• Laker Airways

The long simmering conflict between Miles Wyatt, chairman of British United Airways and his ebullient hands-on managing director, Freddie Laker, came to a head in late summer 1965, resulting in Laker's resignation. In the event, Laker had been planning a new airline at least a year before his departure from British United Airways and on 8 February 1966 announced the formation of Laker Airways to conduct contract hire and ad hoc leasing based at London-Gatwick.

Having been closely involved in the development of the BAC 1-11 during his early days with British United Airways, Laker capitalised on this relationship to secure the purchase of three of the jet airliners at a cost of £4m, committing over £200k of his own money to the business, with the balance underwritten by a consortium of City of London banks. Pending delivery of the new aircraft, in March 1966 two surplus Bristol Britannias were obtained on lease-purchase from BOAC at a knockdown price of £373,000 and sporting Laker’s horse racing stable colours, began commercial operations on 29 July 1966. Much of the early work involved European ad hoc charters and sub-leases for other carriers, amongst them British United Airways and Air France.

Later in the year the Britannias were employed to carry fuel and general cargoes into Zambia, at the time isolated from the coast by loss of its dependant rail link through embargoed Southern Rhodesia. Aided by a loyal team of former employees and business colleagues, Freddie Laker set about finding work for his impending BAC 1-11s and came up with the idea of 'time charters', long in use in maritime circles. This involved committing an aircraft exclusively to the contractor for a specified period at an inclusive set price. Amongst the early takers were up-and-coming inclusive tour operators, Lord Brothers Ltd and Wings Ltd, an offshoot of the Ramblers Association. The Lord Brothers deal guaranteed a minimum utilisation of 1,700 hours for one aircraft for the 1967 season and was worth in excess of £500,000.

Laker's first BAC 1-11 was delivered in February 1967 and immediately placed on long term wet-lease to Air Congo for their scheduled domestic and regional services from Kinshasa. The remaining two, arriving in April and May, were employed on inclusive tour contracts flying from Gatwick and Manchester. Endeavouring to get the best economic usage of the new aircraft, Laker Airways pioneered several original concepts; employing reduced thrust take-offs to limit engine wear and attaining optimum operating height as rapidly as possible to save fuel. By payload limiting the BAC 1-11 to 70 passengers, it became possible to fly Gatwick-Tenerife non-stop, at the extreme limit of the BAC 1-11s range under favourable weather conditions. The clever part of this concept was to penalise the tour operators if they exceeded this capacity to the tune of £157 for airport charges and time lost for an en-route fuel stop at Lisbon.

Not all of Freddie Laker's legendary deals were successful though. In June 1967, just two months into a summer lease of a Britannia, Treffield International Airways of East Midlands collapsed owing Laker £16,000 and wrecking the tour programme of their prime contractors, Hourmont Travel of Cardiff and Arrowsmith Holidays of Liverpool. Laker moved quickly to take over Arrowsmith's substantial north of England based operation and in November 1967 bought the company outright.

By the end of the first year of operation, Laker Airways had completed 2,611 stage flights and had flown 2,614,000 miles during the course of some 7,000 flying hours, all of which helped towards a profit of £305,000 for the summer season. For the 1968 season a fourth BAC 1-11 was acquired and endeavouring to ensure year-round fleet utilisation, a summer inclusive tour contract was concluded with Flug Union of Berlin, augmented in the otherwise quiet winter period by transporting home West Germany's Turkish 'guest’ workers. By 1973 three BAC 1-11s were committed solely to this German business. Other off-season work involved flying British India Steam Navigation cruise passengers to the Mediterranean and transporting Hadj pilgrims to Mecca. But all was far from well with Laker’s main contractor, Lord Brothers, on the surface a highly successful company, but in reality gradually succumbing to the depressed profit margins largely brought about through an ongoing volume and price war driven by one of the industry’s major players, Clarkson’s Tours. With Lord Brothers owing Laker Airways around £500.000, at least on paper, drastic action was necessary and came in the form of a takeover by Laker to protect his exposed position.

Early in 1969 the Britannias were replaced with two Boeing 707s, obtained from the receivers of the recently collapsed British Eagle. These aircraft were initially used on the longer inclusive tour runs to the Canaries and North Africa pending the award of a permit to operate transatlantic affinity group charters, which were begun in the spring of 1970. Despite the volatile inclusive tour market, at this stage the Laker Group had developed into a substantial organisation with annual profits approaching £500,000, encompassing the airline, an associated maintenance company, three UK-based tour operators and a hotel company and travel agents in Spain. Following the path trodden by rival Harold Bamberg’s British Eagle airline, in September 1970 Laker ventured into the Caribbean, entering into a partnership with the newly-formed International Caribbean Airways, based in Barbados. This provided an outlet for one of the Boeings, operating weekly scheduled flights to Luxembourg and regular charters from Canada and West Germany. Laker eventually bought his partner’s shares and the continuing association the Barbados government, which held 51%, led to International Caribbean Airways becoming the country’s national carrier in 1975.

Long before the rise of the 'dot com' airlines, with two decades of commercial aviation experience behind him, the ever-innovative Freddie Laker pioneered the concept of low-cost airlines. Responding to the regulatory constraints and abuses of the affinity group charter market, he conceived the idea of a daily low-fare, walk-on service across the Atlantic. The licence application for his aptly named Skytrain was initially rejected by the Air Transport Licensing Board in mid-1971, but subsequently granted following a successful appeal and confirmed by the newly-appointed Civil Aviation Authority in October 1972, with the proviso that flights departed from London-Stansted, rather than Gatwick. To operate his proposed new service, three brand-new Douglas DC-10-10s were obtained from the frustrated All Nippon Airways order, financed through the Mitsui Bank. These aircraft were capable of operating at a break-even load factor as low as 52%, but as a hedge against over-capacity in the inclusive tour market should the Skytrain venture fail, Laker astutely negotiated repayments on a pay-as-you-fly basis, rather than fixed amounts. The first DC-10 was delivered on 17 November 1972 and quickly despatched on an around the UK publicity tour. However, its arrival coincided with a turbulent period in the air travel industry with the continuing inclusive tour price war, long-haul overcapacity brought about by the introduction of wide-bodies jets and, in 1973, a tripling of fuel prices by the oil producing countries.

To minimise these negative influences, Laker began flying ABC (Advanced Booking Charters) to Canada, marketed through Lord Brothers, subsequently re-titled Laker Holidays, at fares as low as £45 return. Laker was also one of the first carriers to apply fuel surcharges. In 1974 the inclusive tour bubble finally burst with the failure of Horizon Holidays, Clarksons, Court Line and Donaldson International in rapid succession. Laker quickly absorbed much of this business and as such, was one of the few charter carriers to remain in profit during this period. Nevertheless, his Skytrain venture remained stalled through a combination of back-pedalling by the US authorities, concerned with the surfeit of transatlantic capacity and the dire state of its prime flag carrier, Pan American.

At home, the Labour government was equally preoccupied with the conflicting claims of aspirant independent 'second force' carrier British Caledonian and the state-owned, loss-making British Airways. In this climate of 'regulated competition', it was hardly surprising that the incumbent minister, Peter Shore, revoked Laker's Skytrain licence in the summer of 1975. Unabashed, Freddie Laker, self-styled champion of the common man, citing 'Magna Carta’, successfully resorted to the courts to have the decision overturned. Across the Atlantic President Jimmy Carter’s new administration ushered in a policy of de-regulation and in this mood of liberalisation, in late June 1977, the American Civil Aeronautics Board ratified Laker's Skytrain licence after a six-year struggle. On 2 September 1977 Skytrain finally took off for New York, carrying 272 passengers at £59 a head.

But this was just the start of Freddie Laker's ambitions; a second route to Los Angeles was opened on 26 September and during the first year's operations the airline had made an estimated $2m clear profit. However, this was more than wiped out by the worldwide grounding of the DC-10 in June 1979 following the crash of an American Airlines aircraft at Chicago, when an engine detached from a wing pylon. Although the manufacturer was exonerated, coming at a time when Skytrain was in its infancy, the airline could hardly afford the estimated loss of $13m that resulted. Undaunted, Freddie Laker confirmed his faith in the Douglas design, by ordering five of the longer-range Dash 30 models for delivery commencing December 1979.

With the new equipment, yet another daily Skytrain was launched on 22 May 1980, this time to Miami, to where in the first ten days of operation, 6,000 passengers opted to follow the popular slogan and ‘Take a Laker’. To this growing network, departures from Manchester and Prestwick were added, together with Tampa, Florida, as a fourth US destination from 1 April 1981. The package tour and charter businesses were also showing good results, with Laker Airways carrying 287,000 passengers between May 1979 and April 1980 to destinations as far afield as Ankara and Barbados. Laker, knighted in 1978 in recognition of his services to the airline industry, also had his sights on Hong Kong and Australia as key elements in establishing a round-the-world Skytrain system. It was also planned to apply the same formula to Europe and to this end ten new Airbus A300s were ordered for deliveries commencing January 1981, though an initial attempt to secure a scheduled licence for UK-Zurich was not endorsed by the Swiss authorities.

By the end of 1981 the whole airline industry was entering a period of recession with passenger numbers falling, especially on the North Atlantic routes. Cracks were also opening in Laker's organisation and the airline began losing money with an especial burden being that the company's large debt was in dollars, whereas revenue income was largely in sterling, which was falling against the dollar. The one encouraging area was advance bookings for the 1982 Mediterranean tour programme, which could have fully utilised the Airbus fleet. Financially, there was no doubt that Laker’s low-cost fares were now hurting the established full-fare carriers and while they could take his competition on a few transatlantic routes, his intentions to roll out this strategy on a global basis was a huge threat. So, as the eventual litigation was to reveal, discussions occurred amongst the major carriers (including Pan Am, TWA, British Airways and British Caledonian) to bring this competition to an end and Laker’s financial problems opened the opportunity.

Not wishing to lose a major leasing customer, McDonnell-Douglas Corporation had offered to help refinance the airline, but when a number of its other major European customers made threats to take their business elsewhere, McDonnell-Douglas withdrew. Then, on 5 February 1982, Laker Airways’ bankers suddenly appointed receivers, forcing the airline to cease operations, leaving several thousand passengers stranded and others losing money on prepaid tickets. This was done even though the airline was not technically bankrupt and had never defaulted on a loan payment, although it was stretched with debts and financing of $270m.

Desperate attempts at a re-financing package were thwarted, with the banks’ receivers doing quick deals to sell its assets to rival British Caledonian. Even Sir Freddie's status as the golden boy of Prime Minister Margaret Thatcher's enterprise culture could not save his airline; though in a not uncharacteristic volte-face her government would ultimately commit £800m pounds of public funds to fatten up British Airways for privatisation. An unhappy combination of events coupled with Freddie Laker's somewhat cavalier attitude to the company’s debt-equity ratio had conspired to facilitate the company’s collapse. Such was his public popularity that numerous ‘Save Laker’ funds sprung up to subscribe or pledge millions, but these gestures were insufficient to rescue the airline.

There followed litigation, both in London and Washington, against a number of airlines and banks, alleging a conspiracy to destroy the airline, contrary to America’s anti-trust laws. With the evidence including the threatening communications from various carriers to McDonnell-Douglas Corporation, ultimately the case was settled with the liquidators for $48m, primarily funded by British Airways so as to enable their privatisation to go ahead. Sir Freddie walked away with $8m, ostensibly to retire to Miami, but, unable to stay away from the airline business for long, he resurfaced in May 1992 with Laker Airways (Bahamas), flying vacation charters from Florida to the Caribbean with several Boeing 727s. With Laker at the helm as chairman and managing director and retaining a one-third share, the airline grew to add schedule services from eight USA east coast cities, before it closed down in 2005. After a lifetime of aviation adventure and innovation, Sir Freddie Laker died in February 2006 aged 83.