Last year budget airlines carried almost 70 million passengers to and from the UK but forty years ago things were very different. While “well off” passengers were being pampered by the likes of British Caledonian, British Airways and Pan American, the rest could only dream of joining the jet-set until Sir Freddie Laker revolutionized the skies with the first “no-frills” airline, Laker Airways.
I first heard of Laker Airways when I was just a kid; my parents flew with them on their first holiday together to Ibiza in the early 1970s. Laker Airways’ long-haul arm Skytrain however, was launched in the autumn of 1977 and it had just one route; London Gatwick to New York-JFK. There were no advanced bookings and most certainly no “online” bookings/check-in’s/apps back then, passengers had to queue up at the airport for their ticket. The low-priced fares to cross the Atlantic made Sir Freddie one of the first “celebrity entrepreneurs” of our time. Skytrain made a profit within its first year and Sir Freddie placed orders for more wide-bodied DC-10 planes which were the preferred option for Skytrain plus more routes were soon added to Florida and California.
As Sir Freddie’s airline grew, so did his confidence but not everyone was impressed; namely the “big boy” airlines. Skytrain launched well and was operating successfully but Sir Freddie didn’t want to stop there, he could see opportunities with an outlook of launching Skytrain into a global “no frills” airline. But it was that sky-high ambition that would take his business in to turbulence.
Laker Airways doubled in size in just five short years, adding more planes and carrying over two million passengers – this put Laker Airways on a collision course with it’s competitors. As the eighties arrived and recession hit Britain, Skytrain looked dangerously over stretched. The worsen exchange rate and fuel prices rising meant that Laker faced spiraling costs at the same time as revenues were falling and being an airline built on low fares this made it particularly hard to rise prices to make up the difference.
Sir Freddie had ploughed money in to the airline’s expansion that meant it had very little left in reserve. Laker’s competitors had cut their prices on all of Sir Freddie’s routes. By 1982, the bank called in its multi-million pound overdraft. The airline went bankrupt on 5 February 1982 and Sir Freddie’s dreams were shattered as so were those of his staff and passengers. Laker Airways collapsed with debts of over £270 million – at the time – making it the biggest corporate failure in British history. Sir Freddie soon waged war against the likes of British Airways, BCAL, United, Lufthansa, KLM and Pan Am calling his demise as a “dirty tricks campaign” by his competitors who clubbed together to put him out of business. He settled out of court in the mid-Eighties but the fearsome dog-eat-dog war of the airlines was felt far and wide especially by Virgin Atlantic who would face a similar “dirty tricks” battle with BA in their early years as well.
First class entrepreneurs raise the bar to drive things forward every time, which is good, that’s why they are first class but it does come at a cost; it makes them the worst people at judging their own limits and those of their businesses. So when things do go well it can be fantastic. When things go badly it can be tragic.
Laker Airways operated from 1966 to 1982 and for a brief period again in the UK from 1996 to 1998.
Eglin, Roger; Ritchie, Berry (1980). Fly me, I’m Freddie. London, UK: Weidenfeld and Nicolson.
Airliner World – The Laker Airways Skytrain, July 2005. Avenel, NJ, USA: Key Publishing. (Airliner World online)