to co-ordinate BCal's transatlantic schedules with those airlines' domestic schedules to be able to offer its customers "seemless" onward connections within the US to destinations BCal did not serve direct from the UK.) BCal's difficulties on the Atlanta route were to a large extent caused by Delta's dominance at Atlanta where that airline was headquartered and where it had its main operational base. (At the time Delta accounted for more than 70% of all traffic passing through Atlanta and around four-fifth of all passengers using the airport made an onward connection from there or had flown in on a connecting flight, in the overwhelming majority of cases with Delta Air Lines itself. This gave Delta a stranglehold over its home base.) To improve the financial performance of the Atlanta route, BCal proposed running a joint service with Belgium's flag carrier SABENA, which used to operate the route from Brussels. (At the time BCal was operating five weekly round-trips between Gatwick and Atlanta using a DC-10-30 widebody and SABENA was operating Brussels-Atlanta twice a week with a Boeing 747-100. Both services lost money.) BCal applied to the CAA for permission to replace its own loss-making, non-stop Gatwick-Atlanta service as well as SABENA's loss-making, non-stop Brussels-Atlanta service with a daily, combined Brussels-Gatwick-Atlanta service operated with a SABENA 747 due to commence during 1985. However, BA objected to this on the grounds that using a foreign-registered aircraft to operate a scheduled service between the UK and the US constituted a violation of the Bermuda II UK-US bilateral air services agreement. Instead, BA asked the CAA to revoke BCal's Gatwick-Atlanta licence and transfer it to itself. In the event, the CAA approved BCal's application and dismissed BA's objection. BCal and SABENA commenced their joint daily Brussels-Gatwick-Atlanta schedule utilising one of the latter's 747s in 1986. BCal supplied 62% of the cabin crew. SABENA supplied the flight deck crew as well as the remainder of the cabin crew. (The 62:38 cabin crew split in favour of BCal had been decided on the basis of the percentage of seats each airline was contractually obliged to sell on that service.) BCal's and SABENA's joint operation led to complaints - mainly from BCal's premium customers - that the seating arrangement and in-flight service provided on the SABENA aircraft did not conform to BCal's very demanding standards. On the other hand, some of SABENA's French-speaking customers used to complain about the lack of the foreign language skills of BCal's cabin crew.

[edit] The Gatwick Year

BCal termed 1978 the "Gatwick Year". There were several reasons for this.

By 1978 the airline had fully recovered from the 1974 crisis year, which had threatened its very existence at that time. After the severe contraction forced upon it by the early '70s' oil crisis, the company's core scheduled operation was growing again with new widebodied aircraft and routes being added and schedules being expanded. Furthermore, business was booming with planes being fuller than at any time in the firm's history and it expected to earn record profits during that year.

To underline BCal's confidence about its future prospects, the interiors of the airline's narrowbodied fleet were undergoing a major refurbishment at that time. (These aircraft - including the entire 16-strong, short-haul BAC 1-11 fleet comprising nine larger series 500s and seven smaller series 200s - were given "widebody look" interiors featuring new seat covers that prominently displayed BCal's corporate logo among several other improvements to give customers the same travel experience as on the newly delivered DC-10s.)

During the second half of 1978 BCal also introduced an updated livery and replaced its single Piper PA-23 "Aztec" acquired in 1975 with a pair of larger Piper PA-31 "Navajo Chieftains". (BCal used one of these aircraft to inaugurate a new Gatwick-Birmingham feeder route at the start of the 1978/'79 winter timetable period.)

BCal also became a "scheduled service only" airline during 1978 implementing a decision taken the year before when the share of passengers travelling on charter flights had declined to just 15% of all passengers carried (as opposed to two-thirds at the time of the airline's inception seven years earlier). There were two main reason's for BCal's withdrawal from the charter market:

• A 25% contraction of the transatlantic ABC flights market as a result of the initial success of the daily Laker Airways "Skytrain" low-fares, "no frills" scheduled operation between London Gatwick and New York JFK, which began during the previous year's autumn season.

• A steady decline in charter rates in the European package tour holiday market where BCal used to supply whole-plane charter seats to its Blue Sky Holidays tour operator affiliate as well as third party tour companies.

Prior to "Skytrain", BCal had been a major operator in the ABC market running regular flights to the US, Canada and West Africa from its Gatwick base and a number of other UK departure points. These flights were sold through its Golden Lion Tours tour operator affiliate. BCal found that it could deploy this long-haul capacity far more profitably to increase the number of routes and flights in its most important long-haul scheduled markets because the yields on its prime long-haul scheduled routes were much higher than in the ABC market.

Although operating short-/medium-haul whole-plane charters enabled the airline to improve the utilisation of its BAC 1-11 fleet - especially at week-ends, the company's increasing focus on the scheduled side of its business (as opposed to charter flights) meant that overall costs were increasing as well. The reason for this increase in costs was the greater number of overheads that were required to support the expanding scheduled operation. This, in turn, meant that the firm had acquired significantly higher costs than most of its contemporary charter airline rivals, thereby making it more and more difficult to compete profitably in this market at the prevailing low rates. In addition, there always used to be problems with the aircraft's configuration. (BCal used to operate its short-/medium-haul schedules and charters with the same planes as its whole-plane charter market activities were not of the scale that would have justified keeping a dedicated fleet for these activities. This, of course, meant that the airline was unable to adopt separate high- and low-density seating arrangements to meet the differing, specific requirements of the scheduled and charter markets.) Moreover, there used to be time-keeping issues resulting from operating scheduled and charter flights with the same aircraft that negatively impacted the scheduled services' punctuality whenever these were delayed due to the knock-on effect created by late-incoming charter flights.

1978 was the first year BCal operated the majority of its scheduled services plying the prime long-haul routes to West Africa and South America with state-of-the-art widebody equipment.

At the start of that year's summer timetable period flight frequencies on BCal's Gatwick-Glasgow and Gatwick-Amsterdam routes increased to five round-trips per day on week days (Monday to Friday). During that period the airline also resumed its Edinburgh-Newcastle-Copenhagen service, which it had abandoned in 1974.

During 1978 Abidjan joined BCal's scheduled route network. Benghazi and Birmingham joined the network at the start of the 1978/'79 winter timetable period when the airline increased frequencies between London Gatwick and Paris Charles de Gaulle to seven daily round-trips on week days, with flights operating at two-hourly intervals. The addition of twice-weekly flights to the Libyan port city of Benghazi to the existing five weekly services to Tripoli meant that for the first time BCal was able to offer its passengers daily flights to Libya, an important market for highly profitable, oil-related business travel. BCal's introduction of a 747 on the daily Gatwick-Houston schedule also enabled it to replace its two-class configured 1-11-500s on the West African coastal schedule to Banjul and Freetown via Casablanca and Las Palmas with 707s. The 707's greater range (compared with the 1-11) enabled it to cut out the intermediate stops and offer its passengers a more convenient, direct routing that took less time. BCal furthermore replaced two-class 1-11s operating on the Tripoli route with 707s.

In addition, the BAA had just completed the first phase of a major refurbishment and extension of BCal's Gatwick base. The centrepiece of this revamp was a completely refurbished centre pier featuring eleven telescopic, widebody-compatible loading bridges. These were the first loading bridges to be installed at Gatwick, which was a single-terminal airport at the time. For the first time in its history, BCal also gained a dedicated check-in area for all its flights. This allowed its passengers to avoid the so-called "bucket-and-spade" brigade (as the airport's charter airline passengers were commonly referred to during the 1970s and early '80s). These passengers had given Gatwick a poor public image during the '70s and '80s. At the peak of the annual summer holiday season the press used to descend on Gatwick to take photographs of hundreds of families with small children crowding the airport's terminal while awaiting announcements of their delayed charter flights' departures.

Moreover, the Government had announced its intention to take pro-active steps to help ensure Gatwick's development as a genuine alternative to Heathrow the year before. It was hoped that this in turn would assist BCal's development as a serious alternative to BA and the other major, established scheduled airlines.

These steps included inviting BCal and Britain's other Independent airlines to apply to the CAA for route licences to operate scheduled services to destinations in the British Isles and on the Continent that were not already served from Gatwick, thereby increasing the reach of the airport's scheduled route network as well as providing more connecting traffic for BCal. (At the time BCal was Gatwick's principal scheduled airline, which operated almost all of the airport's long-haul scheduled services as well as the bulk of its short-haul schedules.)

The CAA had conducted a public hearing into competing applications for the award of several licences to commence new short-haul scheduled services from Gatwick during 1977. The applicants included BCal as well as BA, BIA and Dan-Air. At the time BCal had applied to begin scheduled services from Gatwick to Copenhagen, Gothenburg, Oslo and Stockholm as well as to add Aberdeen to its existing Edinburgh-Newcastle-Copenhagen licence. BCal was keen to expand its limited short-haul European network beyond the existing four routes linking London Gatwick with Paris Charles de Gaulle, Amsterdam-Schiphol, Brussels-National (Zaventem) and Genoa (a former BUA route). The airline needed to develop its connecting traffic through Gatwick by growing the European network to include destinations in Germany, Switzerland, Scandinavia and Southern Europe in order to help it increase load factors on its long-haul flights to Africa, South America and the US as well as to improve the profitability of these services.

BA had applied to serve Dublin, Dusseldorf, Frankfurt and Zurich from Gatwick. It also asked the CAA to confirm several licences it already held to serve additional destinations in Europe from Gatwick.

BIA had applied to serve Dublin, Dusseldorf, Frankfurt, Hamburg, Milan Linate and Zurich from Gatwick. In support of its application, BIA had proposed to operate these services with 65-seater Fokker F-28 1000 series "Fellowship" jet aircraft, rather than the larger BAC 1-11-500s its rivals had planned to use on their services. These had almost twice the seating capacity of the Fokker jets. Using smaller aircraft would have enabled BIA to offer more frequent flights, thereby offering a more attractive product for the business travel market. BIA reckoned that this would improve its chances of being awarded these licences.

Dan-Air had applied to run scheduled services to several of the aforementioned destinations as well as to Berlin Tegel, where a number of that airline's aircraft were already based, and Munich.

In the event, the CAA decided to approve both BCal's as well as BA's applications but to reject BIA's and Dan-Air's applications. The CAA argued at the time that the Scandinavian routes BCal had applied for constituted important feeder services for the airline's long-haul flights to Africa, South America and the US, thereby aiding the future development of the company's scheduled route network at Gatwick. The CAA also argued that BA in its capacity as the UK's primary flag carrier could not be excluded from Gatwick's further development. The CAA furthermore argued that both BIA and Dan-Air lacked the necessary expertise to take on the established scheduled airlines on major international trunk routes.

However, BCal was unable to use its newly awarded licences as there was no provision in the bilateral air services agreements the UK had concluded with Denmark, Norway and Sweden for another carrier to operate scheduled services on the main trunk routes between London and these countries in addition to the incumbent flag carriers' services. This meant that BA and Scandinavian Airlines (SAS) had an effective monopoly on most routes between the UK and Scandinavia. To help secure BCal's reciprocal traffic rights on the main trunk routes between London and Scandinavia, the UK Government agreed to begin negotiations on a new bilateral air services agreement with its three Scandinavian counterparts in December 1978. It was hoped that this would enable BCal to commence its first-ever scheduled services from London to Scandinavia at the start of the 1979 summer timetable period.

BA, which was facing no such bilateral restrictions, was able to commence operations an all four routes for which it had been awarded licences at the start of the 1978 summer timetable period itself. However, it chose to run low-frequency services offering no more than a single daily round-trip on each of these routes.

Despite this setback for BCal, it was still able to offer its passengers a greater number of possible connections at Gatwick during 1978 compared with the year before as a result of additional frequencies on existing domestic routes as well as new domestic feeder routes operated/launched by other Independent British airlines.

British Midland replaced its Vickers Viscount turboprops with which it had operated a thrice-daily service between Gatwick and Belfast ever since it had taken over the route from BCal in 1974 with McDonnell Douglas DC-9 jets. As a result of the jets' higher cruising speed, British Midland was able to operate up to four daily round-trips on that route. In addition the DC-9's seating capacity was greater than that of the Viscount, thus resulting in a significant overall capacity increase.

Brymon Airways began a new twice daily Gatwick-Plymouth service using an 18-seater De Havilland Canada DHC-6 Twin Otter commuter plane.

Air Westward, a newly formed regional airline, began a new service linking Gatwick with its base in Exeter operated with an 18-seat Embraer EMB 110 Bandeirante.

Dan-Air commenced a new thrice weekly Gatwick-Bergen 1-11 schedule. This service in particular had scope to deliver additional high-yield, oil-related connecting traffic to BCal as Bergen was one of the twin centres of the Norwegian oil and gas industry.

In addition, Aer Lingus became the first foreign airline to split its scheduled operations between Heathrow and Gatwick when it launched a daily Gatwick-Dublin service to complement BA's service on that route.

Government initiatives in support of Gatwick's development also included new policies to transfer all scheduled services between London and Canada as well as London and the Iberian peninsula from Heathrow to Gatwick on April 1, 1979 and to compel all airlines that were planning to operate a scheduled service to or from London for the first time to use Gatwick instead of Heathrow. The latter policy was officially known as the "London Air Traffic Distribution Rules". It came into effect on April 1, 1978 and was applied retrospectively from the beginning of April 1977. These rules were designed to achieve a "fairer" distribution of traffic between London Heathrow and London Gatwick, the UK's two main international gateway airports. The policy was aimed at increasing Gatwick's utilisation to help the airport make a profit.

In the event, only BA transferred all of its scheduled services to Gibraltar, Portugal and Spain from Heathrow to Gatwick at the start of the 1979 summer timetable period, after the Secretary of State for Transport had instructed it to do so. Air Canada, Iberia and TAP Air Portugal all refused to follow suit. (Air Canada in particular argued that Gatwick's runway was too short to enable it to operate fully laden 747s from there non-stop to the Canadian West coast with a viable payload. It had also threatened to make Frankfurt its "number one" destination in Europe if the UK Government forced it to move its London operations to Gatwick.)

The "London Air Traffic Distribution Rules" stated that airlines that did not already operate an international scheduled air service from/to Heathrow prior to April 1, 1977 would not be permitted to commence operations at that airport. Instead, they would have to use Gatwick for all their London-based operations. However, airlines that did not already operate at Heathrow prior to this law taking effect could still commence domestic scheduled services at the airport provided that the BAA, which ran both Heathrow and Gatwick on behalf of the Government, as well as the incumbent Secretary of State for Transport granted them permission to do so. In addition, the "London Air Traffic Distribution Rules" banned all new all-cargo as well as all charter flights from Heathrow as of April 1, 1978.

Avianca, the CAAC (Air China's predecessor) and Philippine Airlines were among the first batch of airlines directed to use Gatwick instead of Heathrow as a result of the "London Air Traffic Distribution Rules". (Both Braniff Airways and Delta Air Lines commenced operations from Gatwick at the same time as a result of Bermuda II.)

Another pro-active measure the Government took to aid BCal's and Gatwick's development at the time was to grant permission for a high-frequency helicopter shuttle service linking both of London's main airports.

[edit] Reaching new financial heights

BCal recorded a profit of £10m at the end of the 1977/'78 financial year on October 31, 1978 (the airline had changed the end of its financial year from September 30 to October 31 in the meantime). This was the company's best-ever financial result since its formation back in November 1970. It was a clear sign that it had left the dark days of late 1974 and early 1975 when its very existence was under threat firmly behind. The good results boosted BCal's management's confidence in the airline's long-term future prospects. They also boosted staff morale and made everyone working for BCal at the time proud of their company's achievement.

[edit] Linking Heathrow and Gatwick by air

A new, high-frequency helicopter shuttle service linking London Heathrow and London Gatwick was inaugurated on June 9, 1978.

This service was operating ten times a day in each direction using a 28-seater Sikorsky S-61N helicopter, which was owned by the BAA. BCal held the licence to operate the service and provided the cabin crew. (A single crew member used to look after the passengers on this ten-minute flight.) British Airways Helicopters, the wholly owned helicopter subsidary of BA whose headquarters were located at Gatwick, provided the flight deck crew and engineering support.

The service gave BCal's passengers easier access to flight connections at Heathrow, especially to destinations not served by scheduled flights from Gatwick at the time.

It was used by 60,000 passengers during the first year of its operation.

The service ended in 1986 when its licence was withdrawn on environmental grounds following the completion of the M25 London orbital motorway. (There were growing complaints about the "excessive" noise created by a low-flying helicopter from people living underneath the Gatwick-Heathrow Airlink's flight path in politically sensitive constituencies.)

[edit] Supersonic ambitions

1978 was also the year BCal set up a taskforce headed by the late Sir Peter Masefield, at the time BCal's deputy chairman, to investigate the possibility of operating the Aerospatiale-BAC Concorde supersonic airliner viably on the airline's long-haul route network as there were still a few unsold, "white tail" examples available at that time.

The most obvious choice for a supersonic service was Gatwick-Lagos, the backbone and main money spinner of BCal's scheduled operation. BCal's Concorde taskforce's brief was to assess the viability of a second daily all-premium supersonic service complementing the airline's existing daily subsonic, mixed-class widebody service on this route.

BCal put in a bid to acquire on of these "white tail" aircraft. (BA, which had jointly introduced the world's first commercial supersonic service with Air France in 1976, was bidding for the aircraft as well.) In the event, BCal's bid was not successful.

Following the unsuccessful bid to acquire Concorde direct from the manufacturer, BCal eventually arranged for two aircraft to be leased from BA and to have them maintained by Air France. It became necessary to find additional work for BCal's envisaged two-strong, leased Concorde fleet to increase the aircraft's utilisation, thus permitting a profitable operation. Therefore, BCal decided to use the second aircraft to replace its subsonic operation between Gatwick and Atlanta with a supersonic service. The reason BCal chose to operate its first supersonic service to the US to Atlanta rather than Houston, a far more profitable destination due to the oil-related traffic, was Concorde's range limitation. (BCal's Concorde task force had come to the conclusion that only non-stop supersonic services were viable.) It was hoped that a time-saving, all-premium product specifically tailored to the requirements of the business travel market would transform the financial performance of the struggling Atlanta operation.

Both supersonic services were to be launched at the start of the 1979 summer timetable period.

However, the changing geopolitical situation - especially, the fall of the Shah of Iran and the subsequent tripling of crude oil prices - as well as the sheer complexity of the operational arrangements eventually put paid to BCal's Concorde plans.

[edit] Further diversification and expansion at the end of the 1970s

1979 was another good year for BCal. The airline took delivery of its delayed third and fourth McDonnell Douglas DC-10-30 widebodied aircraft during the first and third quarter of that year. This permitted the aircraft's introduction on its daily Gatwick-Houston schedule as well as the replacement of the remaining 707-operated services on its mid- and South Atlantic routes. The narrowbodied capacity thus released was used to add frequencies on existing routes as well as to launch services to new long-haul destinations. As a result, BCal launched a fourth weekly service to Brazil and added Quito and Guayaquil to the mid-Atlantic schedule. The company also increased frequencies on its short-haul routes. A fourth daily round-trip was added to both Gatwick-Manchester and Gatwick-Brussels. A third daily frequency operating on week days (Monday to Friday) was added to the Newcastle-Amsterdam portion of BCal's Glasgow-Newcastle-Amsterdam regional route. Furthermore, BCal began adding its two-letter BR airline designator to the BIA-operated flights linking its Gatwick base with Le Touquet and Rotterdam, with frequencies being increased on both of these routes as well.

During that year BCal also established a wholly owned helicopter subsidiary and it placed the launch order for a brand-new widebodied aircraft, the Airbus A310.

In addition, 1979 was the year BCal acquired its last Boeing 707 - a series 320C freighter - from MAS.

Moreover, BCal came up with its own proposal to create a new network of European low-fare services to be marketed under the trademark "Miniprix" to counter Laker's plans for a pan-European "Skytrain" operation that was supposed to operate on up to 660 different routes criss-crossing the entire continent. Including BCal's existing four European destinations, it envisaged linking Gatwick with up to 25 points on the Continent. Most of these services were to be initially operated with the airline's existing narrowbodied equipment, i.e. both the BAC 1-11-500 and the Boeing 707-320C, at a frequency of one flight per day in each direction. BCal was evaluating both the McDonnell Douglas MD-80 narrowbody as well as the Airbus A310 widebody as suitable long-term replacements for its existing narrowbodied aircraft on these routes.

BCal eventually began offering "Miniprix" fares on off-peak services on its existing European routes after it had obtained all necessary approvals from the UK authorities and their respective European counterparts.

Another important development that helped enhance BCal's network connectivity for its oil industry customers occured on November 10, 1979. On that day Dan-Air replaced BA's service on the Gatwick-Aberdeen route with an improved schedule - including more flights, all of which were operated with that airline's BAC 1-11 jet aircraft. (Aberdeen's local business community, which was dominated by the oil industry, depended on a fast and frequent link to London Gatwick to be able to make connections at that airport with long-haul flights serving other important oil industry centres such as Houston, Lagos and Tripoli, which were all served by BCal at the time. However, BA had begun replacing the Aberdeen-based 1-11 it was using to operate its early-morning schedule to Gatwick with a Vickers Viscount turboprop at the start of the 1978 summer timetable period because the 1-11 was apparently required to operate another regional BA route from Heathrow. The substitution of the 1-11 with the Viscount considerably increased the non-stop flying time between Aberdeen and Gatwick because of the turboprop's lower cruising speed compared with the jet it replaced. As a consequence, by the time the Viscount reached Gatwick, most of the onward, long-haul connecting flights had already departed, thereby rendering this service useless for the Aberdeen business community. They therefore backed a lobbying campaign initiated by Dan-Air who were prepared to take over this service, offering an expanded jet schedule of up to three return flights per day at times that suited the requirements of the business community and ensured they could connect to/from other services at Gatwick with ease. This resulted in an application to the CAA to transfer BA's Gatwick-Aberdeen licence to that airline, which - following a successful hearing - the CAA agreed to do.)

Brymon Airways' takeover of BCal's regional, domestic Gatwick-Birmingham schedule, which it operated at an increased frequency of up to three daily return flights using an 18-seat Twin Otter, furthermore contributed to enhancing BCal's overall network connectivity during that period.

However, BCal also suffered a few setbacks during 1979. These included continuing frustration of the airline's desire to launch scheduled services to Scandinavia despite the conclusion of a new Anglo-Scandinavian bilateral air services agreement and the temporary grounding of the airline's widebodied fleet - then comprising three McDonnell Douglas DC-10-30s - during the second quarter following the crash of an American Airlines DC-10-10 in Chicago during May of that year.

As far as the former was concerned, the new air services agreement the UK had negotiated with Denmark, Norway and Sweden during December 1978 contained an important clause that effectively restricted the provision of scheduled services on trunk routes from/to London to BA and SAS, thereby continuing to prevent BCal from using the licences the CAA had awarded it the year before. (As a concession to the UK Government's desire to develop Gatwick as an alternative international gateway airport serving London, SAS agreed to transfer its twice-daily London-Stavanger service and one of its daily London-Copenhagen services from Heathrow to Gatwick as well as to launch a brand-new, daily Gatwick-Aarhus route at the start of the 1979 summer timetable period. BA agreed to launch a daily Gatwick-Stockholm service at the same time. BCal's senior management described the then new Anglo-Scandinavian air agreement as a real "can of worms".)

Regarding the latter, the grounding of the world-wide DC-10 fleet in the aftermath of American's May 1979 Chicago crash necessitated the short-term lease of another 747 to enable BCal to provide adequate capacity on its Nigerian trunk routes during that period. BCal also operated a Dan-Air Comet on short-term lease between Gatwick and Tripoli while the 707s normally used on that service were redeployed to operate a reduced schedule to Houston and South America during the aforesaid period.

Another setback BCal suffered at the time was the CAA's decision to turn down the airline's application to extend its existing Gatwick-Lusaka service to Harare (then still called Salisbury) from the start of the 1980 summer timetable period and instead to approve BA's rival application to begin serving the Zimbabwean capital from Heathrow via Johannesburg.

[edit] Launching a new widebodied aircraft

In 1979 BCal became the European launch customer for the Airbus A310 when the airline placed a firm order for three A310-200s plus an option on another three aircraft.

Airbus Industrie had offered BCal a generous discount as an independent launch customer who ran its business along commercial lines and was not depending on any government's financial backing. It thought that this would significantly enhance the new widebody's sales prospects in the US, the largest and most important market for large, commercial aircraft in the world.

Two of the aircraft BCal had on firm order were to be delivered in 1984 while the remaining aircraft was to be delivered the following year. BCal chose General Electric (GE) CF-6-80 engines to power its A310s. These aircraft were intended to replace BCal's remaining, aging and increasingly fuel-inefficient 707 narrowbodies on higher volume medium-haul routes, primarily Gatwick-Tripoli, as well as on "thin", long-haul routes to West and Southern Africa.

In the event, only two aircraft were delivered. In addition to replacing BCal's 707s on the North, West and Southern African routes, the airline also used these twin-engined widebodies on its Middle East services - chiefly Gatwick-Riyadh, for which it had subsequently obtained a licence. During the summer period BCal's A310s occasionally operated peak-time services on the Gatwick-Charles de Gaulle route on week days and on Gatwick-Jersey on week-ends as well.

However, both aircraft only had a short career with BCal. They were sold during the mid-1980s following the loss of the highly profitable Libyan routes. (At the time BCal's senior management decided that these aircraft no longer suited its requirement and chose to standardise the airline's widebodied fleet on the McDonnell Douglas DC-10 and the Boeing 747, respectively.)

Following the aircraft's sale, BCal became the subject of a major controversy involving both the UK and the US governments when it was discovered that both aircraft had turned up in Libya - minus their engines - in spite of the imposition of international sanctions denying Libya access to anything high tech - including commercial airliners, their powerplants and systems - at that time.

[edit] A helicopter subsidiary

In 1979 BCal established British Caledonian Helicopters as a wholly owned subsidary headquartered in Aberdeen as a result of purchasing Ferranti Helicopters.

BCal's decision to set up its own helicopter subsidiary at Aberdeen, the leading North Sea oil industry centre, at a time when North Sea oil production was in full swing was driven by the airline's desire to cash in on the North Sea oil boom. It was also part of a strategy to offer a seamless service to the oil industry as an extension of BCal's contemporary "linking the oil capitals of the world" corporate strategy. BCal felt vindicated in its decision to launch a helicopter subsidiary when the price of a barrel of crude oil had reached an all-time high in the aftermath of the second global oil price shock of the 20th century triggered by the Shah of Iran's fall from power in 1979.

However, the airline decided to sell off its helicopter unit in 1987 as a result of its growing financial difficulties as well as the steep decline in oil-related business due to the collapse of the oil price in the mid-'80s.

[edit] The 1980s roller coaster

There were many ups and downs for BCal during the 1980s.

BCal suffered a series of major setbacks as a result of several geopolitical events that occured during that decade.

These events significantly weakened BCal operationally as well as financially. They were the main factors that contributed to the airline's demise during the second half of that decade.

[edit] Accelerated expansion at the beginning of the 1980s

1980 saw the delivery of three more McDonnell Douglas DC-10-30 widebodied aircraft.

The delivery of these planes enabled BCal to launch new routes to Atlanta on June 1, followed by Hong Kong on August 1 as well as San Juan, Puerto Rico, and Dallas/Ft. Worth on October 26. It also enabled the airline to replace the 707s, with which it had inaugurated another new route to St. Louis in April of that year, with its newly delivered DC-10 widebodies at the end of October when St. Louis became a stop-over on the new Dallas route. During that year the company also added Tangier to its North African network.

This accelerated pace of growth made BCal the fastest growing member airline of the Association of European Airlines (AEA) for the year 1980.

BCal received a boost during 1980 when the CAA approved its application to convert its restricted licence to serve Dubai as a refuelling stop en route to/from Hong Kong only into a full licence permitting it to carry passengers, cargo and mail between London and Dubai as well as Dubai and Hong Kong from the start of that year's winter timetable period, despite BA's objections on the grounds that BCal needed Dubai as a "prop" to support its Hong Kong service. The UAE's "Open Skies" aviation policy furthermore permitted BCal to gain reciprocal approval within a relatively short period of time, without having to put pressure on the UK Government to renegotiate its bilateral air services agreement with its overseas counterpart or to resort to legal action as it often needed to do in other, similar cases.

Brymon Airways' decision to extend its thrice-daily Gatwick-Birmingham feeder service to Nottingham East Midlands Airport provided a another boost to BCal as it helped further improve its network connectivity.

The high oil price during that period was a mixed blessing for BCal. It helped the airline fill its premium cabins on its oil-related business routes to Nigeria, Libya and Texas. On the other hand, the escalation of the jet fuel price and the fact that the high price of oil had considerably worsened the severe recession in Britain at that time significantly increased the company's operating costs, while at the same time reducing overall demand for its flights. BCal therefore decided to reduce off-peak frequencies - especially, on week-ends - on most of its short-haul routes from the start of the 1980/'81 winter timetable period. This also included combining week-end, off-peak flights from Gatwick to Glasgow, Edinburgh and Manchester by converting non-stop flights into one-stop operations.

Among the set-backs BCal suffered at that time were the CAA's rejection of BCal's application to add Manila as an extension to its Gatwick-Dubai-Hong Kong route and instead approve BA's rival application to begin serving Manila from Heathrow via Bangkok as well as BA's successful lobbying of the Government to revoke BCal's long-standing Gatwick-Bahrain-Singapore exempt charter licence in return for having granted it permission to launch a fully fledged scheduled service to Hong Kong.

BCal received another new DC-10-30 widebody in 1981. The delivery of this aircraft enabled the airline to increase frequencies on the prime long-haul routes to West Africa from seven to ten weekly round-trips. It also permitted a frequency increase on the Gatwick-Dubai-Hong Kong route from four to five weekly round-trips.

1981 also saw the completion of BCal's new corporate headquarters - aptly named Caledonian House - in Crawley's Lowfield Heath area close to the airline's Gatwick base, the construction of which had begun the year before. It was the first purpose-built headquarters in the company's history. BCal's new headquarters was a typical 1980s style, high-rise "chrome-and-glass" building resembling the office buildings in the then very popular fictional, American TV series Dallas. It enabled the firm to bring together under one roof all the offices that used to be spread out in various buildings at Gatwick as well as in Crawley's town centre since its inception. BCal had originally intended to build its new headquarters nine storeys high. However, the CAA had objected to this on the grounds that a building of that height sited so close to Gatwick Airport might interfere with the airport's radio traffic. It was therefore decided to build it only seven storeys high. (Following BCal's takeover by BA at the end of 1987, the new owner housed its Air Miles and BA Holidays subsidiaries in this building, which had meanwhile been renamed Astral Towers.)

Network connectivity for BCal's high-yield, oil-related business travellers was further improved as a result of Dan-Air's decision to introduce a fourth daily return flight operating between Gatwick and Aberdeen on week days (Monday to Friday).

BCal's search for a more fuel-efficient replacement for its aging BAC 1-11 fleet - especially, the range-limited 1-11-200s - acquired a new sense of urgency during 1981 against a backdrop of further escalating fuel prices. The airline was evaluating both the new BAe ATP turboprop as well as the BAe 146, the UK aircraft manufacturer's new, four-engined regional jetliner that was due to enter service in 1983, in addition to Boeing's new 737-300. Both BAe types were rejected because it was felt that they had insufficient range to permit non-stop flights from BCal's Gatwick base to some of the more distant points BCal already served or planned to serve in Europe and North Africa. Moreover, BCal felt that operating a turboprop on trunk routes would meet with passenger resistance as by that time most people had become accustomed to travelling on jets on these routes.

High fuel prices and a major recession on both sides of the Atlantic were the main reasons BCal ended its 1980/'81 financial year with a small loss.

[edit] Expanding eastwards

As a result of the network structure BCal had inherited from BUA, an exclusive North-South airline, it became a predominantly North-South orientated carrier as well. Although there was a small Western component to the US, the Eastern component was completely lacking. The predominant North-South route structure had been further reinforced by the 1976 "spheres of influence" policy, which had effectively locked the airline's long-haul operation into two continents, Africa and South America, that were often characterised by political instability and economic mismanagement. [7]

BCal's senior management realised that it needed to develop the traffic flows across its network in an East-West direction to increase the network's reach and to enable its passengers to make omni directional flight connections. This was also essential to enable the airline to increase its economies of scale and to reach the minimum size envisaged in the Edwards report. BCal's senior management moreover realised that an expansion of the airline's network to the East would give it access to fast-growing markets that were politically stable and well-managed economically, thereby helping to counterbalance the politically unstable African and South American markets where economic mismanagement seemed to be the order of the day.

BCal's new Gatwick-Dubai-Hong Kong route was intended to be just the first step in this expansion to the East.

The Hong Kong route had come about as a result of The UK government decision in 1979 to open up the lucrative route between London and the then Crown Colony of Hong Kong to additional competition. This was to be provided by a second British scheduled carrier to ease the shortage of capacity passengers were experiencing at peak times on the ten-times-a-week monopoly service operated by British Airways between Heathrow and Hong Kong.

A competitive race for the additional daily scheduled service on offer ensued when BCal, Laker and Cathay Pacific, Hong Kong's home town airline as well as its de facto "flag carrier", all filed their own application with the CAA in London.

BCal had proposed running a conventional scheduled service from Gatwick to Hong Kong via Dubai utilising its rapidly growing fleet of McDonnell Douglas DC-10-30 widebodies in a three-class configuration featuring a first and an executive class in addition to an economy cabin. BCal had also agreed to offer a limited number of low fares that would match the lowest fares Laker had proposed. (Laker had proposed to run a daily "Skytrain" service linking London Gatwick and Hong Kong via Sharjah to be initially operated with single-class, 380-seat McDonnell Douglas DC-10-30s while Cathay Pacific had proposed a daily, conventional three-class service linking its Hong Kong base with Gatwick via Bahrain.)

After the hearings into the rival licence applications had concluded, the CAA decided to award a licence for an addtional daily scheduled service between London and Hong Kong solely to BCal.

The CAA rejected both Cathay Pacific's and Laker's rival applications, thus clearing the way for BCal to become the designated second British scheduled carrier on that route.

However, Hong Kong's Air Transport Licensing Authority (ATLA) unexpectedly refused to endorse BCal as the officially designated, second British carrier on the London-Hong Kong route because many influential people in the Crown Colony felt very upset that Cathay Pacific was going to be excluded from one of the world's most lucrative air routes. This caused a minor diplomatic row between the UK government and the colonial administration in Hong Kong. Cathay Pacific immediately began a "back-door" lobbying campaign in the Crown Colony as well as in London, stressing that it had invested millions of pounds 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 eventually relented and allowed Cathay Pacific to join Laker in appealing to John Nott, at the time the UK's Secretary of State for Transport, against the CAA's award of a licence exclusively to BCal.

The Secretary of State for Transport decided to overturn the CAA's decision and to throw the route open to all three airlines, i.e. BCal, Cathay Pacific and Laker, without imposing any restrictions on the frequencies of their proposed services.

As far as Laker Airways was concerned, this unfortunately turned out to be only a "partial victory" because the ATLA continued to refuse granting it a reciprocal licence, without which Laker's proposed service remained grounded.

On the other hand, Cathay Pacific's simultaneous entry into the London-Hong Kong market necessitated a reduction in frequency of BCal's planned service. BCal decided to operate only four weekly round-trips instead of offering a daily service as originally planned. (This had negative consequences for revenue and profit projections because any prime long-haul business route operated at a frequency of less than one flight per day in each direction constitutes a less attractive product for business travellers. It also means that it takes longer for the route to be in profit. Nonetheless, over the coming years traffic grew faster for all airlines than initially predicted, partially as a result of subsequently obtaining full traffic rights to carry passengers, cargo and mail between London and the intermediate stop-over points in the Gulf as well as between those points and Hong Kong. This in turn, enabled BCal to operate a daily service within two years from the date of the route's launch.)

In the event, Cathay Pacific commenced a thrice-weekly service between Hong Kong and Gatwick via Bahrain on July 17, 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 August 1, 1980 using a McDonnell Douglas DC-10-30.

BCal subsequently obtained traffic rights to fly to a number of additional points in the Gulf as well as the Saudi Arabian capital Riyadh. Following the 1985 route swap with BA, BCal became the sole UK flag carrier to the whole of Saudi Arabia.

In May 1987 BCal launched its second route to the Far East when it launched a thrice-weekly service from London Gatwick to Tokyo. At the time of BCal's application to the CAA for a licence to begin scheduled services to the Japanese capital, it had also applied for a licence to extend this new route to Seoul, which was not served by any British scheduled airline at that time. BCal had hoped that gaining access to both of these prime business destinations would give it a foothold in the air travel markets of Japan and South Korea, then Asia's two leading economic powerhouses. However, BCal lost out to BA's rival application to commence scheduled services to the South Korean capital from Heathrow. (This seemed to be a replay of what had happened a few years before when the airline had applied for a licence to serve Manila as an extension of its Gatwick-Dubai-Hong Kong route.)

[edit] An engine overhaul plant

Since its inception BCal had relied on third parties to overhaul all of its aircraft's engines. (For example, at that time BCal had a contract with BOAC to overhaul the Rolls-Royce Conway engines of its VC-10s.)

However, with the growth in its widebodied fleet during the early 1980s - most of which had been acquired direct from their manufacturers and were powered by GE CF6-50 or CF6-80 engines, it started making sense to bring the maintenance of the engines powering a substantial part of the fleet back in-house and to sell any spare capacity to third party airlines whose aircraft had the same powerplants.

In 1981 BCal opened its new engine overhaul plant at Prestwick Airport near Glasgow in Scotland. The new engine overhaul plant was owned and run by Caledonian Airmotive, a dedicated, wholly owned subsidary of the airline, which had been set up with technical support from GE and had qualified for a local government grant.

As Caledonian Airmotive's engine overhaul business grew and the plant was expanded, the overhaul of other engine types - including non-GE types - was added as well.

On March 4, 1987 Caledonian Airmotive was sold to the US-based transport, logistics and supply chain management specialist Ryder Systems as part of a major asset disposal programme, which was initiated to keep the British Caledonian Group afloat during the crisis it faced at the beginning of the second half of the 1980s.

[edit] An unexpected setback

The 1982 Falklands War was an unexpected, major setback for BCal. Argentina's decision to close its airspace and airports to all UK-based airlines as well as to all UK-registered aircraft and Peru's decision to follow suit as an expression of its solidarity with Argentina resulted in the loss of the most profitable parts of BCal's South American network, especially Buenos Aires - its most profitable destination in that part of the world - and the lucrative "fifth freedom" traffic rights between Madrid and Buenos Aires. Instead, that conflict left the airline with an unprofitable "rump" network because the remaining routes to Brazil, Venezuela and Colombia did not generate sufficient traffic to be profitable on their own, even after a reduction in frequencies. (The closure of Argentina's airspace had also made BCal's operations to/from Santiago de Chile unprofitable as BCal's aircraft had to take a long detour en route between Brazil and the Chilean capital. This almost doubled the flying time resulting in significantly higher fuel consumption. This, in turn, made the airline's operation on this sector prohibitively expensive, thereby rendering it unviable.) Another negative consequence for BCal was that one of its eight McDonnell Douglas DC-10-30 widebodied jets suddenly became surplus to its long-haul scheduled requirements forcing the airline to look for alternative work to increase long-haul fleet utilisation.

Laker Airways' collapse at the beginning of February of that year provided BCal with additional work to utilise its spare aircraft capacity. BCal assumed Laker Airways' contract to operate the twice weekly Gatwick-Luxembourg-Barbados service of Caribbean Airways (as International Caribbean Airways had become by then). BCal also accepted a contract from Air Seychelles to launch a twice-weekly Gatwick-Frankfurt-Mahe service on behalf of that carrier as well as to take over KLM's contract to provide a weekly service on behalf of Surinam Airways between Amsterdam and Paramaribo.

Laker Airways' demise furthermore enabled BCal to relaunch a daily service between Gatwick and Los Angeles as well as to acquire six aircraft from the failed carrier's estate and to move into the hangar it had occupied at Gatwick. The ex-Laker aircraft that joined BCal's fleet included two DC-10-10s as well as four BAC 1-11-300s. BCal used the former aircraft to set up a new, wholly owned charter subsidiary. The latter aircraft as well as three second-hand 1-11-500s that had been acquired from other sources replaced BCal's seven, aging 1-11-200s. (BCal sold the entire seven-strong 1-11-200 fleet to Florida Express, a new start-up carrier in the US.)

Other positive developments for BCal in what was a difficult year included the first expansion of its short-haul European network in eight years as well as the establishment of a dedicated commuter network.

In addition, 1982 was the first time a Boeing 747 wearing BCal's full livery joined the airline's fleet on a long-term lease to provide additional passenger and cargo capacity on the prime long-haul route to Lagos. Moreover, 1982 saw the retirement of BCal's last passenger-configured Boeing 707 as well as the adoption of a new policy to carry all scheduled air freight in the belly holds of the airline's widebodied passenger aircraft only.

During 1982 BCal also applied to the UK and Australian authorities for permission to launch a full-fledged, three-class scheduled service between Gatwick and Melbourne via Colombo at a frequency of four flights a week each way. BCal proposed to inaugurate what would have been the first ever scheduled operation Down Under by a wholly privately owned, Independent British airline with McDonnell Douglas DC-10-30s. BCal furthermore held out the prospect of placing an order for brand-new, higher capacity Boeing 747-200Bs powered by Rolls-Royce RB211 engines to replace the DC-10s on that route as soon as this was justified by increased demand to improve its chances of having its application approved by the UK authorities. It tried to win over the Australian authorities by promising to give a major boost to Australia's inbound tourism from the UK as well as to deliver a steady stream of international transfer passengers to Qantas and Ansett Airlines, Australia's two leading domestic airlines. Eventually, BCal's application to launch its proposed scheduled route from the UK to Australia did not succeed, mainly because of Qantas' determined opposition to any move by the Australian authorities to dilute the lucrative Qantas-BA duopoly on the "kangaroo route". At the same time, the UK authorities had turned down BCal's application as well because it was felt that there was no realistic chance of obtaining reciprocal approval for the proposed service from their Australian counterparts.

Despite being a difficult year for BCal, the airline managed to stay in the black during that period. The airline made a pre-tax profit of £1.1m, which translated into a £300,000 retained profit, in the financial year to October 31, 1982. [8]

[edit] A charter arm

Following Laker Airways' collapse during the first quarter of 1982, BCal decided to re-enter the whole-plane charter business by establishing British Caledonian Charter as its dedicated charter subsidiary.

This enabled the airline to take over several lucrative charter contracts that had originally been awarded to Laker Airways. The unexpected collapse of that airline removed a considerable chunk of capacity from the whole-plane charter market resulting in a recovery of the UK market's typically depressed charter rates. Therefore, BCal's re-entry into that market seemed opportune at the time.

BCal sold a 50% stake in British Caledonian Charter to the Rank Organisation.

British Caledonian Charter was subsequently renamed Cal Air International. A modified, all-white livery prominently displaying a red Lion Rampant on the aircraft's fin was introduced as well.

Following BA's acquisition of the British Caledonian Group, Rank became the sole owner of Cal Air. (Rank's decision to acquire 100% ownership of that airline resulted in another change of name to Novair International Airways.)

[edit] A commuter division

To further improve its network connectivity and to transform Gatwick into a US style airline hub, BCal established a dedicated commuter services network under the British Caledonian Commuter brand at the start of the 1982/'83 winter timetable period. BCal's commuter network was modelled on the Allegheny Airlines commuter system, the first dedicated commuter operation in the world launched in 1967.

The first airline to join the British Caledonian Commuter scheme in 1982 was Humberside-based Genair. [9] [10] That airline acquired a small fleet of Shorts 330 and Shorts 360 commuter turboprop planes, which were repainted in the British Caledonian Commuter colour scheme. Genair used these aircraft to launch new feeder routes linking BCal's Gatwick base with Humberside, Norwich, Teesside, Leeds/Bradford and Liverpool. All flights on the aforesaid routes were operated under BCal flight numbers using the BR designator.

Other airlines that joined the British Caledonian Commuter scheme at its inception included Brymon Airways and Guernsey Airlines. The former operated the feeder routes from Gatwick to Birmingham and Plymouth while the CAA had transferred BIA's Gatwick-Guernsey licence to the latter following numerous passenger complaints about the service BIA had previously provided on that route.

Genair, the British Caledonian Commuter scheme's founding member, eventually folded in what had been a very difficult operating environment for small, Independent regional airlines in the UK during the early 1980s.

However, Genair's loss was made good by other airlines that joined the British Caledonian commuter scheme in subsequent years. These included Connectair, a newly formed regional airline based at Gatwick itself, and Metropolitan, a regional affiliate of Dan-Air based at Bournemouth. RFD, a German regional carrier based at Dortmund, and Southend-based British Air Ferries (BAF) - the successor to British United Air Ferries - eventually became part of the British Caledonian Commuter scheme as well.

Connectair inaugurated a new feeder route from Gatwick to Antwerp and subsequently took over the operation of BCal's Gatwick-Brussels service. Metropolitan linked Gatwick with Bournemouth, Exeter and Southampton. RFD operated a feeder link from Gatwick to Paderborn. BAF revived Gatwick's regional link with Rotterdam, which had been dormant for several years.

BCal even tried to persuade Britair, a regional affiliate of Air France that had provided regional services from Gatwick to several provincial towns in Northern France for a number of years, to join its commuter scheme and to feed passengers from French provincial towns into its worldwide network via Gatwick. In the event, Britair declined BCal's offer under pressure from Air France and the French authorities who did not favour a link-up between one of their regional airlines and a foreign carrier.

[edit] Further expansion into Europe

Following BA's decision to abandon the short-haul routes it had been operating from London Gatwick at low frequencies since 1978 and to surrender a number of unused licences to the CAA, BCal, Laker Airways and Dan-Air requested the CAA to transfer these licences to themselves.

BCal applied to take over BA's scheduled operation between London Gatwick and Frankfurt as well as BA's dormant Gatwick-Geneva licence. BCal was awarded both licences. (Laker Airways was awarded licences formerly held by BA from Gatwick to Berlin Tegel and Zurich. Dan-Air obtained the Gatwick-Dublin licence BA originally held.)

The fairly "liberal" bilateral air services agreements between the UK and Germany as well as between the UK and Switzerland - compared with other, contemporary air services agreements the UK Government had concluded with its overseas counterparts - enabled BCal to commence double daily scheduled services in each direction on both routes within a relatively short time span following the award of the licences. This was the first time since 1974 that BCal was able to launch new routes from Gatwick to Europe. These were BCal's first scheduled services to Germany and Switzerland, which were going to be important sources of feeder traffic for the airline's long-haul services from Gatwick.

The launch of the two new routes coincided with the introduction of a dedicated business class cabin on all of BCal's short-haul flights to Europe, the first time the airline had offered two classes on its short-haul routes since its inception - with the exception of a brief period in the early 1970s during which it had offered a first class on the Gatwick-Paris route. (BCal used the "Executive Class" brand for both its new European as well as its longer established long-haul business class.) However, all of the airline's short haul domestic services - including Gatwick-Jersey - remained one-class.

In addition to BCal's expanded European schedule, the airline launched several new regional, UK domestic routes from its Gatwick base, which were operated by its partner airlines participating in the British Caledonian Commuter scheme. (BCal also resumed scheduled operations to Los Angeles and added Douala to its network during that time.)

On the downside, BCal further reduced its frequency on the Gatwick-Glasgow and Gatwick-Edinburgh trunk routes to a maximum of only three round trips per day as a result of the Government's decision to overturn the CAA's rejection of British Midland's application to launch scheduled services on the main London-Scotland trunk routes from Heathrow.

[edit] Launching a new narrowbodied plane

In 1983 BCal became the first airline in the world to order the Airbus A320. BCal placed a firm order for seven A320s and took an option on another three, with deliveries of the aircraft on firm order due to commence during the spring of 1988. The options were subsequently converted into firm orders as well.

Although the A320 was bigger than BCal's actual requirement, Airbus Industrie had offered the airline a generous discount to sign up as the aircraft's first customer. Having BCal launch a brand-new narrowbodied aircraft, gave the manufacturer added credibility in its global sales campaigns. This was of particular importance in the all-important US market, which Airbus needed to penetrate with its new aircraft if it wanted to break the stranglehold archrival Boeing had enjoyed in this market segment with its venerable 737 for over one-and-a-half decades. Airbus knew that the major US carriers that were prime targets of its North American sales campaign would be highly suspicious of the new aircraft's commercial credentials if state-owned, foreign flag carriers like Air France and Lufthansa were the only launch customers it had. Therefore, having a wholly privately owned, successful Independent airline with a major, worldwide scheduled presence like BCal order a brand-new, technologically advanced aircraft came in handy.

BCal intended to use its A320s to replace the aging 1-11s on its short-haul European and its medium-haul North African routes. (It intended to keep a small number of 1-11s for a few more years following the delivery of its first A-320s to continue plying UK mainland domestic routes.)

Furthermore, 1983 finally saw the introduction of daily flights on BCal's Gatwick-Dubai-Hong Kong route. This coincided with the launch of a new, enhanced long-haul business class, which BCal branded "Super Executive Class".

Moreover, that year the CAA awarded BCal a licence to commence scheduled services from Gatwick to Riyadh in preference to BA's rival application for a licence to launch a scheduled Heathrow-Riyadh operation.

During that year BCal and its affiliated companies also adopted a new organisational structure to reflect the growth in the group's business as well as the diversification into new activities in recent years. British Caledonian Group became the new holding company. It had a paid-up share capital of £20m. [11] Apart from the airline itself, its other subsidiaries included British Caledonian Aircraft Trading, British Caledonian Flight Training, British Caledonian Helicopters, Caledonian Airmotive, Caledonian Hotel Holdings and Caledonian Leisure Holdings. (Caledonian Hotel Holdings acquired ownership of all the airline's hotels in the UK and overseas while Caledonian Leisure Holdings became the owner of the company's tour operators.)

In addition, this was the time BCal began implementing a new co-operative, industrial relations strategy, which it called The Way Ahead. This strategy was designed to make the airline the most productive among its peers in Europe by redefining established working practises. Its aim was to achieve a significant reduction in labour costs through increased productivity, thereby putting the firm ahead of its rivals. It was hoped that this would ultimately translate into higher profits as well.

In a nutshell, the afore-mentioned strategy sought to gain acceptance among eligible BCal employees by offering them a higher basic rate of pay and a greater personal involvement in the management's decision-making process in return for forgoing their overtime pay and agreeing to new, more efficient working practises that resulted in increased labour productivity. [12]

The subsequent, successful implementation of the new industrial relations strategy made BCal employees the highest paid airline staff in the UK at the time.

Overall, 1983 turned out to be another tough year for BCal. In the financial year to October 31, 1983 the airline made a pre-tax profit of £2.6m. This translated into a £300,000 retained profit at group level. [13]

[edit] A flight training academy

As part of BCal's overall 1980's diversification strategy, the airline's senior management decided to establish British Caledonian Flight Training as a wholly owned flight training academy in a joint venture with GE Commercial Aviation Training (GECAT), a key part of GECAS. This enabled BCal to train its own flight deck crews in-house, rather than having them trained by other airlines. (For example, prior to the establishment of British Caledonian Flight Training, BCal had sent its 1-11 flight deck crews to train in the flight simulators of Aer Lingus and Allegheny Airlines/US Air at various times.) It also enabled BCal to sell any spare capacity to third parties.

The new flight training academy was sited in the Manor Royal industrial area of Crawley close to the British Caledonian Group headquarters at Caledonian House and within easy reach of Gatwick Airport. It was equipped with several new, state-of-the-art flight simulators for a range of contemporary narrow- and widebodied aircraft types.

Following BCal's asset disposal programme in the wake of the 1986 crisis, GE acquired sole ownership of the former BCal flight training academy.

[edit] Changing the game plan

1984 was another record year for BCal that exceeded the record financial performance of 1978. It ended the financial year to October 31, 1984 with a pre-tax profit of £17.1m. This translated into a £10.9m retained profit at group level. [14] These profits were the result of the much improved state of the British economy, which had staged a recovery from the severe recession of the early 1980s, as well as BCal starting to reap the benefits of the new industrial relations strategy it had begun implementing the year before.

1984 saw the arrival of two brand-new A310-200 widebodies at BCal's Gatwick base.

During 1984 Riyadh, Muscat and Libreville were added the network. At the start of the summer timetable period frequencies to Frankfurt and Geneva increased to three daily round-trips. Connectair and RFD joined the British Caledonian Commuter scheme adding new, regional feeder routes from Gatwick to Antwerp and Paderborn. Connectair also assumed the operation of BCal's Gatwick-Brussels route. BCal furthermore decided to withdraw its Glasgow-Newcastle-Amsterdam regional service to focus its operations on providing worldwide scheduled services from London only. (The Glasgow-Newcastle-Amsterdam route was taken over by Air UK. [BCal's Edinburgh-Newcastle-Copenhagen service had already been withdrawn several years before.]) BCal moreover decided to retire the four ex-Laker 1-11-300s and to acquire another second-hand 1-11-500, giving it a total fleet strength of 13. This enabled the airline to standardise its short-haul, narrowbodied fleet on the same aircraft sub-type, thereby enhancing its ability to interchange aircraft across that fleet. In addition, BCal decided to hush-kit the entire 1-11 fleet to comply with stringent noise abatement rules that had come into force at some of the airports on the Continent to which it used to fly, especially in Germany and Switzerland.

1984 also marked the end of the long-haul, narrowbodied era for BCal when the last Boeing 707 - a 320C series freighter - left its fleet.

The acquisition of transatlantic ABC flight and package tour market leader Jetsave in 1984 enabled BCal to improve its economy class loads on its US routes by filling seats that would otherwise have remained empty with Jetsave customers.

A number of major events that were to have a decisive impact on BCal's future occurred during 1984 as well.

Most importantly, the UK Government began to prepare then wholly state-owned BA for privatisation in earnest by appointing a new board of directors with several years' experience in private industry as well as by changing its legal status from a Crown Corporation to a public limited company. BCal's senior management saw this as a major threat to the company's continuing existence as the UK's second largest international scheduled airline. According to BCal's own calculations, at the time BA alone accounted for 83% of all UK scheduled airline capacity as opposed to a mere 14% for BCal itself. This meant that a privatised BA on this scale would enjoy far greater financial clout than BCal. It also meant that BA's market power would be disproportionate compared with that of any other UK airline as a result of its much greater economies of scale. Furthermore, the Government's decision to proceed with BA's privatisation inevitably meant the end of the "Second Force" policy, which had guided BCal's development for one-and-a-half decades since its inception, as well. In addition, the transfer of BA's ownership from the public to the private sector meant that BCal could no longer rely on the indirect protection Government ownership afforded it to prevent BA from abusing its power - for example, by engaging in anti-competitive behaviour against BCal. These views were generally shared by the UK's other Independent airlines.

To redress this competitive imbalance, BCal proposed to the Government the transfer of several of BA's most lucrative long-haul routes to itself - including BA's highly profitable Saudi Arabian routes as well as that airline's routes to Delhi and Kolkata (then still called Calcutta) - as well as the removal of capacity restrictions on all short-haul European routes it already served from Gatwick. The airline furthermore proposed to take over BA's services from Gatwick to the Iberian peninsula as well as that airline's services from Gatwick to the Caribbean. Moreover, BCal wanted the Government to pursue additional opportunities for dual designation in its [re-]negotiations of existing and new bilateral air services agreements with foreign governments on its behalf - in particular, to the Far East as well as to East and South Africa and Canada at a later stage. BCal was prepared to pay BA £200m for the routes to be transferred as well as for seven of its most modern, Rolls-Royce RB211-powered Boeing 747-200Bs and the associated staff to operate these routes. BCal also reckoned that this would allow it to grow to the minimum size that was required to turn its Gatwick base into an efficient hub to enable it to prosper in the post-BA privatisation environment. BCal was furthermore of the opinion that this would allow it to increase its scheduled capacity to about a quarter of all UK scheduled airline capacity while permitting BA to continue in its role as the dominant UK scheduled carrier, which would still have accounted for ca. 70% of total scheduled capacity.

BCal's senior management told the Government that the only alternatives to this proposal were shifting its existing scheduled operation from Gatwick to Heathrow's then new Terminal 4, which it expected to produce an additional annual profit of £20m, or to merge with BA. [15] BCal's senior management also told the Government that its preferred option was to remain at Gatwick and to strengthen its position there through the proposed route transfers to enable BCal to turn it into an efficient hub-and-spoke operation that would allow it to compete with BA and the US "mega" carriers on a level playing field. The airline's senior management furthermore told the Government that a merger with BA was its least preferred option.

The late Lord King of Wartnaby, BA's newly appointed chairman, infamously dismissed BCal's offer to purchase BA's assets for £200m as a "smash-and-grab raid". He also made it clear to the Government that he and his fellow board members fiercely opposed transferring any of these assets to BCal. Lord King also left the Government in no doubt that it would find itself in the highly embarrassing situation of having to dismiss the entire board if it imposed a route transfer to BCal against the BA board's will.

The opposing views of Britain's two main scheduled airlines on the future shape of the British air transport industry led to a review of the Government's airline competition policy by the CAA. The result was CAP 500, an official document in which the CAA outlined the findings of its review of existing UK airline competition policy. This document also contained a number of recommendations that were designed to ensure that a competitive balance between BCal and the UK's other Independent airlines on one hand and a privatised BA on the other was maintained.

The CAA broadly endorsed BCal's proposals by recommending the transfer of BA's Saudi Arabian as well as its Caribbean and Iberian peninsula routes to BCal. The CAA also recommended removing all capacity restrictions on BCal's existing short-haul European routes. It furthermore advocated increasing the opportunities for designating BCal as the second UK flag carrier on additional long-haul routes where BA was the only UK scheduled airline. This was to be achieved through appropriate amendments to the relevant bilateral agreements. (In addition, the CAA favoured a scheme under which BA would give financial assistance to other Independent airlines to take over BA's existing regional operations as well as to launch new regional routes.)

Full implementation of CAP 500 would have resulted in strengthening BCal's position at Gatwick by making it the sole UK scheduled airline on all trunk routes from that airport while maintaining BA's status as the dominant UK scheduled carrier at Heathrow. (It would also have resulted in BA's complete withdrawal from the regions.)

In the event, under pressure from BA's board as well as to ensure BA's successful flotation, the Government decided not to accept the CAA's recommendations in full. Instead, it settled on a limited route transfer from BA to BCal. This entailed transferring BA's highly profitable Saudi Arabian routes to Dhahran and Jeddah to BCal to add to its new route to the Saudi capital Riyadh. The Government thought that this would strengthen BCal by making it the sole UK flag carrier to all of Saudi Arabia and that it would tie in well with BCal's "linking the oil capitals of the world" corporate strategy, which it had successfully pursued since the late 1970s. To be seen as "even-handed" by both parties as well as to counter BA's accusations of displaying "favouritism towards BCal", the Government required BCal to hand over its loss-making South American routes to BA.

The limited route transfer on which the Government had decided was far less ambitious than either BCal's own proposals or the CAA's recommendations and would still leave it far smaller than BA and the emerging US "mega" carriers. Although this was less than it had bargained for, BCal's senior management decided to accept the Government's decision because they estimated the two Saudi Arabian routes BA was going to transfer to be worth £18m in additional annual profits. This would be only £2m less than BCal expected to earn in extra yearly profits from its existing network had it been able to transfer its entire operation to Heathrow. Given these magnitudes as well as Heathrow's already tight slot situation at peak times, BCal's senior management considered this difference in annual profitability "immaterial".

The route transfer was to take place at the start of the 1985 summer timetable period.

The fatal shooting of Woman Police Constable (WPC) Yvonne Fletcher, a young, female police officer of the London Metropolitan Police force, on April 17, 1984 while on duty in front of the so-called "Libyan People's Bureau", the Libyan embassy in London's St. James's Square and the British Government's subsequent decision to sever its diplomatic relations with Libya was a major setback for BCal. It resulted in the sudden loss of BCal's highly profitable Gatwick-Tripoli route - at the time its second most profitable route behind Gatwick-Lagos - when the Libyan authorities' decision to close their airspace to British airlines and aircraft forced a BCal A310 en route to Tripoli to turn back over the Bay of Biscay and return to Gatwick.

The loss of the Tripoli route led to the decision to dispose of both newly delivered A310s as well as to cancel the delivery of the third aircraft BCal still had on firm order.

A comparatively very minor setback BCal suffered at the time was the CAA's decision to turn down Connectair's application to take over British Midland's Gatwick-Belfast operation as part of the British Caledonian Commuter scheme and to transfer the licence to Dan-Air instead. (The CAA felt that Dan-Air's proposal to replace British Midland's thrice-daily turboprop service with a twice-daily mainline jet operation represented a "materially superior" proposition to provide a scheduled air service on a trunk route than Connectair's rival proposal to use unpressurised 30-seater commuter planes to maintain the same frequency as British Midland.)

1985 was the year that broke all previous financial records at BCal. The pre-tax profit in the financial year to October 31, 1985 reached an all-time high of £21.4m. (The retained group profit for that period was £11.3m.) [16]

The limited route transfer on which BCal had agreed with BA and the Government took effect at the start of the 1985 summer timetable period when BCal commenced scheduled operations from Gatwick to Dhahran and Jeddah replacing the BA service from Heathrow. At the same time BCal relinquished its traffic rights to Recife, Salvador, Rio, Sao Paulo, San Juan, Caracas and Bogota. BA acquired these traffic rights and began serving most of these destinations from Heathrow.

A second 747 wearing BCal's full livery joined the fleet permitting the resumption of a daily Gatwick-JFK service during the summer of 1985, after the airline's absence from that route for over a decade.

The temporary lease of a Viscount sporting the full BCal livery for the duration of the 1985 summer timetable period enabled the airline to increase capacity on the Gatwick-Brussels route by replacing smaller aircraft Connectair used to operate that service under the British Caledonian Commuter scheme as well as to add more capacity on week-ends on the busy Gatwick-Jersey route.

Two more, second-hand DC-10-30s were acquired to replace both of BCal's A310s, which left the fleet when the additional DC-10s arrived.

As Gatwick became busier, BCal's senior management called on the Government to ban all charter flights from the airport and to move those services to Stansted instead. (In 1979 the BAA had struck a legally binding agreement with West Sussex County Council obliging the airport operator not to build a second runway at Gatwick for 40 years in return for gaining the council's approval to begin construction of a second terminal there. BCal's senior management was concerned that in years to come Gatwick would run out of a sufficient number of viable slots. BCal needed these slots to continue expanding at the airport and to transform it into a proper hub-and-spoke operation.)

The Government decided to meet BCal's request for a ban on all charter flights from Gatwick "half-way" by agreeing to give preference to scheduled services in all future slot allocations at the airport.

The collapse of the oil price during the mid-1980s had serious repercussions for BCal's revenue and profit projections as this impacted the airline's oil-related business routes on which the airline had depended for most of its profits since the late 1970s. All of these routes carried fewer premium business travellers than anticipated. This, in turn, led to a sharp decline of those routes' profitability and, hence, to their contribution to the airline's overall profitability. In the case of the newly acquired Saudi Arabian routes this meant that they delivered less than half the projected profits.

The limited route transfer had allowed BCal to grow its scheduled capacity to about 18% of all UK scheduled airline capacity, while BA only suffered an insignificant reduction in its share of total scheduled capacity.

BCal's 18% share was still far less than the minmum size BCal needed to acquire the economies of scale to compete with BA as well as the US "mega" carriers on a level playing field. It was also far less than envisaged in the Edwards report prior to BCal's formation.

This situation was unsatisfactory for the airline as well as unrewarding for its shareholders.

Therefore, under pressure from its controlling shareholder 3i, the search for a new, long-term strategy began. [17]

As a consequence of its main shareholder's dissatisfaction, the British Caledonian Group's board of directors established contact with ILG's board in November 1985. The purpose of this meeting was to begin exploring ways of combining BCal's and Air Europe's separate short-haul operations in a new joint venture that would have enabled both airline's to acquire the economies of scale to compete with a privatised BA on a level playing field. Another objective of this exercise was to smooth out each other's peaks and troughs, for BCal's peaks occured during week days while Air Europe's peaks occurred on week-ends. This meant that both airlines could offer their spare capacities to each other to achieve an overall higher level of equipment utilisation as well as higher load factors throughout the week. ILG's dominant position in the inclusive tour market would also have helped BCal to significantly increase its generally low short-haul loads by filling seats that would otherwise remain empty with ILG's clients, especially on week-ends. A series of meetings ensued. The result was a 150-page study entitled An Airline for Europe. It envisaged the commencement of joint scheduled operations from Gatwick to Hamburg, Munich, Dusseldorf, Milan Linate and Nice in 1987. The next stage of development was to occur during the 1988/'89 winter timetable period when further routes linking Gatwick with Copenhagen, Stockholm, Vienna, Rome and Athens were to be added. The study also envisaged adding services from Gatwick to Zurich, Dublin, Madrid and Lisbon at a later stage to enable the joint venture to acquire sufficient economies of scale to become a viable entity in the long term. However, it also recognised that it might be difficult to implement the last stage of the envisaged expansion as the relevant routes had already been licensed to Dan-Air. [18]

The study also made profit projections for each stage of the envisaged joint venture's development.

These were:

• £3.7m for 1987/'88.
• £5.5m for 1988/'89.
• £25.2m for 1989/'90.

The latter represented a return on total equity employed plus previously retained earnings of 18.2%. This was substantially better than BCal's short-haul operation could ever have hoped to achieve on its own. [19]

Despite several rounds of talks being held that lasted well into the first half of 1986, both sides eventually decided not to proceed further with their joint venture study and to go their separate ways.

[edit] A major crisis

BCal had high hopes for 1986. It intended 1986 to be a "super year" during which it expected to make record profits representing a substantial improvement on the previous year's pre-tax profits of £21.4m (an £11.3m retained group profit), in itself a record performance. The British Caledonian Group expected its turnover to exceed half-a-billion pounds while BCal expected to carry just under two-and-a-half million passengers. The year's crowning glory was to be the flotation of the British Caledonian Group on the London Stock Exchange.

Instead, 1986 turned out to be BCal's "annus horribilis" during which it was facing its most acute crisis as a result of events beyond its control. The airline was never going to recover from this crisis, which ultimately sealed the company's fate.

The events that brought about a dramatic turn-around in BCal's fortunes plunging it into a £19.3m pre-tax loss (a £14.4m retained group loss) included

• the American bombings of Libya during April 1986 in retaliation for that country's alleged involvement in the bombing of the West Berlin discotheque "La Belle" the same year during which several US servicemen as well as a Turkish woman were killed

• the world's worst nuclear accident in Chernobyl in the then Soviet Socialist Republic of Ukraine on 26 April 1986

• the adverse impact of the Nigerian naira's devaluation on BCal's earnings from passenger and freight bookings originating in Nigeria and paid for in the local currency, which the Nigerian government of the day prevented from being repatriated to the UK.

The first two events almost emptied the cabins of BCal's widebodied planes plying the transatlantic routes linking Gatwick with Houston, Dallas and Atlanta as well as New York JFK and L.A. because of a sudden surge in cancellations, especially from passengers based in the US. Many of BCal's American passengers cancelled or postponed their trips at that time because they feared retaliatory attacks by Libyan secret service agents and did not want to risk exposing themselves to the radioactive fallout from the Ukrainian nuclear catastrophe while conducting their business or spending their holidays in Europe. At the time BCal's transatlantic scheduled services accounted for a quarter of the airline's worldwide revenues. The Libyan bombings also dashed any hopes BCal had to resume operations on its highly profitable Gatwick-Tripoli route later that year resulting in a further loss of expected revenues and profits.

The third had a serious impact on BCal's finances at a time of crisis as it denied the airline speedy access to a substantial amount of money derived from passenger and cargo sales in its most important as well as most profitable overseas market. This resulted in a significant revenue loss.

What was already a bad situation for the airline was made worse by the continuing, steep decline of the oil price, which had started the year before. This rapid fall in the oil price reduced the oil industry's spending power, thereby significantly reducing the number of oil-related business passengers planning to fly with BCal in future. As these passengers used to account for a major share of the airline's high-yield premium bookings, future revenue and profit projections needed to be revised as well to take account of much reduced demand for the company's most expensive tickets.

In addition, the Government announced the withdrawal of BCal's licence to operate the high-frequency Gatwick-Heathrow Airlink helicopter shuttle service as a result of the completion of the M25 London orbital motorway, thereby denying the airline's passengers easy access to connecting flights from Heathrow as well as depriving passengers travelling with airlines based at that airport of the opportunity to avail themselves of convenient onward connections from Gatwick. The resulting reduction in the number of passengers changing flights at BCal's Gatwick base was expected to have a detrimental effect on load factors on the airline's profitable long-haul routes. This, in turn, was expected to reduce the profitability of these routes as well as the airline's overall profitability.

As a result of the problems it was facing during that time, BCal was forced to announce 1,000 job losses (out of a total worldwide workforce of 7,700). It also needed to make adjustments to its schedule to take account of the expected changes in traffic patterns. This led to an immediate reduction in the number of weekly frequencies on BCal's underperforming Saudi Arabian routes. The aircraft capacity thus released was redeployed on BCal's well-performing route to Dubai and Hong Kong (increasing the number of weekly round-trips from seven to nine).

Altogether BCal suffered a total revenue loss of £80m - £35m for losses related to the US military action in Libya and the Ukrainian nuclear catastrophe, another £35m related to the devaluation of the Nigerian currency and £10m for the voluntary severance programme to achieve a reduction in the head count - while the airline itself lost two-and-a-half million pounds every month at that time. [20] [21]

The airline embarked upon a major asset disposal programme to compensate for this significant revenue loss as well as to have sufficient funds to keep the business running. These asset disposals included the highly profitable sale of two, relatively young McDonnell Douglas DC-10-30 widebodied aircraft to Continental Airlines, the sale and lease-back of the entire 13-strong, short-haul BAC 1-11 fleet, the sale of six of Caledonian Hotel Holdings' hotels - including the sale of both Copthorne hotels to Aer Lingus, the sale of the Caledonian Airmotive engine overhaul subsidiary to US-based Ryder Systems, the sale of the Caledonian Leisure Holdings tour operator subsidiary and the eventual disposal of British Caledonian Helicopters the following year. [22]

Despite facing a major crisis, BCal continued adding new aircraft, routes and flight frequencies in an effort to maintain a competitve operation.

Two more 747s joined the fleet during 1986. This permitted a major capacity increase on the popular Gatwick-Dubai-Hong Kong route by replacing the DC-10-30s, with which BCal had operated that route since its launch in 1980.

During that year Gaborone and Aberdeen joined the network, the former as an extension of BCal's twice-weekly Gatwick-Lusaka service and the latter as a continuation of the airline's daily mid-day service between Gatwick and Manchester. (The reason BCal decided to add Aberdeen to its domestic network was a major frequency reduction - from four to two daily round-trips - in Dan-Air's Gatwick-Aberdeen schedule as a result of reduced demand in the wake of the mid-'80s oil price collapse. That airline's decision to cut the number of flights it operated on the aforesaid route in half negatively impacted BCal's network connectivity at Gatwick, especially for its premium business travellers working in the oil industry who depended on well-timed connections between Aberdeen and BCal's long-haul flights serving important oil destinations in Texas, the Middle East and West Africa.)

BCal's acquisition of a fifth 747 the following year permitted the launch of a new route from Gatwick to Tokyo at the end of May in 1987, at a frequency of three return flights per week. Two of these flights were operated non-stop in each direction making BCal the first UK airline to fly non-stop between London and Tokyo. (BCal managed to beat BA, whose competing non-stop Heathrow-Tokyo service commenced on June 4 of that year, by a few days.) The third flight was operated with a stop in Moscow each way. (At the time the Soviet authorities demanded that most West European airlines whose aircraft were passing through its airspace en route between Europe and Japan operate at least one flight in each direction with a stop in the USSR's capital.) In addition, for the first time in five years, two new European routes were launched from Gatwick. These served Milan Linate and Nice at a frequency of ten and three return flights per week, respectively.

In June 1987 BCal formally objected to the CAA's decision to license Air Europe to launch eleven new scheduled routes from Gatwick to Europe, many of which would compete with BCal's existing services. [23]

As late as November 18, 1987, when the battle to gain control of the ailing British Caledonian Group was in full swing and a decision on its eventual fate was only a few weeks away, BCal filed a counter application for additional route licences to commence scheduled services from Gatwick to Copenhagen, Stockholm, Oslo, Rome and Athens with the CAA. (Air Europe announced its intention to launch eleven new scheduled routes from Gatwick to Europe at a press conference in London later that day.) [24]

[edit] Launching the DC-10's successor

Despite its precarious financial position, McDonnell Douglas managed to persuade BCal to sign up as a launch customer for its proposed MD-11 trijet, the successor to the DC-10, well ahead of the programme's formal launch on December 30, 1986.

BCal placed a firm order for three aircraft. It also took an option on a further six aircraft. Delivery of the three aircraft on firm order was expected during 1990.

In addition to qualifying for a significant manufacturer discount as a launch customer, BCal chose the MD-11 over competing, new aircraft models because of the high degree of commonalty with its existing DC-10 fleet, thereby helping it minimise crew conversion and maintenance costs.

Eventually, BCal's MD-11 order was taken over by American Airlines.

[edit] Rapidly deteriorating financial performance

By July 1987 BCal had already exhausted most of the proceeds from the asset disposal programme.

The proceeds from the sale of two DC-10s to Continental Airlines was all that was left to keep the airline in business. Senior management realised that the company was unlikely to survive on its own and that it needed to act fast if it wanted to avoid BCal's collapse. [25]

Therefore, the search for a financially strong partner acquired a renewed sense of urgency.

Several rounds of talks that were aimed at achieving a full-scale merger ensued with various airlines in the UK, the US, Canada and Europe.

(According to figures subsequently released by BA, BCal lost £32m during its last year of operation.)

[edit] Diminishing future prospects

BCal's future prospects as a stand-alone, medium-sized airline operating a variety of short-, medium- and long-haul scheduled services were rapidly diminishing against a background of looming consolidation in the airline industry. This was driven by the emerging US "mega" carriers that had begun channeling their traffic flows into powerful hub-and-spoke operations rather than feeding these into the networks of BCal and other international partner airlines in the wake of US deregulation. In addition, BA's impending privatisation and the Government's refusal to fully implement the recommendations contained in the CAA's airline competition review document meant that BCal was unable to acquire the economies of scale it needed to compete with these airlines on a level playing field. This deprived it of achieving higher volumes over which to spread its fixed costs as well as of the capacity to generate the funds to continue investing in fleet renewal, further network expansion and new IT systems. [26]

[edit] Three-way battle to gain control of crisis-stricken airline

BCal's precarious financial position made it obvious for most of BCal's rivals and seasoned industry observers that the ailing airline lacked the financial strength to survive on its own for much longer.

BCal had valuable traffic rights to operate scheduled services on a number of lucrative, long-haul routes to parts of the world that were not served by any other British airline at that time. It therefore became a desirable takeover target and a bidding war ensued between several potential suitors.

The chief protagonists in this takeover battle were BCal's archrival BA as well as ILG/Air Europe and SAS.

[edit] British Airways' agreed takeover bid

On 16 July 1987 both the late Sir Adam Thomson and the late Lord King of Wartnaby, then the respective chairmen of the British Caledonian Group plc and British Airways plc, announced at a press conference the intention of the latter to acquire the former in an agreed £237m bid to a stunned world. [27] They had agreed on this deal only the day before. Officially this was presented as a "merger between equals". However, within the industry it was widely acknowledged as a mutually agreed rescue deal to avoid BCal's collapse. [28] In addition, BA, which had been privatised only in February of that year, was keen to get hold of its main home-grown competitor's most valuable assets. These assets included BCal's lucrative traffic rights to those parts of the world BA could not serve itself as a result of the now defunct "Second Force" policy, which itself had resulted in a "spheres of influence" policy for BA and BCal by preventing both airlines from competing with each other on a number of important long-haul routes. BA also saw this as a "necessary" move to fill the gaps in its global route map to acquire the economies of scale that would permit it to compete against the then emerging US "mega" carriers on a level-playing field. It therefore wanted to get hold of these assets before any competitor could lay its hands on them. Moreover, BA wanted to prevent BCal's assets to pass into the hands of any partially foreign-owned or controlled competitors. It felt that under such a scenario the long-term competitiveness of the entire UK air transport industry was threatened.

[edit] Air Europe's unsolicited counter bid

Following Lord King's outright rejection of ILG chairman Harry Goodman's offer to purchase BCal's short-haul operation - including BCal's 13-strong fleet of hush-kitted BAC 1-11-500s that was used to operate the airline's short-haul domestic and European scheduled services as well as the associated staff that kept these services running - for a "fair" price and to merge that operation with the short-haul operations of ILG subsidiary Air Europe in return for not having the proposed BA-BCal deal referred to the MMC, ILG decided to launch a new counter bid for the entire British Caledonian Group at the end of July 1987. [29]

(This was the second time ILG had made a bid to acquire British Caledonian Group. ILG had launched its first takeover bid, which had valued British Caledonian Group at £36m, in May 1986. [30] [31] That bid had materialised after several rounds of inconclusive talks exploring ways of combining the short-haul businesses of Air Europe and BCal in a new joint venture, which had taken place between ILG and British Caledonian Group since the end of 1985. At the time BCal's senior management had dismissed Air Europe's/ILG's counter bid as "derisory" because it had valued the entire British Caledonian Group's assets far below their minimum expectations.)

Air Europe was concerned that a new entity combining BA and BCal had the power to destroy the UK's remaining Independent airlines, especially with regard to their ability to compete with such a behemoth. At the time Air Europe had ambitions of its own to become a major short-haul scheduled operator. It was planning to launch eleven new routes from Gatwick to Europe, thereby replacing and enhancing the services BCal had provided. Given a combined BA-BCal's superior financial strength, considerably lower borrowing costs and far greater economies of scale, Air Europe's management felt that it would be imprudent to launch these new routes if it had to compete with BA out of Heathrow and Gatwick as well. Therefore, its parent ILG had decided to make a counter bid, which it hoped would either kill off BA's proposal to take over BCal lock, stock and barrel or result in it being referred to the MMC.

To enhance its credibility as a serious contender despite the low price offered to win control of the whole of the British Caledonian Group, Air Europe's bid contained a detailed proposal to return BCal to profitability by way of a reorganisation. This proposal had been prepared by a retired BA head of route planning whom ILG had specifically hired for this purpose. The proposal itself entailed separating BCal into four discrete businesses, each of which would have had its own management who would have been accountable for the performance of their own business unit. The businesses into which BCal was to be split included a long-haul operation using the existing BCal brand, a short-haul operation to be merged into Air Europe's existing short-haul operation using the BCal brand to serve business routes and the Air Europe brand to serve leisure markets as well as an engineering and a ground handling unit. [32]

The long-haul operation was to be re-equipped with a brand-new fleet comprising six Boeing 747-400s and ten Boeing 767-300ERs to achieve a substantial reduction in operating costs and to permit an increase in frequencies. There were to be fewer services to Africa - where the new management wanted to keep only the really profitable routes to Nigeria and Ghana - while a second daily service to New York JFK was to be launched, Dubai was to be de-linked from the Hong Kong service and Hong Kong was to be served non-stop with the new 747-400s (none of the existing aircraft in BCal's long-haul fleet had the range to reach Hong Kong non-stop from the UK with a viable payload). In addition, there were to be more flights to the Middle East making use of a number of unused licences to serve additional destinations in the region, which BCal had obtained during the early 1980s. There was also a plan to apply for traffic rights to serve other destinations in the Far East non-stop from Gatwick in competition with BA's existing services from Heathrow. This combination of more non-stop flights and higher frequencies to prime long-haul destinations would have resulted in a more attractive product for high-yield business travellers, thereby enabling the revamped BCal to become profitable again within a short period of time. [33]

The short-haul operation was to have brand-new aircraft as well, which would have resulted in replacing BCal's 13 aging BAC 1-11-500s with the new Boeing 737-300s Air Europe had on order. It would also have resulted in adopting the Air Europe short-haul in-flight product, which was of a higher standard than BCal's contemporary short-haul product. [34]

BCal's senior management rejected ILG's renewed bid on the grounds that it still did not adequately reflect the value of the group's assets, in particular those of BCal. In addition, BCal's senior management felt that both airlines' nature of operations and their business strategies were incompatible and that therefore there were no synergies to be gained from combining BCal with what they regarded as "just a charter airline". [35]

[edit] A new twist

The October 1987 stock market crash and ILG's successful referral of the original BA-BCal "merger" proposal to the MMC resulted in BA tabling a revised bid to take over BCal. However, the new bid was far less generous than the original one. It was worth only £156.7m. [36] BA's materially inferior offer to buy out the shareholders of the British Caledonian Group led to BCal's senior management, most of whose members were also on the British Caledonian Group's board of directors, turn against BA and to recommend to their shareholders not to accept the revised bid. Instead, with the backing of BCal's controlling shareholder 3i, a desparate search for a "white knight" who was prepared to pay the same amount of money BA had offered to pay in its original bid began. [37] Talks with British Midland, UTA and SAS ensued. Among these sets of talks the one with SAS seemed to be the most promising. [38]

According to contemporary media reports, SAS was prepared to match the price of BA's original bid by offering up to a quarter of a billion pounds for the British Caledonian Group. However, Jan Carlzon, the then chairman of the SAS group, was well aware that the so-called "nationality clauses" in most bilateral air services agreements as well as most countries' legal framework regulating the ownership of their airlines would restrict SAS's direct involvement in BCal's finances to acquiring a minority stake in its holding company. SAS therefore dispatched a team of executives headed by Jan Carlzon to the UK to work out details of a possible "joint" bid involving setting up an employee trust fund that would hold the same number of shares on behalf of British Caledonian Group employees as SAS itself was seeking to acquire so as to be compliant with any rules limiting the stakes foreign individuals or entities could own in a British airline. They were prepared to extend a loan to the trustees of the envisaged employee trust fund to enable them to acquire an equal number of shares on behalf of the group's employees. The SAS executives discussed these ideas with BCal's senior management and the unions representing its staff at the British Caledonian Group's Crawley headquarters as well as with Government officials in London.

Facing a barrage of hostile propaganda and delaying tactics from BA that were designed to stall any third party's competing bid to acquire BCal for as long as possible as well as a "mixed" response to its planned counter bid for BCal from various departments of the UK Government, SAS eventually ran out of time to put together a workable alternative to BA's revised bid for BCal.

SAS's rationale for launching a counter bid for BCal was the airline's desire not to be left behind in the then widely expected scramble for consolidation in the airline industry by becoming part of one of the four or five global airline groupings that were then predicted to dominate the entire industry. (SAS had already acquired a minority shareholding in Texas Air Corp., then the holding company of Continental Airlines, which at that time was the second largest airline in the non-Communist world. During that period it was also courting SABENA with a view to persuade it to become part of the envisaged global alliance.)

SAS thought that BCal's Gatwick base would give it access to a centrally located hub in the world's biggest international air travel market, thereby helping it to overcome its geographic isolation on the margins of Northern Europe. It also thought that BCal's lucrative long-haul routes from Gatwick to Africa and the Middle East would give it access to markets it could not profitably serve itself from relatively sparsely populated Scandinavia and that this would make a good fit with its short-haul European routes - especially its comprehensive schedule to the UK from Scandinavia. SAS furthermore thought that by agreeing to transfer these services from Heathrow to Gatwick, it could also help solve BCal's long-standing problem of not operating enough short-haul flights to improve its long-haul loads from Gatwick.

Had parallel talks to merge with UTA, at the time the largest wholly privately owned airline in France as well as the closest French equivalent to a "Second Force", succeeded, this would have resulted in a "near perfect" fit of both airlines' long-haul networks as these were largely complementary. It would also have given UTA access to a short-haul network - at the time UTA was an exclusive long-haul carrier - operated by BCal and it could have provided additional transfer passengers travelling to/from the UK for that airline's long-haul services from its base at Paris Charles de Gaulle via BCal's Gatwick-Charles de Gaulle feeder services. However, at the time the French authorities were thought to disapprove of establishing an equity link between any of their airlines and a foreign carrier.

Parallel talks with British Midland, which wanted to transfer all of BCal's scheduled services from Gatwick to Heathrow, ended without result at an early stage because BCal's senior management felt that this was not feasible given the tight slot situation at London's premier airport. [39]

BCal maintained that it had held several rounds of "exploratory" talks concerning the airline's potential takeover with a number of US "mega" carriers that were willing to pay a substantial premium over BA's original bid to acquire BCal. These talks had come to nothing because the US carriers feared that there were insurmountable regulatory obstacles to such a cross-border acquisition in the highly regulated airline industry. [40]

[edit] British Airways' revised bid backed up by bullying tactics carries the day

Faced with the prospect of its takeover target being "snatched away" from under its nose by SAS, British Airways began resorting to bullying tactics. In this it had the implicit backing of Lord Tebbit, then a prominent cabinet member of Britain's ruling Conservative Party, who publicly referred to SAS as "Viking raiders" following its attempt to launch a successful counter bid to take over Britiain's second largest scheduled carrier. [41]

BA was using a mix of "rational" and "emotive" arguments to "convince" both the regulators as well as the shareholders of the British Caledonian Group that its revised offer was in their "best", long-term interest.

At the time, SAS used to pursue a high-fares-high-yield strategy in its Danish, Norwegian and Swedish home markets. Therefore, BA argued that the SAS bid for BCal would lead to higher fares and thus would not benefit British consumers. In addition, BA also argued that BCal's takeover by SAS, in which the governments of Denmark, Norway and Sweden each held a 50% stake at that time, effectively represented a "back-door" nationalisation of a significant part of Britain's privatised air transport industry and contrasted this with its own, recent privatisation. In this context, BA highlighted the fact that two of these governments represented countries - Norway and Sweden - that were not even members of the EU at that time and therefore were not bound by the EU's moves to liberalise its member states' air transport markets. BA furthermore argued that this would call into question BCal's international traffic rights as most bilateral air services agreements contained a clause demanding airlines to be substantially owned and controlled by interests based in the countries they represented and went on to argue that this could force the British Government to make concessions to its overseas counterparts that were not in the interest of the British air transport industry to preserve BCal's UK flag carrier status. BA moreover backed up its arguments with the threat that it would immediately apply to the CAA to have all of BCal's licences to operate scheduled air services revoked and that it would also call for the revocation of BCal's AOC. BA based these threats on a clause in the 1982 Civil Aviation Act, which clearly states that any airline claiming UK flag carrier status must be be substantially owned and controlled by individuals who are UK nationals or entities whose headquarters are located in the UK.

As the regulatory environment for such a cross-border airline merger proved to be an international, legal and political mine field and time was running out in view of the continuing deterioration of BCal's financial position that further called its ability to survive into question, the British Caledonian Group's controlling shareholder 3i eventually decided to accept BA's revised bid and to sell it its 41% stake. 3i's December 1987 decision to sell out to BA resulted in the British Caledonian Group's other shareholders selling their stakes to BA as well, thereby sealing BCal's fate. [42]

Following BA's successful takeover of BCal, SAS had a giant hording erected at the entrance to Heathrow's central area featuring an advertisement that ended with BCal's famous 1980s marketing slogan we never forget you have a choice.

[edit] End of a tale

The referral of BA's original bid to take over the entire British Caledonian Group to the MMC had resulted in the imposition of several conditions before the proposed deal was allowed to go ahead. These included BA releasing a minimum of 5,000 annual slots BCal had held at Gatwick to competitors as well as requiring it to surrender to the CAA several of BCal's licences to operate scheduled services from Gatwick on a number of important, short haul feeder routes. Although BA had been permitted to re-apply for these licences, the CAA had decided to re-allocate all of them to rival Independent airlines. [43]

BA also needed to withdraw the objections to Air Europe's application to the CAA for licences to launch new scheduled services on several short-haul routes BCal already used to serve from Gatwick. (BCal had lodged these objections with the CAA at the time Air Europe had submitted the aforesaid application.) [44]

Furthermore, both companies' combined turnover exceeded the minimum threshold that automatically triggers the referral of a proposed merger between two or more companies that conduct a significant part or all of their business in EU member states to the European competition authorities in Brussels. Therefore, the EC's Competition Directorate needed to clear BA's takeover of BCal as well.

In addition to the conditions imposed by the MMC, the EC's Competition Directorate required BA to give a legally binding undertaking that it would not seek to increase its share of Gatwick slots through any additional acquisitions of other airlines and/or their slots at Gatwick until 1992. This measure was intended as a safeguard for other airlines that required access to a sufficient number of attractive slots at Gatwick to launch viable scheduled services in competition with BA.

Air UK, the joint successor to BIA and Air Anglia, had been awarded the licences for BCal's former London-Scotland trunk routes from Gatwick to Glasgow and Edinburgh. Dan-Air had obtained the licences for the old BCal routes from Gatwick to Manchester and Aberdeen via Manchester as well as from Gatwick to Paris Charles de Gaulle and Nice. The licence for BCal's Gatwick-Brussels route was transferred to Air Europe. The CAA also granted Air Europe permission to increase the frequency on its existing route between Gatwick and Paris Charles de Gaulle, where it had already begun to compete with BCal, so that it could match Dan-Air's frequency. Both Air Europe and Connectair had been successful in their applications for BCal's unused European route licences.

BA continued serving all of the aforementioned routes until the new licence holders were ready to assume those operations at the start of the 1988/'89 winter timetable period.

BCal ceased to exist as a legal entity at 00.01 hrs. on April 14, 1988.

Cal Air International, the former British Caledonian Charter operation, was not part of BA's acquisition of the British Caledonian Group. Neither was British Caledonian Flight Training part of that acquisition. (It continued as an independent organisation.)

British Airtours, BA's wholly owned, Gatwick-based charter subsidiary, was rebranded Caledonian Airways, with its aircraft being repainted in a modified BCal livery featuring BCal's Lion Rampant on aircraft fins and female cabin crew members taking to wearing the famous Caledonian tartans.

BA replaced the former BCal short-haul fleet comprising 13 BAC 1-11-500s with 14 Boeing 737-200 "Advanced". (Some of these aircraft had originally been operated by British Airtours in a high-density, single-class configuration and had subsequently been converted into a two-class, scheduled configuration.)

The ex-BCal 1-11s were transferred to BA's regional bases in Birmingham and Manchester.

The five second-hand 747s BA had inherited from BCal were replaced with its own 747-100/200s. (At the time BA already had two 747s stationed at Gatwick to operate its Caribbean schedules from there.)

In addition, BA stationed a Lockheed L-1011 "Tristar" widebodied aircraft at Gatwick, which was used to operate the former BCal West African coastal schedule from Gatwick as well as a number of new routes to North Africa and the Middle East, which BA had transferred to Gatwick from Heathrow.

The only former BCal aircraft BA kept for its Gatwick operation were eight McDonnell Douglas DC-10-30s that had formed BA's erstwhile competitor's core long-haul fleet since the early 1980s.

BA transferred the former BCal routes to Tokyo and Saudi Arabia to Heathrow. To compensate for this loss as well as to utilise its full slot allocation at Gatwick, BA moved its routes to Amman, Baghdad and Cairo to Gatwick. [45]

BA transferred all of its international operations from Gatwick - including those it had inherited from BCal - to the then brand-new North Terminal, which opened in March 1988. (The domestic services BA had inherited from BCal at Gatwick continued using the South Terminal as the North Terminal lacked the facilities to handle domestic flights in those days.)

Delivery of the A320s BCal had ordered in 1983 began to BA's new Gatwick base during the spring of 1988. These aircraft had been painted in BA's contemporary Landor and Associates designed livery. BA operated its first commercial A320 service between London Gatwick and Geneva before transferring the entire A320 fleet to its main base at Heathrow later that year.

[edit] Reasons for the failure of the Second Force concept and for British Caledonian's demise

The prime causes for the failure of the "Second Force" concept and BCal's demise were:

• The unwieldy route structure it had inherited from BUA.

• The Government's reluctance to live up to the spirit of the "Second Force" aviation policy through concrete deeds.

• The Government's conflict of interest as the sole owner of BA as well as the regulator for all British airlines.

• The 1976 "spheres of influence" policy that left both major British scheduled airlines with fragmented networks, thereby putting them at a competitive disdavantage vis-a-vis their main international rivals.

• The political consensus at the time that was suspicious of private enterprise generally and hostile to the idea of wholly privately owned airlines providing scheduled services in competition with wholly or majority government-owned flag carriers, especially on the high-profile trunk routes.

• Highly restrictive bilateral air services agreements with little or no scope for dual designation.

• The cumbersome process to gain a licence to operate a scheduled service during the 1970s and early '80s.

• The fact that on identical routes with the same fare structure load factors, revenues and yields - the profit per passenger - are significantly lower at Gatwick than at Heathrow.

• Gatwick's location and its smaller catchment area compared with Heathrow.

• The Government's failure to fully accept the recommendations of the CAA's 1984 airline competition review paper that would have strengthened BCal's position at Gatwick by considerably increasing the scale and scope of its operation to enable it to withstand the competitive onslaught from a privatised BA.

The route structure BCal had inherited from BUA at the time of its inception was notable for the unplanned and unsystematic manner in which it had grown since the early 1960s.

At the time the late Sir Freddie Laker had begun building up BUA's scheduled route network in his capacity as that airline's managing director. In those days only very limited opportunities existed for wholly privately owned, Independent airlines to provide fully fledged scheduled air services on major domestic and international trunk routes. This resulted in a "poor fit" of many routes in BUA's network of scheduled services, thereby making it difficult to offer sensible connections that could be marketed to the travelling public. It also represented the "best" network structure the late Sir Freddie was able to put in place under the then prevailing regulatory regime.

The most fitting description for the resulting network of domestic, European and intercontinental long haul scheduled services from Gatwick was a "motely collection" of routes resembling a "rag bag". This made it difficult to develop profitable streams of transfer traffic using Gatwick as a hub. For this reason it was always going to be a challenge to persuade people to fly to Gatwick from relatively minor places like Genoa or Jersey in order to make an onward connection at the airport to what many people would consider "secondary" places in Africa or South America, and an even greater challenge to do this profitably.

At the height of its commercial success in the late 1970s and early 1980s, BCal managed to turn the "dilemma" the structure of its route network presented to its advantage by focusing on those routes that carried a very high proportion of potentially very profitable, oil-related, premium business traffic. It even managed to become the "preferred carrier" of many high-ranking oil industry executives based in Texas, the centre of the global oil industry, by providing convenient, "hassle-free" connections between Houston/Dallas, Lagos and Tripoli via the airline's Gatwick base. However, the downside of this initially successful strategy was that it made the company dependent on a small number of markets whose fortunes were tied to the commodity price cycle, in often unstable parts of the world, for most of its profits.

Although this worked in BCal's favour when the price of a barrel of crude oil was "sky-high" during the late '70s/early '80s, it started working against it when the oil price collapsed in the mid-'80s. It also further compounded the firm's growing financial problems at the time, culminating in the financial crisis that led to its takeover by archrival BA.

Despite BCal being awarded several licences to commence scheduled services on a number of high-profile long-haul routes with a good mix of business and leisure traffic, the Government made little or no attempt to assist the airline in obtaining reciprocal traffic rights from overseas governments that would have enabled it to actually use all of these licences.

For instance, the CAA had awarded BCal licences to launch fully fledged scheduled operations from London Gatwick to New York JFK, Los Angeles, Houston, Atlanta, Toronto and Singapore during the 1972 "cannon ball" hearings itself. However, it took the UK Government four years to negotiate a new air services agreement with the US government that actually enabled BCal to make use of its Houston and Atlanta licences. Renegotiation of the then very restrictive UK-Canadian air treaty that could have permitted BCal to operate a scheduled service to Toronto was never attempted. BOAC's resistance to opening up the lucrative Far Eastern route to Singapore to home-grown competition by another British scheduled airline was so strong that BCal eventually only gained an exempt charter permit to operate between Gatwick, Bahrain and Singapore.

In addition, the UK Government began to undermine the "Second Force" concept itself from the moment it decided to re-allocate BCal's unused Gatwick-JFK and Gatwick-L.A. licences to Laker Airways, a rival Independent airline, following the late Sir Freddie Laker's high-profile, public campaign to get his proposed "Skytrain" operation off the ground. [46] The "Second Force" concept was furthermore undermined when the Government overturned the CAA's refusal to grant British Midland a licence to begin domestic scheduled services on the two main trunk routes between London and Scotland from Heathrow itself, without giving BCal reciprocal access to that airport. The "Second Force" policy was finally killed off when the Government decided to go ahead with BA's privatisation in earnest. Moreover, the CAA undermined the Government's "Second Force" policy as well by awarding Air Europe licences to launch scheduled services on several routes from Gatwick to Continental Europe in direct competition with the existing BCal services. These measures significantly weakened BCal. They also had a detrimental effect on the airline's ability to establish itself as an effective competitor to the major scheduled airlines that were operating from Heathrow.

The conflict of interest that arose out of the UK Government's dual role as the sole owner of BA, at the time by far the largest British scheduled airline accounting for between three quarters and four fifth of the total output of Britain's entire scheduled air transport industry, as well as the regulator for all UK airlines meant that the interests of the "Second Force" were not always at the top of the Government's list of priorities. This conflict of interest put the Government in a dilemma when it was preparing BA for privatisation during the mid-1980s in the full knowledge that this was likely to pose a major threat to BCal without substantial route transfers from the former to the latter, which would have enabled BCal to become sufficiently large enough to compete with BA and other major scheduled airlines on a level playing field. At the same time, the Government was well aware that it risked undermining BA's successful flotation on London's stock exchange if it agreed to the transfer of several of BA's most lucrative long-haul routes to BCal as well as the removal of all capacity restrictions on short-haul routes where both airlines were already competing with each other as recommended by the CAA and requested by BCal itself.

The "spheres of influence" policy, which the Government had imposed on both of Britain's major scheduled carriers as a result of an aviation policy review conducted in the mid-1970s against a backdrop of huge losses the airline industry had faced in the aftermath of the early-'70s oil crisis and which had effectively eliminated long-haul competition between BA and BCal, had fragmented both airlines' networks. This had weakened them internationally in comparison with their main overseas rivals. The resulting weakening of BA's and BCal's international competitive strength was of far greater concern to the latter as it was much smaller than either BA or most of its foreign-based competitors and had a less comprehensive network offering fewer connections than most rival airlines.

At the time of BCal's inception, politicians on the left of the UK's political spectrum - in particular, Labour left wingers and most of the unions - fundamentally opposed the very idea of wholly privately owned, Independent airlines providing scheduled services in competition with the state-owned Corporations. These critics' world view had been shaped by their World War II and early post-War experiences. They therefore regarded any form of competition as a "waste of scarce resources". Some of them were also ideologically driven in their opposition to private enterprise playing a prominent role in the UK's air transport industry.

Highly restrictive bilateral air services agreements that had little or no scope for dual designation meant that BCal was effectively kept out of many markets for which it had already obtained licences from the CAA.

Even where the bilateral air services agreement between the UK and a foreign country enabled BCal to be designated as the second UK flag carrier, the airline was still facing numerous capacity restrictions in terms of the number of flights it could operate and/or the number of seats it could sell as well as the lowest fares it could offer. For example, the Anglo-French air treaty did not limit the number of airlines the UK Government could designate on the London-Paris route. However, it stipulated that all British airlines' combined share of the total capacity on that route could not exceed the combined capacity share of all French airlines and that all capacity increases needed to be mutually agreed by both sides. As Air France was the only airline the French government had designated to serve this route, this effectively meant that BA and BCal were compelled to share the 50% of the total capacity between London and Paris that had been allocated to the UK between themselves. It also gave Air France an effective veto over any capacity increase, thereby allowing that airline to dictate the pace at which additional capacity could be added. It took BCal 15 years to reach its maximum capacity allocation of 20% of the London-Paris market's total capacity since it commenced scheduled operations on that route.

BCal tried to "work around" these restrictions by using smaller 1-11-200s in a low-density configuration featuring a first class section on week days and larger, single-class 1-11-500s on week-ends. This enabled it to offer a higher frequency on week days resulting in a more competitive schedule for business travellers while keeping within its allocated capacity share.

During the 1970s and early '80s BCal faced similar capacity restrictions on the London-Amsterdam and London-Brussels routes, while other European governments flatly refused any request from their UK counterpart to have BCal designated as a second UK flag carrier arguing that there was no equivalent of a "Second Force" in their countries that could have matched the additional capacity BCal would have offered.

One of the reasons BCal continued operating the regional routes between Gatwick and Le Touquet as well as Gatwick and Rotterdam, which it had inherited from BUA, for several years was to provide additional capacity to/from alternative airports that were relatively close to the main airports where its operations were subject to capacity restrictions.

Some countries imposed capacity restrictions on BCal's operations even on regional routes that did not compete with any trunk routes and therefore could not have caused any "diversion of traffic" from these routes. BCal's London-Genoa operation was a case in point. The only way the Italian authorities agreed to BCal's request to add an additional Saturday frequency on that route was to compel the airline to enter into a pool agreement with Alitalia. Under that agreement BCal was forced to share its revenues and profits on that route with Italy's flag carrier, even after that airline had decided to withdraw its own Heathrow-Genoa service it had originally operated in competition with the Gatwick-Genoa service provided by BUA/BCal.

Such anti-competitive practises were not confined to BCal's European operations. The bilateral agreements governing most of BCal's long-haul routes obliged the airline to enter into a pool agreement with the designated foreign flag carrier[s]. These agreements stipulated that all revenues and profits were to be equally shared by all carriers serving the same route. This usually meant that revenues and profits were shared on a strict 50:50 basis, regardless of each carrier's actual market share. The only exceptions to this almost "universal" rule were the US as well as the Asian countries to which BCal flew (with the exception of tightly regulated Saudi Arabia). As far as the US was concerned, no US airline was allowed to enter into a pool agreement with any other airline - especially, a wholly/majority government-owned, foreign carrier - as this constituted a violation of that country's tough antitrust laws. With regard to the Asian countries - other than Saudi Arabia - that received scheduled services from BCal, the UK already used to have fully liberalised or fairly liberal bilateral air services agreements with these countries, reflecting those governments' general preference for a less regulated economy.

The generally illiberal and unco-operative attitude of foreign governments and their agencies whose reciprocal permission BCal needed to launch a new international route or to increase the frequency of an existing international service was reflected in the long delays such applications often encountered. These delays were often caused by foreign carriers interceding with their governments to "postpone" granting reciprocal permits for as long as possible because they were really not interested in being exposed to genuine competition - especially, if that competition was going to be provided by an efficient, wholly privately owned, Independent airline like BCal. For example, the Brazilian authorities took nearly five years to approve BCal's request to add a fourth weekly service between the UK and Brazil. (BCal had applied for the fourth weekly frequency to Brazil during the summer of 1974, hopeful that it would gain all necessary approvals in time for the start of the 1974/'75 winter season. In the event, the airline needed to postpone the introduction of this fourth frequency until the spring of 1979.)

These bilateral restrictions seriously impeded BCal's efforts to successfully build a network of short-haul, European feeder services that was essential to provide sufficient transfer traffic for its long-haul routes from Gatwick. Furthermore, these restrictions made it extremely difficult to offer its passengers a more frequent service on certain long-haul routes that could have attracted more high-yield business traffic. It also left the airline with an incomplete network, which resulted in a weak route structure. This, in turn, constituted a major competitive disadvantage.

As a general rule, on average, a full-service scheduled operation at Gatwick with a fare structure that is identical to a similar operation at Heathrow produces a 10% lower load factor. For example, BCal's scheduled load factors at Gatwick rarely exceeded 60% whereas comparable BA load factors at Heathrow were regularly above 70%. BCal tried to compensate for this difference in load factors between Gatwick and Heathrow by being a much more cargo-oriented carrier than BA. Compared with BA, cargo accounted for a far greater share of BCal's total revenues and accounted for a greater share of its profits as well. (Among the European scheduled carriers, only KLM derived a greater share of its total revenues and profits from the carriage of cargo.)

Similarly, on average, a scheduled service at Gatwick also generates a 20% lower revenue and results in an up to 25% lower yield than a comparable service at Heathrow.

Heathrow's and Gatwick's respective geographic location as well as the number of people living within each airport's catchment area accounts for this difference in load factors, revenues and yields.

The former has a bigger catchment area than the latter because more people live north of the Thames than south of it. Heathrow's catchment area includes about three-quarters of London's population and roughly two-thirds of the population in the whole of Southeast England. London is where most of the demand for air travel in the Southeast originates. In addition, for most Londoners Gatwick was a far less accessible airport than Heathrow in the days prior to the M25, mainly as a result of its greater distance from most parts of London. (In those days it took almost two hours to drive there from central London despite there being hardly any traffic jams then. The only advantage Gatwick enjoyed over Heathrow in terms of ease and speed of access was its direct rail link to London Victoria, something which Heathrow lacked at that time. [Prior to 1977 London's premier airport was not even connected to the London Underground network.])

The size of an airport's catchment area and its accessibility are of particular significance for the premium travel market. Back then, Heathrow's relative ease of access meant that it could attract a far grater number of travellers who were living or working in London than Gatwick. Moreover, Heathrow's larger catchment area meant that it was able to offer more frequent flights to a greater number of destinations with more conveniently timed connections. This, in turn, helped attract a greater number of business travellers who were the airlines' most profitable customers. It also meant that there were at least four to five business travellers in Heathrow's catchment area for every business traveller in Gatwick's catchment area.

On the other hand, the differing sizes of Heathrow's and Gatwick's catchment areas are far less significant for non-premium travel as many people are prepared to travel to an airport outside their catchment area to take advantage of a cheaper flight.

This constituted a major competitive disadvantage BCal faced at Gatwick compared with other airlines that were based at Heathrow. It was further compounded by the fact that Gatwick had few connecting flights during the 1970s and early '80s, mainly as a result of the regulatory regime as well as the bilateral air services agreements the UK Government had negotiated with its overseas counterparts. (The former necessitated going through a costly and time-consuming process to gain a licence to operate a scheduled service. This involved lenghty hearings the CAA conducted for each route application where BA and other Independent airlines, which felt the Government's policy of making BCal its "chosen instrument" of the private sector discriminated against them, objected to BCal's application and - in cases where there were several rival applications - against each other as well. The latter often had no scope for designating a second British scheduled airline in addition to the incumbent carrier. This meant that even in those cases where BCal had succeeded in securing licences to operate scheduled services on routes of its choice, it was effectively prevented from using these licences if it involved an international operation where there was no scope in the relevant bilateral air services agreement for the UK Government to designate it as the second UK flag carrier.) At the same time, Heathrow was the most important point for interline traffic in the world with more passengers changing flights there than at any other airport.

Whatever connections there were at Gatwick were mostly provided by BCal itself, at great cost to the airline. Since the early-'70s oil crisis only the four short-haul BCal routes from Gatwick to Paris, Brussels, Jersey and Genoa had made a positive contribution, with Paris, Jersey and Genoa being the only routes that were genuinely profitable in their own right - i.e. after allocating all overheads. However, given the fact that 40% of the airline's scheduled passengers were changing from one of its flights to another at Gatwick, BCal's dependency on providing this limited number of feeder services was such that withdrawing any of these services or significantly reducing frequencies - even those of loss-making services - had an immediate, negative impact on the loads of the generally profitable long-haul services and, therefore, on the company's overall profitability as well. [47] It was with this in mind that BCal's senior management had always justified keeping its UK mainland domestic trunk routes despite these losing £2m each year ever since BA had introduced its high frequency "Shuttle" service on these routes from Heathrow, which had led to a reduction in frequency of the competing BCal services from Gatwick as the airport's smaller catchment area did not allow BCal to generate the minimum traffic flows that would have made a competing, high-frequency service from Gatwick viable. BCal's senior management estimated that its short-haul domestic feeder flights generated additional long-haul revenues of £5m per annum and that the European feeder services added £20m to the company's long-haul revenues.

The Government's decision to permit a limited transfer of routes from BA to BCal, rather than the major route transfer as well as the removal of capacity restrictions on all short-haul feeder routes proposed by BCal itself and advocated by the CAA's review of airline competition policy ahead of BA's privatisation, did not make BCal big enough in terms of economies of scale and scope it needed to develop an efficient hub-and-spoke operation at Gatwick. This would have enabled BCal to compete with a much bigger, privatised BA as well as the emerging US "mega" carriers on a level playing field. Instead, the limited route transfer still left BCal in an operationally and financially much weaker position than its far bigger and stronger rivals. This increased the airline's vulnerability to external shocks, thereby seriously undermining its financial strength to withstand such crises.

[edit] Facts of interest

• The late Sir Adam Thomson was born on July 7, 1926 into a working class family in Glasgow. He passed away on May 23, 2000 aged 73. He was knighted in 1983 for his services to the airline industry.

• The late Sir Adam was chairman of the Association of European airlines from 1977 until 1978.

• The late Sir Adam reportedly made the following statement during an address at the World Affairs Council some time during the early 1980s: "Recession is when you have to tighten your belt. Depression is when you have no belt to tighten. When you have lost your trousers, you are in the airline industry."

• According to contemporary press reports, the late Sir Adam commented on Air Europe's plan to launch several new routes from Gatwick to Europe in competition with BCal during the second half of the 1980s that there was no sense in the two small boys beating each other about at Gatwick while the big, fat cat was sitting at Heathrow.

• During a meeting of the BCal board to discuss what impact a privatised BA would have on BCal's future an anonymous, hand-written note saying "The writing is on the wall." was supposed to have been passed round the boardroom.

• The late Earl Mountbatten of Burma was on board BCal's inaugural Gatwick-JFK flight on April 1, 1973. The flight diverted to Boston due to inclement weather in the New York area.

• BCal's aircraft were named after famous Scots and well-known Scottish places.

• Some BCal aircraft were allocated out of sequence registrations. For instance G-BCAL was allocated to one of the Boeing 707s, G-CLAN and G-CELT were the registrations of the Piper "Navajo Chieftains", G-DCIO was the registration of the eigth DC-10 and G-HUGE was the Boeing 747 "Combi" registration.

• All BCal aircraft were using retreaded tyres.

• BCal was a full member of IATA since its inception through its membership of both the organisation's Trade Association as well as its Tariff Co-ordination body.

• BCal had an exemplary industrial relations record. It never lost a full day's work as a result of industrial action, which was remarkable in strike-prone 1970s' and early '80s' Britain. [48]

• BCal won many prestigious UK travel industry awards.

• BCal named its Gatwick airside lounge for its premium passengers the Clansmen Lounge.

• BCal held just under one-fifth of all Gatwick slots at the time of its takeover by BA. [49]

• BCal was one of Gatwick's three handling agents during its 17-year existence. (The others were BA and Gatwick Handling.)

• BCal had its on air freight terminal at Heathrow. [50] It used to operate two weekly all-cargo flights from there until the early 1980s.

• BCal owned a handling agent at Hong Kong's old Kai Tak Airport and had its own air terminal in the city centre during the 1980s.

• The MOD awarded BCal the contract to carry members of the UK armed forces and their dependants between the UK and Hong Kong.

• A pair of Boeing 747s BA had acquired following its takeover of BCal continued wearing BCal's livery for nearly two years after the airline had ceased to exist because the Hong Kong Air Transport Licensing Authority refused transferring BCal's licence to operate the Gatwick-Hong Kong route to BA.

• A female first officer flying BAC 1-11s for BCal during the 1970s and '80s went on to become a BA Concorde captain following BA's acquisition of BCal.

• Maureen Wimshurst, a BCal cabin crew member during the early 1970s, won the 1974 Miss London Airport award.

• Tim Clark, vice president of Emirates Airline, and Vic Sheppard, Emirates' UK and Ireland sales manager, were former BCal employees.

• Atul and Virendra Patel, the owners of a small London travel agency named Travel Eye Ltd., reportedly submitted a counter bid to take over the ailing BCal on August 13, 1987. According to contemporary news reports, they were prepared to match the price BA had agreed to pay for the entire British Caledonian Group on July 15, 1987. However, BCal maintained that it had never received any such bid. The Patel brothers themselves decided to withdraw their bid a few days after it had become public. [51]

[edit] Incidents and accidents

BCal had an unblemished safety record throughout its 17-year existence.

During that time there never was a fatal accident involving a BCal aircraft as a result of good airmanship and an extremely high safety consciousness throughout the organisation. This made the airline stand out from many of its contemporary rivals. It also was one of the company's greatest contributions to commercial aviation.

According to the annual airline safety survey for the year 1975 conducted by Flight International, BCal was one of the top three safest airlines in the world, behind Qantas and ahead of Lufthansa.

However, there were a few noteworthy non-fatal incidents involving BCal aircraft.

• On January 28, 1972 a BCal Vickers VC-10-1109 (registration: G-ARTA) sustained severe structural damage as a result of an exceptionally hard landing at Gatwick at the end of a short ferry flight from Heathrow, where the aircraft had been diverted due to Gatwick being fog-bound and where all passengers had disembarked. A survey of the aircraft's damage had revealed that its airframe had been bent out of shape and that it required extensive repairs to be restored to an airworthy condition. The airline's senior management decided that these repairs were not cost-effective. The aircraft was written off and a decision taken to have it scrapped. It was eventually broken up at Gatwick in 1975. [52] (This aircraft had been the VC-10's prototype. It had subsequently been converted as a 1109 series passenger aircraft before being sold in 1969 to Laker Airways, which immediately leased it out to MEA. Laker Airways sold the aircraft to BUA in 1970.)

• During the summer of 1976 a BCal BAC 1-11-500 (registration: G-AZMF) burst all its main wheel tyres while landing at Gatwick at the end of a scheduled flight from Jersey. All occupants were safely evacuated via the aircraft's emergency exits.

• During 1981 a BCal McDonnell Douglas DC-10-30 aquaplaned after touching down on the wet runway at Kano Airport in northern Nigeria. Nobody was hurt in that incident.

[edit] Coding data

• IATA Code: BR
• Callsign: Caledonian

[edit] External links

• British Caledonian web site
• High Risk: The Politics of the Air (Adam Thomson's autobiography published in 1990)
• Fly me, I'm Freddie. (Freddie Laker's biography by Roger Eglin, published in 1980)
• It was nice to fly with friends: The story of Air Europe (by Graham Simon, published in 1999)
• Monopolies and Mergers Commission report on proposed British Airways takeover of British Caledonian
• BA-BCal merger as reported on BBC News, 16 July, 1987
• contemporary timetable images
• 1986 portrait of Sir Adam Thomson, at the time chairman of British Caledonian Airways and the British Caledonian Group, standing inside Gatwick's hangar 3
• Daily Telegraph obituary of Sir Peter Masefield, BCal's former deputy chairman from 1978-1987
• History of British Caledonian's VC-10s
• various, backdated issues of Flight International containing articles relating to British Caledonian and the "Second Force" concept, 1969-1988
• various, backdated issues of the OAG World Airline Guide containing contemporary British Caledonian schedules, 1970-1988