The top official of British Caledonian Airways warned yesterday that unless the United States government reconsiders its international low-fare air policy, "airline disasters will follow . . ."
In a speech to the National Aviation Club, Adam Thomson, chairman and chief executive officer of B. Cal, contended that current U.S. policy appears to be based on a tenet of "simplistic consumerism that "the lower fare the better, and let the devil take the hindmost'" -- a policy he called "extremely short-sighted and counter-productive."
Such a policy assumes that competition occurs in a free marketplace, where the measure of success is profitability and where the companies that aren't profitable fail, Thomson said. "That is not the real world of international aviation," he argued, noting that the bulk of the carriers on the North Atlantic -- where the low-fare competition is taking place -- are government owned and supported.
Many accept losses rather than lose their share of the market, he suggested for a host of reasons: to fly their flag, have good commercial links with other foreign countries, earn foreign currency, develop tourism other reasons, but not the "year-end results on the airline profit and loss statement.
"So in a price war, those who will suffer will be those who pay the penalty for losing money -- the private sector, principally, and that includes U.S. operators and those few foreign free enterprise carriers, like B. Cal," he argued.
Thomson contended that "sensible governmental intervention" is needed in international aviation to make sure the consumer is paying enough as well as to make sure the consumer isn't paying too much. He argued that the bulk of the traveling public today is paying less for air travel across the Atlantic than required to cover carriers' costs, and that "severe injury" to free enterprise carriers, including bankruptcy for some, will be the inevitable result.