Spotlight: "I'm Freddy—Fly Me"
On September 26, a dream will come true for Frederick A. Laker. The gregarious, outspoken entrepreneur from Great Britain will begin operations of his much heralded "Skytrain," the first regular low cost jet service across the Atlantic.
It has been neither an easy nor a complete victory. Since 1972, when he first proposed cutting transatlantic airfares by about half, Laker has been whipsawed by government agencies determined to protect large airlines from competition. First the United States, and then Great Britain, reneged on agreements to permit his service to start.
In a refreshing departure from other attempts to upset the airline cartel, however, Laker Airways has prevailed over its adversaries. President Carter signed an agreement in June that authorizes Skytrain to begin daily service between New York and London, on a one year trial basis.
The success of his campaign to bring low fares to the "Forgotten Man"—those who cannot now afford air travel—owes much to Laker's personality, which is freewheeling and independent. Like many 19th century capitalists, respect for traditions has never been Laker's strong suit.
Laker was born in Canterbury, England in 1922, in a household whose father had abandoned the family. His years in school were distinguished in only one respect. "I was a total nonentity at Simon Langton," he smiles, "the biggest bloody dunce in the school. I hold a record there: on the day I left, I was caned seven times on my behind. The headmaster, knowing I was leaving, said, 'This is the happiest day of my life.'"
The unpromising beginnings did not dim Laker's initiative. After leaving school at 16, he became intrigued by airplanes. He took a job as a floor sweeper and tea server at an aviation plant, quickly gaining a familiarity with aircraft that would help him land a wartime job with the Royal Air Force as a pilot and ground engineer.
Laker's talent as an entrepreneur became apparent soon after the war, when he parlayed his own and his mother's savings into a small fortune through shrewd investment in war surplus equipment. His investment advice to friends brought him more than gratitude; one night in a bar, an appreciative associate wrote him a check for the equivalent of about $100,000 to finance purchase of a fleet of second-hand planes.
The planes made possible Laker's first million dollar enterprise. The advent of the Berlin airlift kept his planes flying virtually nonstop, providing him with the cash to purchase 100 more aircraft and 6000 engines, which he sold at a substantial profit. Laker became rich enough before he turned 30 to indulge an expensive habit—buying a new Rolls Royce each year.
During the 1950's, Laker expanded his enterprises into a charter passenger service, and design of air freight carriers. He was the obvious candidate to manage British United Airways, the largest private airline in the country, when it was formed by merger in 1958. Laker ran the airline at a profit for each of the seven years he spent there.
In 1965, Laker perceived an opportunity that had gone ignored before. Package tour promoters at the time lacked a way to offer low-fare vacations to air travellers in the off season. Laker's innovation—now in use throughout the industry—was to lease his charter aircraft to the tour agencies on a yearly basis. His idea launched his newly formed company, Laker Airways, into a top spot among charter carriers. The company has since won a reputation for outstanding management, and for good natured spoofs of the industry. Laker has on occasion sported a sign reading, "Fly Me—I'm Freddy."
By the early 1970's, Laker had spied another market: the highly profitable transatlantic passenger routes. In the view of IATA, the international airline cartel, a maverick carrier like Laker Airways would wreak havoc if allowed to compete with its members. Former President Richard Nixon, determined to protect American carriers from such a fate, stalled Laker's proposals to offer a $90 fare for regularly scheduled, no reservation flights.
Laker was infuriated. He had managed to win the approval of the British government for his proposal, which obligated the United States by treaty to approve it. By the time President Gerald Ford was ready to move ahead on the plan, the tables had switched again. The new Labor government in Britain revoked approval for Skytrain in fear that it would erode the earnings of the shaky state airline, British Airways. Not surprisingly, the experience left Laker feeling burned. "Not only is IATA a farce, but also the CAB (Civil Aeronautics Board) and the CAA (Britain's Civil Aviation Authority)," he says, "because none of those people are willing to honor the basic principles of democracy."
The picture finally changed in his favor during recent months. The British government became convinced that Skytrain would bring needed tourist dollars into the economy. President Carter, who had called for more competition in air travel during his election campaign, approved a one-year trial for the service. Fares will be $135 from New York to London—and American carriers, which once issued protests at the price, are rushing to follow suit.
Despite his success in battling the regulators, Laker has some sober words. His 345 passenger DC-10s will be forced by the terms of the agreement to fly about half empty during winter months. "What an indictment of free enterprise when they tell you you have to control the people who fly," he says. The agreement signed by Carter in June holds the company a "virtual hostage" for the trial period of one year. "It is a most disgraceful document produced by a country that prides itself on free enterprise," Laker adds. "…Experience has taught me that the U.S. government believes in competition, provided there isn't any."
Yet opening the airline cartel—if only partially and for one year—seems likely to produce incontrovertible evidence of the merits of competition. For those who welcome the gifts of capitalism to the "Forgotten Man" that Laker likes to champion, the contributions of an enterprising Englishman will be remembered for a long time.