Freddie Laker is a eig, bouncy bundle of unrestrained energy who has forced the international airlines cartel to cut prices drastically on their profitable London-New York run.
They are doing it, he insists, only to drive his Laker Airway and its Skytrain service to the wall.
They're openly saying they're going to kill Laker before April first," he said during a long afternoon's rambling talk.
"We'll beat their brains out," he snorted, eager for the fight over cut-rate passengers due to begin next month.
In Britain, where corporate executives run to the stuffy and stodgy, Laker is a breezy, shirt-sleeved departure, a figure from an old Paul Douglas movie. At 55, his 6-foot-1 frame is still trim and he is as restless as a $2 bettor before the starting gong. (That is not much less than he bets on his own horses, raised on a profit-making stud farm.)
He works from a tiny office in the corner of a hangar here and climbs three flights of bare, concrete steps to reach it. His secretary, Liz-Chilton, said her boss doesn't need a bigger office because, he is in it so seldom. He spends most of his day racing up and down the stairs, looking in on Laker's other departments, all housed in that same hangar corner.
When one of Laker's DC-10s comes in for servicing, the boss is likely to give a hand.He has never gotten over the joy of tinkering with engines of machines that move people.
The bare-bones, no-frills style that enables Laker to promise roundtrip transatlantic flights for $239 - the standard "economy" rate is $695 or nearly three times as much - is written all over the man. He wears a frayed brown shirt, open at the neck, his tie pulled down. He jumps up and down to take telephone calls and shares his delight over an executive worried about keeping a 19-year-old secretary at work after midnight. ("Nineteen," he says. "She's probably been divorced three times already.")
If Laker is right, a hitherto untapped segment of air travelers will now stream across the Atlantic, boarding his planes without reservations, paying for food and drink distributed by stewardesses wearing the black and red colors of his stable. Until Pan America and the others decided they had to meet his competition, Laker figured his traffic would amount to the equivalent of 112,000 round trips yearly.
Pan Am and the other majors around the world engage in a lawful cartel to carve up markets and fix prices through the International Air Transport Association and various national regulatory bodies like the Civil Aeronautics Board. For nearly six years, they fought to keep Laker's Skytrain service out of the air. But with the aid of the courts here and a new-look CAB in Washington, Laker finally got the go-ahead for Sept. 26.
"That's the new competitive Carter regime I admire," Laker said. "Your government and mine have suddenly become consumer, competition minded." But in the next breath, he recalled that Washington and London have just negotiated a new, overarching air pact that carves up markets with even greater precision.
Pan Am, British Airways, TWA, Air India, E1 A1 and Iran Air - all solid Cartel members - responded by offering a similar standby service at only $17 more than Laker and with the free meal thrown in Laker, who claims he really likes competition, got more than he bargained for and now is crying "foul".
"Look at that," he said, and pointed to Pan Am's brief to the CAB. It says that "except as a competitive response to Laker," Pan Am's scheme "could not be justified on economic grounds." It should take 37,000 passengers from Laker.
It is this that had led the Justice Department's Antitrust Division to ask the CAB if Pan Am and the others are engaged in destructive, anticompetitive pricing, using their resources to swallow losses until Laker gives up. Pan Am estimates that its standby fare will yield an operating loss of $442,000 a year.
The six will also offer a $256 "budget" price, but this would hurt Laker less. To get it, a passenger must pay for a ticket three weeks in advance and permit the airline to assign him to a vacant seat on any day in the week of his choice.
If the majors can keep their standby plan, Laker said, "I say, all right. Just put me on the same basis."
To protect British Airways and other majors, Britain's Civil Aviation Authority insists that Laker Run his flights from Stansted, a remote airport 35 miles from London, and limit them to one a day. He is now asking that these curbs be lifted, so he can fly from Gatwick at the edge of London and as many flights as the traffic demands.
"Every one of these limitations, was put on to protect" the majors, he said, "but I'm confident the CAA will give me an OK. I'm their number one vote catcher. It's me the governments are trying to protect now. They've allowed me to become the consumer lobby. I'm delighted. I can't believe my luck. I've been called a maverick, a chiseler, a bandit. I've been everything but popular."
Laker enjoys displayings his contempt for Pan Am and the other cartel airlines. He showed a letter he once sent Pan Am's chairman, mispelling his name and suggesting that the great carrier needed to overcome its "fuddy duddy" image.
"Regulated industries like airlines," he said, "believe the market is inelastic. Then they don't have to make any effort, don't have to work, innovate or take risks. They fly the same planes to the same pairs of cities at the same times. The only competition is how much they can spend advertising their plastic sandwiches. The quality of their service is geared to the most inefficient.
Laker's life is a rag-to-riches tale that was never supposed to happen again in Britain. Brought up in poverty. His father, a cart driver, left the family when Laker was young Laker left school at 16. His first job was sweeping out offices and bringing tea to exceutives in a plant making seaplanes. Lakes was stirred, went to night school, and studied automotove and aeronautical engineering.
After World War II, in which he ferried planes across the Atlantic, he began buying and selling surplus materials. With the help of a friends's $100,000 loan, he bought 12 bombers that had been converted to cargo carriers. His gamble paid off in the Berl in blockade and his planes were rarely on the ground. That gave Lakes his first fortune.
He helped found and run what was Britain's biggest independent airline, British United, but quarreled with the company's chairman. Laker left in 1966 to start his own line and multiply his fortune. Laker Airways carries charter passengers, package tours and bargain hunters to Corfu, Rhodes, the Costa del Sol, even New York, San Francisco and Toronto. He owns to package tour compaies and they help keep Laker Airway's 10 planes filled. In the year that ended April 1, Laker reports a gross of more than 85 million and a profit of 1.3 million.
Nearly every shilling is his. Laker owns 90 per cent of the company's shares and his first wife the remaining 10 per cent.
Why can Laker expect big profits from cut-rate fares that major airlines say will throw them into the red? Laker's stripped-down office means low overhead and fast decision-making that committees in corporate bureaucracies cannot match.
"The four people that run this business are right in that corridor," He said, Pointing out his door. "I can call a broad meeting by shouting for them."
Unlike the majors, he has no fancy offices in cities all over the globe. In fact, he has no offices at all, except the one in the hangar. He cuts passenger handling costs to the bone and they will be even lower for skytrain service, with tickets sold only on the day of the flight.
Unlike the majors, "I don't go to every corner of the flight envelope, Pan Am thinks it has a divine right to carry every passenger everywhere."
Laker does not carry cargo. His DC-10's galley is below the passenger deck so there are more seats. Without cargo, he needs less fuel, another big saving. His plane lifts 440,000 pounds; the majors are designed for 550,000.
Cocky, even boastful, Laker entertains no doubts, at least in public. He pointed to an ad in a travel agents" trade journal. The big, black headline read: "Before we all go off the rails over Skytrain let's compare it with this new fare from TWA."
"Isn't it marvelous," Laker crowed, "that a company will put my name in a type as large as their own? Six of them are selling my product and I've got a better product."