15 JUNE 1962, Page 4

The Merger

From a *Correspondent 'THOUGH the Atlantic is the biggest and I richest air route in the world, not much money has been made on it in the last year. The jets have been multiplying the numbers of seats offered by a dangerously high factor and more airlines have been trying to improve their share of the cake. The big and the small all have their appeal: the El Als and Cunard Eagles along with the Pan-Americans, BOACs and KLMS. The . Air Transport Licensing Board, charged with the growth and prosperity of British avia- tion as a whole, took the evidence for this to the point of recommending that a second British airline (Cunard Eagle) should be licensed on the London-New York route; the argument was that it would bring in more passengers with its par- ticular appeal. BOAC's counter-attack against this threatened end to its monopoly of British representation on the North Atlantic has been bitter and sustained. It succeeded first in getting Mr. Thorneycroft (whose word was final) to reverse the ATLB's ruling; and now it has gone right in on a unified basis.with Cunard for the joint selling not only of seats in aeroplanes but of berths in ships.

With the prospect of a union of two such large American airlines as Pan-American and TWA, the formation of BOAC-Cunard Limited seems a minimal British response. It may ultimately he followed by increasing pressure for British entry into a developed European combination under Air Union. Whether or not competition unities the present airline structure to that extent, it is difficult for a carrier like Cunard Eagle to operate modern aircraft with any flexibility. With two Boeing 707s, high utilisation is difficult. if not impossible, to achieve with good loads. Good public relations and a good knowledge of the market has allowed them to make considerable inroads into Bermuda and the West Indies (where they have undoubtedly done much better than BOAC); and they have only been held back in the growing market for Atlantic charter flights by the curious American notion that scheduled airlines should only be allowed to carry charters up to 10 per cent. of their scheduled operations. Had Cunard Eagle not been a scheduled operator, the Americans would have allowed them to do as they. pleased. Instead, however, the British and American Governments have been wrangling over Cunard Eagle's charter flights and it had come to the point of British retaliation against US charter operators. This is now solved, because charters up to a tenth of BOAC-Cunard's services should provide all that are needed.

BOAC's interest in the Cunard organisation, especially in the United States, goes back a long way. For some years the BOAC management has been trying to get Cunard to collaborate in sales. Now they are getting much more than this : they will be combining their sales offices, parading each other's slogans and hammering the American and West Indies markets with the doubly familiar name of BOAC-Cunard.

Criticism is coming from believers in pure nationalisation (though they might take comfort from the disappearance of a separate airline in favour of a mere minority holding) and those who fear monopoly. There is so little to be said about nationalisation these days that its advo- cates cannot be blamed for making the best of an irrelevant job. As for monopoly, no one engaged in Atlantic air travel can be accused of this. The opposition may not be licensed by the ATLB, but it is competition of the most varied and determined kind. The issue really is whether the union will carry the strengths or the weak- nesses of its parents. It is a commercial deal and will only be justified by commercial results.