Freddie Laker, the pioneer of cheap, no-frills airlines, started in the aircraft business with a number of Second World War surplus planes that he acquired for a song at Southend Airport. By 1946, Laker knew every airfield in Europe, together with every type of aircraft and its payload. With a loan from a friend he set up Aviation Traders, dealing in war-surplus and then carrying passengers and freight in converted Halifax bombers.
Laker made his first fortune from the Berlin airlift of 1948. The government chartered every available aeroplane from the many small independent airlines at generous rates. The subsequent round-the-clock operation instilled in Laker a mania for punctuality. His profit, however, came from selling spare parts to the other airlines. When the airlift ended, Laker shrewdly judged the market to be overcrowded, and, as others went under, had his team at work smelting 6,000 engines for a saucepan manufacturer.
In 1951 he returned to charter, carrying troops for the Army in aircraft rebuilt from crashed ones. Laker himself survived a crash while landing at Hamburg in 1952, just evading the neighbouring crematorium when two engines failed. In 1953 his Channel Air Bridge began flying passengers, and then cars, from Southend to Calais. Laker also found time to introduce the "stop me and buy one" ice-cream man to Nigeria. In 1958 he sold his business, which was merged with others to form British United Airways.
He became managing director of BUA, but though it grew into the largest independent, Laker hankered after his own airline.
He liked to know all his employees and he liked to call the shots, increasingly difficult in the sprawling BUA.
In 1965, he resigned, forming Laker Airways to capitalise on the booming package holiday trade. The launch was overshadowed by the death of his son by his first marriage, Kevin, in the sports car Laker had given him for his 17th birthday. Three innovations made the airline successful. Laker chartered his aircraft to tour companies at a rate that cost them less the more they flew. He saved money on fuel by telling his crews to fly at higher altitudes than usual and by pioneering the reduced thrust technique on take-off. He also kept his fleet busy off-season, flying winter tours to the Mediterranean and Muslims to Mecca for the Haj.
Despite occasional scares, including involvement on the Mersey in the world's first - and short-lived - commercial hovercraft service, he was carrying half a million passengers by 1971 and looking to expand.
The immediate public reaction to the collapse of Laker Airways, expressed in offers of cash and in attempts to rescue some parts of the business, was eloquent recognition of its owner’s achievements. Sir Freddie Laker transformed the structure of international air travel by introducing regular flights at very cheap prices, often at less than half the conventional fares, pioneering the even cheaper ‘stand-by’ system for his Skytrain service.
Other airlines, previously protected by price-fixing agreements, were forced to follow suit, with the result that a great many more people found that they could afford to fly across the Atlantic than had previously been the case. When he introduced the Skytrain in 1977, it became possible to fly the Atlantic for £59, whereas the standard one-way economy fare at that time was £196.
Laker had been planning to introduce a similarly competitive service in Europe, where fares remain protected (the economy fare from London to Amsterdam worked out at 28p per mile, compared with the 2p per mile that it cost to New York. No wonder the closure of Laker was mourned by travellers everywhere.
The decision to call in the receiver was made on 5 February at a meeting of the board at the Laker Airways’ headquarters at Gatwick. Its debts, estimated at more than £200 million, were proving too costly to service. The company had planned on repaying its dollar borrowings at an exchange rate of $2.25 to the pound, but the rate had fallen well below the £2 mark. The bank overdraft was increased and a financial package agreed at the end of 1981 which it was thought then would be sufficient to ensure the company’s survival. However, the package was dependent upon the company’s trading situation showing no further deterioration. In January the company, then in direct competition with major airlines such as British Airways and Pan American, who had cut their transatlantic fares to the Laker level, reported that considerably less than half its available seats had been sold, compared with the projection of 55 per cent. The banks refused to increase the company’s overdraft and Laker went into liquidation.
Laker Airways over-reached itself. The company borrowed too much money to buy too many aircraft before it had established all the routes it had hoped to gain, and before it had filled enough of the seats it had already available. But it was not alone in suffering the bite of the recession. Pan American nearly went bankrupt in 1981, and British Airways certainly would have done so without access to the public purse. The experience of Laker Airways led to some people to conclude that it was best to keep entrepreneurs out of the airline business, and leave flying to the big state-supported companies. Such a conclusion ignored both the competitive advantages that Laker and other independent airlines had brought, and the cost to the taxpayer of supporting public giants. British Airways lost more than £100 million in 1981, whereas commercial airlines as a whole made a profit. The danger was that air fares would be allowed to rise by agreement among the large companies, perhaps even with the re-introduction of some form of cartel such as the International Air Transport Association used to provide before Sir Freddie Laker came along. He demonstrated that there were plenty of people wanting to fly to far-away places provided the price was right – proving once again the truths of the old commercial rule that you can always sell to people if you offer them what they want at a price they can afford. In terms of air travel, the doctrine of enterprise needed to be extended, particularly in Europe. People wanted cheap travel. This should be the lesson, and the legacy, of Freddie Laker.
Some elements of the text from The Illustrated London News Volume 270, #7004, March, 1982. All images copyright Peter C Brown.