British Caledonian

British Caledonian came into being in November 1970 when the Scottish charter airline Caledonian Airways, at the time Britain's second-largest, wholly privately owned, independent airline, took over British United Airways (BUA), then the largest Independent British airline as well as the UK's leading Independent scheduled carrier. The BUA takeover enabled Caledonian to realise its long-held ambition to transform itself into a major scheduled airline. The merged entity eventually became Britain's foremost independent, international scheduled airline.

A series of major setbacks during the 1980s as well as the airline's inability to grow to the minimum size to become a viable "Second Force" as envisaged in the 1969 Edwards report led to increasing financial difficulties during the second half of that decade. This was the time the airline began looking for a merger partner to improve its competitive position.

British Airways emerged victorious in the ensuing bidding war and gained control of its erstwhile competitor in December 1987.

A new chapter in British commercial aviation

British Caledonian Airways Ltd. (BCal) was formed on St. Andrew's Day (30 November) in 1970 when Caledonian Airways acquired British United Airways (BUA) from its previous owner, the British and Commonwealth group, for £6.9m.¹ Caledonian Airways also purchased three new BAC One-Eleven 500 aircraft, which British and Commonwealth had leased to BUA, for a further £5m.¹

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.² 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 British Air Transport in the Seventies in 1969.³ 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.⁴⁵

The new airline established its headquarters and operational base at Gatwick Airport and Sir Adam Thomson, one of the four co-founders as well as one of the main shareholders of Caledonian Airways, became its chairman and chief executive.⁶

BCal was a full member of IATA, i.e. IATA's Trade Association as well as its Tariff Co-ordination body, at its inception itself as a result of inheriting BUA's IATA membership. Furthermore, BCal was one of Gatwick's three handling agents - the others being BA and Gatwick Handling - during its 17-year existence. BCal also had its own air freight terminal at Heathrow.⁷ (It used to operate two weekly all-cargo flights from there until the early 1980s.)

The fleet inherited from its predecessors comprised 31 jet aircraft: eleven long-haul aircraft (seven ex-Caledonian Boeing 707-320Cs and four ex-BUA Vickers VC-10-1103/1109s), and 20 short-haul planes (twelve BAC One-Eleven 500s [eight ex-BUA and four ex-Caledonian], and eight BAC One-Eleven 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 workforce numbered 4,400.⁸⁹ This made BCal the UK's foremost Independent airline of 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 and the total yearly scheduled capacity measured in passenger kilometres - 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 kilometres - 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. By that measure, BCal was about the same size as Australia's flag carrier Qantas.⁹

The institutional investors that had helped Sir Adam Thomson and John de la Haye in launching Caledonian Airways back in 1961 were also among the shareholders of the newly constituted airline. They included the AA, GUS, Hogarth Shipping, Lyle Shipping, Industrial and Commercial Finance Corporation (ICFC)¹⁰ - one of the two predecessors of Investors in Industry (as 3i was formerly known), Kleinwort Benson (now part of Dresdner Kleinwort Wasserstein), the Royal Bank of Scotland (RBS) and Schroders.⁷ Airways Interests (Thomson), which had been set up at Caledonian's inception a decade earlier as an investment vehicle to hold the stakes of that airline's founders, initially continued holding the late Sir Adam's stake in the new airline combine.⁸ It was subsequently merged into Caledonian Airways (Prestwick).⁸

The merged entity initially traded under the interim name Caledonian//BUA before adopting the British Caledonian name on 1 September 1971. It carried a total of 2.6m passengers during its first year of operation.⁷

During the interim period the VC-10s, five of the eight former BUA One-Eleven 500s and eight One-Eleven 200s were operating the merged entities' scheduled services as these aircraft were already configured in a lower density scheduled seating arrangement, with some of them, 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 operations, pending full integration.⁸ All passenger-configured former Caledonian aircraft as well as three former BUA One-Eleven 500s featured a high density, single class seating arrangement. These aircraft were allocated to the company's "Caledonian Division", which was responsible for all charter operations during that period.⁸ Some of the 707s had an all-cargo configuration. Depending on whether these were used to operate scheduled or charter flights, they were either allocated to the "BUA Division" or the "Caledonian Division".⁸ This meant that at that time roughly 55% of the firm's combined aircraft fleet was allocated to the scheduled division and 45% to the charter division. However, as the charter division's aircraft were configured in a higher density seating arrangement and charter flights generally tended to have higher load factors, two-thirds of all passengers - the bulk of the new carrier's passenger business - were carried on its charter flights during that time.⁷

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 for female staff.

Following the interim period, all former BUA aircraft were repainted adopting Caledonian's livery featuring a prominent Scottish Lion Rampant on its aircraft's fins. At that time all aircraft were named after famous Scots and well-known Scottish places. This tradition was continued throughout the airline's 17-year existence. Some BCal aircraft were also 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 eighth DC-10 and G-HUGE¹¹ was the Boeing 747 "Combi" registration.)

All BCal aircraft used retreaded tyres throughout the company's entire existence.

The "Second Force" inherited BUA's extensive network of scheduled routes serving the British Isles, Continental Europe, Africa and South America. Its scheduled ambitions received a major boost when the UK Government agreed to transfer to it BOAC's West African trunk routes to Nigeria and Ghana as well as its North African route to Libya.¹² (These routes represented 3% of BOAC's annual, worldwide turnover [about £6m of its total annual revenues].¹³) 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 international 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.⁷

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.¹⁴ (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, 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.¹⁵)

In addition, BCal became the Government's "chosen instrument of the private sector".¹⁶ 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.¹⁷¹⁶ 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 achieve the critical mass to challenge the Corporations' near-monopoly among UK-based scheduled airlines.¹⁷

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.¹⁸

BCal also had a Gatwick airside lounge for its premium passengers, which it named Clansmen Lounge.

A force to be reckoned with

BCal commenced scheduled operations from Gatwick to Lagos, Kano and Accra in April 1971.¹⁹ Scheduled services from Gatwick to Tripoli began in June 1971.²⁰ On each of these routes BCal replaced BOAC as the designated UK flag carrier. On 1 November 1971 BCal inaugurated scheduled flights between London Gatwick and Paris Le Bourget Airport, where it replaced BEA's London Heathrow-Paris Le Bourget service and competed with that airline's Heathrow-Paris Orly Airport service.²¹²² This was the first time since the 1930s that a wholly privately owned, independent UK airline commenced a fully fledged scheduled service on a major international European trunk route.²¹

BCal ended its 1970/71 financial year to 30 September 1971 with a profit of £1.7m.²³

In 1972 BCal extended its East African network to the Seychelles. The same year it also introduced a new Edinburgh-Newcastle-Copenhagen regional scheduled service to live up to its claim of being "Scotland's international airline". This 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" 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, 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.²⁴ ("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; these trademarks were dropped in 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, along the busy San Diego-L.A.-San Francisco air corridor in California, boosted passenger numbers and profitability on both routes.²⁵ (Interestingly, Jet Airways, India's leading private sector airline, introduced similar operations between Mumbai and Delhi, and Delhi and Bangalore, 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 seating arrangement began replacing VC-10s on BCal's South American routes, where the 707's greater range enabled the airline to run non-stop flights between London Gatwick and Rio de Janeiro, as well as on the West African trunk routes to Nigeria and Ghana.

As a result of the then prevailing, ruinous rates in the charter market, which still accounted for half of BCal's business at the time, the airline incurred a loss of £194,000 during the financial year to 30 September 1972.²⁶

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. These included a pair of 320C-series aircraft procured on a long-term lease from Britannia Airways featuring a two-class, "widebody look" interior. They were used to inaugurate the airline's transatlantic scheduled routes to New York and LA 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 with the impression that BCal was operating widebodied aircraft when in fact it was not. During that time BCal acquired two further second-hand BAC One-Eleven 500s, which were sourced from Court Line and Transbrasil. (At the same time the airline disposed of some of its 707s, including the original pair of 399C series aircraft that had been delivered to Caledonian Airways direct from the manufacturer's plant in 1967/'68 [-99 being Boeing's customer designator for Caledonian]. In addition, a VC-10 and a One-Eleven 200 were sold to the Royal Aircraft Establishment, which used them 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 1 April 1973. Earl Mountbatten of Burma was BCal's chief guest on board its inaugural Gatwick-JFK flight. (The flight diverted to Boston due to inclement weather in the New York area.²⁷) 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 Trade revoked its licence as a result of BOAC's last minute intervention.)

In 1973 BCal also inaugurated its fourth scheduled domestic trunk 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 operated two daily return trips using its Handley Page Dart Herald turboprops.

On 20 March 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.²⁸

To further extend the network's reach and improve its connectivity, BCal agreed to host Dan-Air's new, twice daily Gatwick-Newcastle flights, which began on 20 April 1974, in its computerised reservation system (CRS) as part of a combined marketing effort.²⁹

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 having been inherited from BUA.)

Plan S

The creation of British Airways (BA) as a result of the 1974 BEA-BOAC merger (one of the other two main 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.³⁰³¹

Plan "S" began to be implemented from 1 November 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 (827 out of a total workforce of 5,673³²).³³

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, Málaga, Palma de Mallorca and Tunis, indefinitely suspending scheduled services on the Glasgow-Southampton route as well as cutting the number of frequencies on the Gatwick-Glasgow and Gatwick-Edinburgh routes from six to four daily round trips. The company 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 One-Eleven 500 fleet were temporarily grounded. Four of these aircraft were subsequently sold. (Dan-Air acquired two³⁴ and Monarch Airlines one of these aircraft in 1975/'76.) 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" to serve 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 One-Eleven 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 One-Eleven 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 1 November 1974, followed by Kinshasa on 1 April 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. The airline operation itself managed to return to the black during the financial year ended 30 September 1975 with a small profit of £250,000 after having lost £4.3m the year before.³⁵ However, BCal's operating profit for the 1974/'75 financial reporting period translated into an overall loss of £366,000, after taking into account the heavy costs relating to the early disposal of the remaining VC-10s and the grounding of several other aircraft as well as the voluntary redundancy programme to achieve the required reduction in headcount.³⁶

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, BA and BCal were no longer permitted to run competing scheduled services on long-haul routes, and BCal had to withdraw from the East African routes inherited from BUA and from the London-New York and London-Los Angeles routes, leading to the suspension of BCal's Gatwick-JFK and Gatwick-LA. licences.³⁷ 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.³⁸³⁷ 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.³⁹ 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 a new scheduled route to Algiers 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 since the route's launch in 1973 with a three-times-daily BCal One-Eleven schedule starting 1 January 1977.

Laying the foundation for further growth

The Gatwick Year

Further diversification and expansion at the end of the 1970s

The 1980s roller coaster

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

Incidents and accidents

BCal had one of the industry's best safety records during its 17-year existence.

According to the annual airline safety review 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.

Notes

^ ^a ^b High Risk: The Politics of the Air, pp. 256/7
^ High Risk: The Politics of the Air, p. 93
^ High Risk: The Politics of the Air, pp. 174/5, 195, 200-204
^ High Risk: The Politics of the Air, p. 199
^ Fly me, I'm Freddie!, pp. 125-130
^ High Risk: The Politics of the Air, pp. 195-198
^ ^a ^b ^c ^d ^e "British Airways Plc and British Caledonian Group plc; A report on the proposed merger", Chapter 4, Competition Commission website
^ ^a ^b ^c ^d ^e ^f High Risk: The Politics of the Air, p. 258
^ ^a ^b Fly me, I'm Freddie!,p. 130
^ High Risk: The Politics of the Air, pp. 159, 241
^ High Risk: The Politics of the Air, p. 512
^ High Risk: The Politics of the Air, pp. 262/3
^ Airline Profile: Number Forty-Two in the Series - British Caledonian, Flight International, 3 August 1972, p. 160
^ High Risk: The Politics of the Air, p. 273
^ Fly me, I'm Freddie!, p. 88
^ ^a ^b High Risk: The Politics of the Air, p. 275
^ ^a ^b Undue preference or national benefit?, Flight International, 27 April 1972, p. 579
^ Aviation News - UK and Irish airlines since 1945 (Update 5 British United Airways)
^ High Risk: The Politics of the Air, p. 271
^ High Risk: The Politics of the Air, p. 272
^ ^a ^b Three to Paris, Flight International, 11 November 1971, p. 753
^ High Risk: The Politics of the Air, pp. 272, 508
^ High Risk: The Politics of the Air, p. 276
^ High Risk: The Politics of the Air, pp. 273/4, 508
^ No Frills - The Truth behind the Low-cost Revolution in the Skies, pp. 26/7
^ High Risk: The Politics of the Air, p. 277
^ High Risk: The Politics of the Air, pp. 280-283
^ BCAL in Paris, Flight International, 14 March 1974, p. 320
^ The Spirit of Dan-Air, p. 88
^ High Risk: The Politics of the Air, pp. 297-302, 304-307
^ Fly me, I'm Freddie!, p. 201
^ British Caledonian cuts back, Flight International, 24 October 1974, p. 527
^ High Risk: The Politics of the Air, pp. 304-307
^ The Spirit of Dan-Air, p. 235
^ High Risk: The Politics of the Air, p. 303
^ High Risk: The Politics of the Air, pp. 340/1
^ ^a ^b High Risk: The Politics of the Air, pp. 316/7
^ B.CAL expands in South America, Flight International, 24 July 1976, p. 212
^ High Risk: The Politics of the Air, p.375
^ Individual Histories - G-ARTA, VC10.net

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