Prestige—But No Profit

High Cost of Running Govt. International Airways

rHE cost of providing Tasman Empire Airways and British Commonwealth Pacific Airlines lervices in the Pacific was shown n Government figures released in Wellington, New Zealand, in early leptember.

The figures include cost of pro iding the essential meteorological nd Civil Aviation radio and other ervices required by the airlines.

TEAL showed a loss of £Stg.lBo,ooo Dr the year ended March 31, 1953, nd the loss for the current year i expected to be twice that figure, he Coral Route accounted for Stg.Bo,ooo and the transTasman jrvice fStg.loo,ooo.

BCPA lost £Stg.l7o,ooo and is stimated to lose £Stg.2oo,ooo in )53-54. New Zealand pays half the EAL loss.

The UK is responsible for 20 per ;nt. of the TEAL loss; Australia 30 ?r cent. Their holdings in BCPA re: UK, 30 per cent.; Australia, I per cent., and NZ 20 per cent.

At a luncheon in Wellington, NZ, late September, the Prime Min fcer of NZ, Mr. Holland, said that s Government would consider ny reasonable proposition for the irchase of NZ interests in TEAL id BCPA.” He said also, that when s Government came to office (in 49) they had wanted to sell New saland’s National Airways Cor iration but had not realised how fficult it was to sell a concern at was losing £320,000 a year.

The NZNAC, lopped of its ex nsive islands services which were ken over by TEAL last year, is ►w said to be paying its way hough it is still on the market d the NZ Government will con ler offers with “sympathetic con leration.” rEAL (as at present constituted), 'PA, NZNAC, with Qantas Em e Airways, Australia’s TAA and ? UK’s BOAC were all creations the acute Socialistic era in the st-war politics of the United ngdom, Australia and New Zea id. They are all excellent ser es and whether you take passage London or Honiara, BSI, or New rk or Aitutaki, Cook Is., you will eive the same high degree of nfort and attention. But all, at oe time or other, have lost vast os of money and some are still ng it. New Zealand, particularly, now anxious to unburden her l but as the Socialists once said, ang scrambled the eggs, it is now y difficult to unscramble them, n the case of NAC, each time >rospective purchaser has shown srest, the Socialist Opposition in has announced that when they again in office they will im diately nationalise all airlines, nput compensation. This en siasm for losing public money

in the air can be regarded as in teresting; but their attitude is not likely to encourage cash purchasers.

When TEAL took over the Island services of NAC last year, it was believed that with efficient organ isation and the use of sea planes and sea bases instead of land planes and expensively maintained airports, this loss could be turned into something close to a profit.

This hope has not materialised.

About this time last year we said in PIM: “TEAL, efficiently managed by New Zealanders, has a fine re cord of service, is expanding

healthily and showed a profit last year of £31,812.”

It appears we were wrong—about the profit. It transpires that what was said was that TEAL had made £31,000 worth of dollars for NZ. We took this to mean profit. It was not. In 1951-52, TEAL loss was about the same as in 1952-53. No one bothered to correct us.

IN the operations of such com panies as TEAL and QEA, their services can be divided into two categories: (1) The trunk-line ser vices such as the Qantas services between Sydney and London, or Sydney and Port Moresby; and the TEAL services between Sydney- Auckland, Sydney-Wellington and Melbourne-Christchurch. And (2)

the pioneering services over routes? of big mileages and small popula-j tions such as in Papua-New Guinea: and down to the Solomons, and from Fiji through the Polynesian islandsa The services which come into: category 2, have been regarded, foie strategic reasons and for prestige as having a value outside that o:c mere transportation and profit anoj therefore there has been littLJ quibbling at the expense involved..

Residents of the isolated island! served have, moreover, now adjusteo; the tempo of their lives to thd weekly or fortnightly or, in somd places, the daily air services, withx out thought of who foots the bill!

If through economic pressure ax some future time, these airservices have to be curtailed or withdrawn the effect on island communities will be profound and bitterly res sented, although the enormous losses involved in maintaining them haw so far all been met by the taxj payers of Australia, UK and Nev: Zealand, the great mass of whom will never have any personal USB for these airways.

The category 1 airways, on thr other hand, should be able to stand on their own merits; their routes lie along areas of high population and their services are much in des mand. But it is obvious, from TEAL figures just released, thas they do not pay their way.

TEAL has a transTasmai, monopoly—no other air companr may carry passengers between Auss tralia and NZ; the fares are —£47 Australian currency for 1,200-mile flight, which is muclc higher than the mileage rate o Australia’s internal airways; thrf services are well patronised and there are about 10 services a weee —some Sydney-Auckland, some Syd> ney-Wellington and one Melbournes Christchurch.

Yet these services between then: lost £Stg.loo,ooo in 1952-53.

BOAC has announced that i will probably soon drop its interea? in TEAL; NZ says it will be to sell its share. Is Australia the:s to be left to shoulder the wholl; responsibility? If it does, can i:i through Qantas perhaps, make thd route pay? If the Tasman services with its short haul, high fares ann monopoly cannot pay, then then: seems small hope for other services not so bountifully endowed.

British Commonwealth Pacififi Airlines (BCPA) is one of thres transpacific operators. If BCPa c loses £Stg.l7o,ooo per annum, is i; reasonable to suppose that thri other two, Pan American ann Canadian Pacific, also each lossi similar amounts?

If they do not lose, then whaei is wrong with BCPA; and if thee. all lose, why then, in the namrc of economic sense, are they all ill the transpacific airservices busies ness?

There has been tremendous proo gress in the South Pacific as a res suit of the post-war boom in airs

transportation. But it is obvious that if the boom is not to burst there will have to be a drastic over haul in the economics of airservice operation.

Governments having bludgeoned their way into the airservice busi ness now seem to be stuck with it: no private enterprise, in its right senses, would take on such an in satiable pet—as the NZ Government has found with its NAC. But even Governments become restive when losses pile up into millions, and some rationalisation or reorganisa tion of airservices seems certain in the immediate future.

If Mr. C. A. Kirkman, of the Colonial Office, has been seconded to the Western Pacific High Com mission Secretariat for two years as First Assistant Secretary. He is at present in charge of the Fiji and Western Pacific Section of the Hongkong and Pacific Department at the Colonial Office, but is ex pected to arrive in Honiara some time in December.

II Mr. Barry Good, of the Resident Commissioner’s Office, Rarotonga, was married to Miss Gloria Adair Hand, a nursing sister at the local hospital, on July 2. The ceremony was performed at the hospital by Mr. L. H. Trenn, and was attended by the Resident Commissioner Mr.

Nevill.