FOR A GOOD SIX YEARS NOW, an enterprising man named Freddie Laker has been trying to introduce a novel plan for barebones air travel between New York and London. His idea is as sensible as it is appealing for those seeking the cheapest possible transtlantic hop: no frills, no reservations and a roundtrip fare of $236. All the while, the big airlines fought Laker Airways, contending among other things that they couldn't possibly lower their fares. But now that Laker is finally cleared for takeoff next month, the scheduled airlines have changed their tune. Through the Internation Air Transport Association, the major airlines are suddenly announcing their own-rate fare agreement.
Now that sounds like happy news for travelers. But that's not the way it strikes the Justice Department, which has a long record of supporting increased low-cost transportation. The department is properly concerned about the long-range effects such as agreement could have on competition. In a petition filed with the Civil Aeronautics Board, Justice attorneys suggest that the latest IATA fares may be predatory, that they could be a temporary method for destroying the highly competitive charter airlines that now provide the only-truly cut-rate fares to Europe.
Certainly if you heard the big airlines' earlier claims about costs and rock-bottom fares, you would have to conclude that in some magical way those costs must have just taken quite a nose-dive. Otherwise, the latest proposed rates would have to be a form of below-cost "loss leader" operation that the big airlines would pay for through some other class of air traffic. That is precisely what worries the Anti-trust Division, which apparently suspects that the scheduled airlines would temporarily subsidize the losses from the cut-rate fares by raising the fares for regular scheduled passengers. The effect would be to lessen demand for charter carriers - which have no higher monopoly fare system to cover their losses. With charter carriers forced out of business, the scheduled lines would be free to drop discounts. Give the strict limitations on air service between Britain and the United States, that would effectively end any serious price competition. Or so it would seem. But Mr. Laker isn't giving up. He's now asking the British government to loosen some of the restrictions placed on his experiment so that it might at least operate in roughly the same way as any cut-rate operations by the scheduled carriers.
However it all turns out, we welcome Laker's efforts to shake up an industry for which more competition with less regulation should be the goal. At the very least, the CAB should not allow the IATA fare plan to go into effect until there has been a thorough investigation of the scheduled airlines' total cost and rate structure. For the Justice Department was right when it said (with respect to transatlantic travel) that "if the charter services die, the only vestige of price competition in international aviation dies with them."