British Caledonian in 1977

In 1977 British Caledonian began laying the foundation for further, profitable growth of its business by introducing the first two examples of a brand-new, state-of-the-art fleet of widebodied jet aircraft as well as by resuming transatlantic scheduled air services under a new bilateral agreement with the US.

Joining the widebody club
Following an exhaustive, three-week evaluation of the Boeing 747, the McDonnell Douglas DC-10 and the Lockheed L-1011 Tristar during the summer of 1976, BCal chose the DC-10 as the widebodied aircraft best suited to serve its expanding long-haul route network. The airline placed an order for two long range series 30 aircraft with an option on another two. To ensure an early delivery, the company took over a delivery slot for two aircraft that had originally been booked by China Airlines.

BCal made its widebody debut on March 13 1977 when the first of the two DC-10s on firm order arrived at the airline's Gatwick base after a non-stop delivery flight from the manufacturer's plant in Long Beach, California.

BCal was so pleased with the DC-10's performance that it decided to convert both of the options it had taken when placing the original order for two aircraft during 1976 into firm orders for delivery during the spring and autumn respectively of 1978. However, a subsequent strike at the manufacturer's Long Beach plant meant that McDonnell Douglas could not honour the delivery schedule on which it had agreed with BCal. This necessitated the temporary lease of a Boeing 747-100 from Aer Lingus. (BCal was using BA flight deck crews to operate the aircraft as it did not have any 747-qualified pilots at the time.) The aircraft, which wore a slightly modified BCal livery, was operating the Gatwick-Houston schedule during the 1978/'79 winter timetable period to cover for the late delivery of the airline's third DC-10. BCal's third and fourth DC-10 were eventually delivered during the spring and autumn of 1979 operating the airline's Houston and mid-Atlantic routes. These aircraft featured a 241-seat first-executive-economy, three-class configuration, which was a novelty at the time. This new three-class arrangement became BCal's standard long-haul configuration. The delivery of the third and fourth DC-10 resulted in the disposal of two further 707s, reducing the long-haul, narrowbodied fleet to seven aircraft.

The same year itself BCal ordered a further four DC-10s, three of which were delivered during 1980. The final aircraft was delivered during the first quarter of 1981, giving BCal a fleet of eight DC-10-30 long-haul, widebodied aircraft. These aircraft formed the airline's core long-haul fleet until its takeover by BA in December 1987. (Interestingly, six of the same aircraft as well as two subsequently acquired, second-hand examples continued to form BA's core long-haul fleet at Gatwick until their retirement during the late 1990s.) BCal's additional DC-10s were used to expand the airline's schedule to Nigeria and Ghana to ten weekly round-trips as well as to replace most of the remaining 707s on the airline's other long-haul routes. They were also used to launch a new Gatwick-Dubai-Hong Kong schedule during the summer of 1980 as well as to re-establish BCal's presence as a scheduled carrier on the Gatwick-L.A. route in 1982, following the withdrawal of the Laker Airways "Skytrain" operation on that route in the aftermath of that airline's spectacular bankruptcy.

In 1982 BCal acquired its first and only two DC-10 series 10 aircraft from the estate of the defunct Laker Airways. These aircraft were operated by British Caledonian Charter, a dedicated charter subsidiary set up to fulfill some of the charter contracts BCal had agreed to take over in the wake of Laker Airways' collapse.

During 1985 BCal acquired a further two, second-hand DC-10-30s. They were the final examples of this aircraft type to join BCal's fleet. Both of the aircraft replaced two, originally brand-new Airbus A310 widebodies BCal had primarily operated on its medium-haul routes to North Africa as well as on some of its newly launched Middle Eastern services for a brief period during the mid-1980s. They were also used to operate the Saudi Arabian schedules, which BCal had obtained from BA in return for its South American services.

The first Boeing 747 to enter commercial airline service with BCal on a long-term basis was a series 230B aircraft acquired from defunct US carrier and erstwhile transatlantic competitor Braniff Airways. The aircraft, which originally belonged to Lufthansa when new, entered service on the airline's Nigerian route in 1982 replacing its DC-10s. (BCal had faced stiff competition from British Airways for this licence. BA had proposed to run a Heathrow-Dallas/Ft. Worth service instead. However, the BAA, Heathrow's and Gatwick's owner and operator, had thrown its full weight behind the BCal application to serve this route from Gatwick as it sought to support BCal in its efforts to develop a fully fledged network of high-yield business routes from that airport in order to transform the airport's financial performance. ) In addition, BCal obtained a licence and sole UK flag carrier status to commence scheduled all cargo flights between Gatwick and Houston - including an optional stop at Manchester or Prestwick in either direction.

During the Bermuda II negotiations the UK side succeeded in having a clause stating that Gatwick - rather than Heathrow - was to be nominated as the designated US flag carrier's London gateway airport whenever BCal was going to be the sole designated UK flag carrier on the same route inserted into the new air services agreement. This clause was meant to support the growth of BCal's scheduled operation at Gatwick as well as to redress the competitive imbalance between it and its much bigger, more powerful rivals.

The UK side furthermore succeeded in negotiating a three-year "exclusivity" period for the incumbent operator on any new route with their US counterparts.

For Gatwick-based BCal this meant that it did not have to face any competitor that was using Heathrow, a more accessible airport with a bigger catchment area and a far greater number of passengers connecting between flights, on any of the new routes it was planning to launch to the US. It also meant that it had any new route to the US completely to itself for the first three years of operation, which most airline industry analysts reckon is sufficiently long for a brand-new scheduled air service to become profitable.

At British insistence Bermuda II furthermore contained clauses that made it illegal for any airline operating scheduled flights between the UK and the US to resort to predatory pricing or capacity dumping. Air fares were only approved if they reflected the actual cost of providing these services. Similarly, capacity increases were sanctioned on a reciprocal basis only. The reason for insisting on the inclusion of these provisions in the Bermuda II agreement was to prevent the much bigger, better financed and commercially far more aggressive US carriers from undercutting BCal with "loss-leading" fares cross-subsidised with profits those carriers' vast domestic networks generated, as well as to stop them from "marginalising" the UK carrier by adding capacity far in excess of what the market could sustain.

In 1981, in an annexe to Bermuda II, both sides agreed to automatically nominate Gatwick as the gateway airport for London for any London-US route that did not already exist under the original 1946 Bermuda agreement.

Moreover, both sides agreed to continue dual designation, i.e. designating two UK flag carriers as well as two US flag carriers, on the London-New York and London-Los Angeles routes. The principle of dual designation was to be extended to another two high-volume routes. In the event, the UK side chose to designate a second carrier on London-Miami, while the US side chose London-Boston for the same purpose. This meant that a second British airline was permitted to commence scheduled services on the former route while another American carrier could do the same on the latter route.

However, the UK Government chose to designate Laker Airways rather than BCal as the second UK flag carrier to New York to enable that airline to inaugurate its long-planned "Skytrain" operation on that route. The UK Government subsequently chose to designate Laker Airways as the second UK flag carrier on the L.A. and Miami routes as well. The Government's decision to designate Laker Airways as the UK's second flag carrier on Gatwick-L.A. as well (in addition to Gatwick-JFK) particularly irked BCal's senior management because it felt that this constrained the airline's future expansion plans, thereby undermining its ability to achieve the critical mass it felt it needed to become a serious competitor to the generally much bigger, established scheduled airlines. BCal's senior management also felt that Laker Airways' designation as the second UK flag carrier on these routes had undermined the "Second Force" concept itself and that it had made the Government's earlier undertaking to make BCal its "chosen instrument" of the private sector meaningless. (Prior to the CAA's decision to award a licence to Laker Airways to run a daily "Skytrain" service between Gatwick and L.A. and the Government's decision to designate that airline as the UK's second flag carrier on the London-Los Angeles route, BCal had submitted an alternative proposal to the CAA. This had been based on a daily, full-service, three-class scheduled operation featuring a "no frills" cabin at the back of the plane, rather than a "standard" economy class. BCal had proposed to launch the new service in 1978 and to commence operations with Boeing 707 narrowbodied equipment prior to the delivery of additional DC-10 widebodied aircraft.)

BCal resumed scheduled transatlantic services on October 23 1977. On that day the airline became the first UK carrier to launch a daily, non-stop London (Gatwick)-Houston scheduled service This was the first time a scheduled airline had offered a "third" class specifically aimed at the business traveller since the beginning of the jet age. The Government agreed to designate BCal as the UK's second flag carrier on the aforesaid route. This enabled BCal to take over the Gatwick-L.A. route from July 1 when it commenced scheduled operations with a three-class McDonnell Douglas DC-10-30 widebodied trijet. Later that year the CAA awarded BCal a long-term licence for this route.

BCal also reactivated its suspended licence for a daily Gatwick-JFK scheduled operation. However, it decided to postpone the route's re-launch for two reasons. One reason was a moratorium delaying the addition of any new capacity between London Heathrow/Gatwick and New York JFK by three years. This had been agreed between the UK and the US governments in the wake of Laker Airways' collapse to reduce the huge overcapacity in that particular market. The other was the competitive situation on that route.

In 1987 BCal applied to the CAA for a licence to extend its daily Gatwick-Los Angeles service to San Diego. By the time the CAA awarded the licence, BCal had ceased to exist as BA had assumed responsibility for its erstwhile competitor's worldwide scheduled operation upon completing the takeover of its former rival in April 1988.

Both the Houston and Dallas routes eventually produced good profits, largely as a result of a steady stream of high-yield, oil-related business traffic. The re-launched New York and Los Angeles routes made a positive contribution as well, as a result of a good mix of business and leisure traffic. However, BCal never made any money on the St. Louis route and the airline struggled to make the Atlanta route profitable. (On both of the latter routes as well as on the Los Angeles route BCal had entered into so-called "buddy" agreements with Ozark Airlines, Eastern Air Lines and Continental Airlines . These agreements aimed to co-ordinate BCal's transatlantic schedules with those airlines' domestic schedules to be able to offer its customers "seemless" onward connections within the US to destinations BCal did not serve direct from the UK.) BCal's difficulties on the Atlanta route were to a large extent caused by Delta's dominance at Atlanta, where that airline was headquartered and where it had its main operational base. (At the time Delta accounted for more than 70% of all traffic passing through Atlanta, and around four-fifths of all passengers using the airport made an onward connection from there or had flown in on a connecting flight, in the overwhelming majority of cases with Delta Air Lines itself. This gave Delta a stranglehold over its home base.) To improve the financial performance of the Atlanta route, BCal proposed running a joint service with Belgium's flag carrier SABENA, which used to operate the route from Brussels. (At the time BCal was operating five weekly round-trips between Gatwick and Atlanta using a DC-10-30 widebody and SABENA was operating Brussels-Atlanta twice a week with a Boeing 747-100. Both services lost money. ) BCal's and SABENA's joint operation led to complaints - mainly from BCal's premium customers - that the seating arrangement and in-flight service provided on the SABENA aircraft did not conform to BCal's very demanding standards. On the other hand, some of SABENA's French-speaking customers used to complain about the lack of foreign language skills of BCal's cabin crew.

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