Laker Airways may be gone but low fares remain
Freddie Laker, king of the airline price-cutters, has crashed financially; yet it may be two or three years before transatlantic passengers who have benefited from his low-price Skytrain really begin to regret his failure.
The collapse of Laker Airways came because Sir Freddie was financially overextended in a depressed international market. It is also, however, a market with enormous reserve capacity, and there is likely to be enough competition between operators still plying the Atlantic route to keep fares from skyrocketing in the short term.
All the same, fares are sure to begin rising soon on the busy Atlantic route. There will be a hike of 15 percent in March and a smaller one in May.
After that, airline specialists are forecasting a flattening out of fare structures as the industry begins getting used to living in a world where Laker's insistent pressure for cheap flights is not an irritant.
Ironically, had Sir Freddie not been forced to call in the receivers to tackle a debt of between (STR)200 million and (STR)300 million ($370 and 550 million), the March and May price rises might not have happened. The pressure would have been on the big government-backed operators to keep an eye out for the Laker challenge.
Now they have a breathing space to see how passengers react to a situation from which Sir Freddie's consumer-oriented, swashbuckling methods have been removed.
There is no doubt that Laker's Skytrain concept produced a revolution in cheap air travel. A buoyant, ultra-confident character, he forced airlines like Pan Am, TWA, and British Airways to lower fares on the Atlantic run.
On routes in Europe and between Europe and Asia the threat of a Laker ''intervention'' had the effect of holding down some airline prices that might otherwise have swung sharply against the traveler.
Laker offered cheap fares, comfort, regularity of service, and the backup of an efficient package holiday company.
His sudden arrival in the mid-1970s enticed other smaller operators like Air Florida and World Airways into the market. They will stay there, and their cheap fare challenge to the ''big boys'' will remain, at least for a while.
Longer term, however, airline industry specialists believe the consumer will be sorry to see Sir Freddie go. Combined transatlantic airline losses last year totaled $462 million. The temptation now for established members of the International Air Transport Association (IATA) will be to let fares inch up to absorb the losses.
The process is likely to be gradual, depending on how many of the smaller operators can stay in the skies and not be knocked out of them by the economic turbulence that ultimately put paid to Laker.
Though a favorite with the flying public, Sir Freddie is an abrasive character. He relished the embarrassment he caused airlines belonging to IATA and openly taunted them with allegations that they were uninterested in helping the flying public.
Laker planned to extend the Skytrain to Asia and Australia. Some of his financial problems sprang from a decision to equip the Laker fleet with new jets which, as the commercial climate sagged, helped to create huge losses.
According to one banking source, if it had been anybody but Sir Freddie, the airline would have been forced into receivership last fall. His abounding optimism helped to persuade his creditors to hesitate before pulling the rug from underneath his operation.
Said one industry executive, ''Freddie revolutionized the airline industry: He couldn't do the same for the banks.''
One of the ironies of Laker's fall is that the price-cutting tactics he pioneered were used in the end to bring him down. It was when Pan Am decided to drop its prices on the Atlantic run to ''flush Sir Freddie out'' that Laker's cash-flow problems began to mount.
He found that Pan Am had too much staying power for him to keep matching its low fares over a lengthy period.
Pan Am's determination to put pressure on Sir Freddie exposed the weakness in his armor: He lacked the capital to operate like one of the ''big boys.''
When the dollar strengthened against the pound and stayed strong for about a year, Laker Airways found it difficult to make ends meet.
Now one of the great odysseys of international travel appears to be at an end , and ultimately the flying public may well suffer.