The story
Inception
Caledonian Airways was the brainchild of Adam Thomson, a former British European Airways (BEA) Viscount pilot and ex-Britavia captain, and John de la Haye, a former BEA flight steward and Cunard Eagle's erstwhile New York office manager.
Thomson, de la Haye and three associates started Caledonian Airways from scratch with an initial investment of £54,000 raised from institutional investors on both sides of the Atlantic, many of which had a "Scottish connection".
Initially, Thomson, de la Haye (the airline’s first Chairman) and their associates wanted to incorporate the new airline under the name Scottish Airways. When they found out that BEA had already reserved this name, the company was incorporated as Caledonian Airways (Prestwick) Ltd. at Glasgow Prestwick Airport, Scotland, on 27 April 1961 to conduct worldwide IT and group charter operations, with de la Haye and Thomson being appointed managing and deputy managing director respectively.
De la Haye was responsible for the famous Lion livery and tartan outfits for cabin crew. Later, he helped to pioneer business class, the helicopter link between LGW and LHR and the limousine service - some of these innovations were subsequently copied by other airlines. As the initial driver of branding, the famous Caledonian customer service and route expansion, de la Haye is generally recognized as the brainchild behind the airline’s early years and subsequent success, as described in a lengthy obituary in The Times. During the 70’s and early 80’s, having semi-retired due to ill-health, de la Haye retained the position of consultant to Sir Adam Thomson and fought hard to stop fleet diversification, which ultimately contributed to BCAL’s downfall and sale to BA due to huge costs incurred by operating multiple types of aircraft. A close friend of Herb Kelleher (Southwest Airlines) he recognized very early on that diverse fleets incur huge costs and was a strong proponent of keeping it simple.
Caledonian operated its inaugural flight on 29 November 1961 from Gatwick, the newly formed airline's main operating base, to Barbados. The first revenue service, an immigrant charter under contract to London Transport Executive, operated the following day in the opposite direction.
The first fare-paying passengers to New York departed Glasgow Prestwick on 21 December 1961. They had paid £40 for the return trip.
Other destinations served during the first year of operations included Lourenço Marques.
The initial aircraft type operated was the Douglas DC-7C, the first of which was leased from Sabena in November 1961. This aircraft was lost in a fatal accident in Cameroon in March 1962. It was replaced the following month with another aircraft of the same type leased from the same source.
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Caledonian's first two DC-7Cs operated European and long-distance charter flights, carrying mainly tour groups, inclusive tour holidaymakers and members of the British Armed Forces. The Ministry of Defence approved Caledonian as a carrier for trooping flights in early 1962. IT flights to European holiday resorts began during summer 1962.
Two Caledonian Airways Douglas DC-7Cs appeared at the Biggin Hill Air Fair in May 1963; one to carry travel trade invitees on a special flight around the English south coast; the other to be viewed by the public while on static display at the airfield.
The DC-7C continued to be the main type flown during the early years. The last example was sold in September 1966.
The airline was emphasising its Scottish roots for marketing purposes by adding the tagline "The Scottish International Airline" immediately behind the Caledonian name on both sides of the aircraft's fuselage, and by its female flight attendants wearing tartan uniforms. The company also sought to attract customers by providing an inflight service that was superior to what most other contemporary charter airlines offered, including complimentary meals, drinks and free overnight bags.
Max Wilson, the chairman of the Overseas Visitors' Club, one of the airline's main group charterers, became Caledonian's first majority shareholder.
In late 1963, the Donaldson Line, a Scottish shipping company, took a 25% minority stake in Caledonian by subscribing to new shares worth £32,000. This provided the resources to expand the airline's freighting activities and to add a pair of DC-6Bs to its fleet in time for the following year's European summer charter season. At the 1963 Biggin Hill Air Fair, Caledonian participated with two of its DC-7Cs. One of the newly acquired DC-6Bs could be viewed by the public while on static display at the 1964 Biggin Hill Air Fair.
Attaining market leadership in transatlantic affinity group charters
On 20 May 1963, the US Civil Aeronautics Board (CAB), with Chairman and Managing Director John de la Haye as lead negotiator, granted Caledonian a foreign [air] carrier permit for a three-year period under Section 402 of the US Federal Aviation Act. It became effective on 17 June 1963 when it was signed by President John F. Kennedy, making Caledonian the first overseas charter carrier to obtain this permit. The so-called Caledonian Case established a precedent and constituted the legal basis for all airlines that had always wanted to operate charters to and from the US and Canada, but had been unable to overcome the objections of the established airlines, such as Pan Am and British Overseas Airways Corporation (BOAC), prior to the enactment of this law. Caledonian's US breakthrough led to it being granted Canadian affinity group charter permission as well. The UK Air Transport Licensing Board (ATLB) licensed Caledonian to begin North Atlantic IT charters in September 1964.
Caledonian's transatlantic growth strategy focused on taking advantage of strong ethnic ties of overseas Scottish communities in North America to the land of their ancestors and an obscure International Air Transport Association (IATA) resolution dating from 1953. Under this resolution, airlines were permitted to offer cut-price charter tariffs if these were negotiated with an individual representing a distinct group that shared a common affinity among its members prior to the application for charter transportation. The way independent charter operators like Caledonian, who were not IATA members, interpreted that resolution was that it applied to closed groups only whose primary purpose of travel was their common interest or kinship, rather than securing cheap air fares for its members. IATA imposed further restrictions on airlines seeking to exploit this loophole by insisting that any agent booking these flights had their commission capped at 5%, that the affinity group's membership could not exceed 20,000 and that those seeking to avail themselves of these offers must have been members for at least six months prior to the commencement of travel. These restrictions were designed to protect IATA members' transatlantic scheduled traffic by preventing non-members from undercutting them.
To comply with IATA's arbitrary transatlantic charter rules, Caledonian and other independent charter operators insisted that anyone who wanted a cheap transatlantic charter flight needed to be a bona fide member of an affinity group, and that the prospective traveller needed to be a member of such an organisation for a minimum period of six months. As a result, clubs and associations with names like Friends of Clan Albion, Anglo-Scottish-American Group, Anglo-American Families Association, Rose and Maple Amity Club, Paisley Buddies, British American Club, Canadian US Pacific Association etc. sprang up on both sides of the Atlantic.
As the charterer was responsible for paying for the aircraft's entire capacity regardless of whether all seats were filled, there was a great temptation to let people, who were not eligible to travel under the affinity group rules, take the seats of other, eligible travellers who had cancelled their bookings. As a result, there were numerous occasions on which the airlines got into trouble with the authorities on both sides of the Atlantic. This made the system increasingly unworkable.
In 1967, Caledonian gained Presidential approval to carry passengers from 19 European countries to the US and to operate IT charters from the US to the UK, following authorisation by the CAB. Confirmation by the White House of the CAB's decision to let Caledonian fly US-originating charter passengers to Britain made it at the time the only airline permitted to cater to the IT market on both sides of the Atlantic.
In 1968, the CAB agreed to expand Caledonian's US IT charter authority to enable it to operate circle-tour charters between 19 European points and the US, with flights commencing the following year.
By 1969, more charter passengers were crossing the Atlantic with Caledonian than those flying on the transatlantic scheduled services of Aer Lingus, El Al, Sabena or Swissair.
By 1970, Caledonian was carrying the majority of the approximately 1.4 million passengers flying as members of affinity groups across the Atlantic each year.
Caledonian sought to differentiate itself from the other UK independent airlines and US supplemental carriers with which it competed in the transatlantic closed group charter market by providing a personalised, high quality full-scheduled-service style inflight service that exceeded most contemporary scheduled transatlantic operators' economy class service standards by a wide margin. On a typical transatlantic 707 charter, there were individually printed menus. The inflight service began with tartan-clad cabin staff serving each passenger free cocktails from the drinks trolley at each seat row as soon as the seat belt signs were turned off. This was followed by the main meal, starting with a separately served hors d'œuvre before serving a main course of fillet of beef, Tournedos, lamb or a chicken dish, accompanied by a selection of complimentary wines. Thereafter, a dessert course was served, followed by a choice from a cheese tray and a basket of fresh fruit. The inflight service concluded with tea or coffee being served with complimentary brandies and liqueurs, as well as free cigarettes for those who smoked.
Further growth and new business opportunities
Caledonian carried 110,700 passengers and made a net profit of £90,600 in its 1963–64 financial year.
Caledonian's rapid growth as a profitable charter carrier did not satisfy the ambitions of its founders. Thomson and de la Haye's long-term goal was to run a fully fledged scheduled operation. They considered Caledonian's transformation into a scheduled airline the only way to build an airline with a long-term, stable future, rather than continuing to compete with "boom and bust" operators that were charging ruinous rates in an insecure charter market.
Caledonian first applied to the ATLB for a licence to launch transatlantic scheduled services from London to New York via Glasgow Prestwick in 1964. These flights were to operate twice-weekly using DC-7Cs. The fare level was to be similar to Loftleiðir's.
During summer 1964, Caledonian added two leased Douglas DC-6Bs to its fleet to complement the DC-7Cs. The additional aircraft enabled Caledonian to operate an expanded European IT charter programme from London Gatwick, Manchester and Glasgow Prestwick.
On 21 September 1964, the ATLB announced its decision to reject Caledonian's application for a licence to operate transatlantic scheduled services. It did however award the airline two licences to operate inclusive tours across the North Atlantic.
In December 1964, Caledonian acquired its first turboprop airliners, a pair of ex-BOAC Bristol 175 Britannia 300 series. These were mainly intended for use on transatlantic IT charters beginning in summer 1965. Over the coming years, additional examples were sourced from BOAC and Canadian Pacific Airlines, enabling the company to continue expanding its worldwide charter business. Britannias gradually replaced DC-7Cs. Caledonian operated a total of nine Britannias, the last of which was disposed of in May 1971.
Caledonian carried 148,000 passengers and earned a net profit of just over £200,000 in its 1965–66 financial year.
The ATLB granted Caledonian five licences to operate scheduled services from Scotland to the Med in 1966. These were the airline's first scheduled service licences.
By the end of September 1966, Industrial and Commercial Finance Corporation (ICFC), one of the two predecessors of Investors in Industry, acquired a 14% stake in Caledonian's holding company. This improved access to capital to finance further growth, including new business ventures and fleet renewal.
Caledonian planned to introduce twice-weekly services from Prestwick to Barcelona and Ibiza for the 1967 summer season, making use of the licences the ATLB had awarded it the year before. However, these plans were shelved due to the Spanish authorities' refusal to grant reciprocal traffic rights.
During 1967, both Lyle Shipping and Great Universal Stores (GUS) became new shareholders of Caledonian Airways. These investments ended a period of uncertainty for the airline following the Donaldson Line's voluntary liquidation. Lyle Shipping's purchase of shares worth £125,000 increased Caledonian's issued capital and reserves to £1 million. GUS were the owners of the Global travel organisation, a leading contemporary UK tour operator that contracted a growing share of its flying business to Caledonian. It acquired Donaldson's 20% stake.
Caledonian re-applied to the ATLB for a licence to launch transatlantic scheduled services from Gatwick, Heathrow or Stansted via Prestwick to New York JFK, Chicago, Los Angeles, San Francisco and Toronto, and from Birmingham via Prestwick to New York, in 1967. These services were to be gradually introduced between 1969/70 and 1970/71 utilising the new 707s. BUA, British Eagle and Transglobe Airways simultaneously applied for similar licences. Caledonian objected to the other independent airlines' applications. BOAC opposed all the independents' applications. The Board of Trade (BOT) directed the ATLB to prejudge the four contenders' applications in order to concentrate only on those that stood a reasonable chance of success under existing bilateral arrangements before the route licensing hearings could begin. As a result, BUA withdrew its own applications but objected to Caledonian's and British Eagle's. Transglobe withdrew its applications as well. Caledonian and British Eagle objected to each other's applications. The ATLB heard Caledonian's applications, British Eagle's counter applications and BOAC's objections in early 1968. Following the conclusion of the transatlantic scheduled licensing hearings in mid-1968, the ATLB rejected Caledonian's and British Eagle's applications. It felt that the independents generally lacked the financial strength to acquire the then latest widebodied and supersonic transport (SST) aircraft for their proposed services, and that these airlines had insufficient economies of scale to enable them to compete with BOAC and the American carriers on a level playing field. It also felt that it would take the independents too long to make these services profitable. In Caledonian's case, the ATLB found that despite having a dedicated North American sales force and its own ground handling operation at John F. Kennedy Airport, the airline's lack of any kind of scheduled service experience and its almost total reliance on Sabena's and Aviation Traders' engineering support counted against granting it a scheduled service licence for one of the most competitive air markets in the world. Secondary factors for the ATLB's rejection of Caledonian's applications included the delay in the introduction of Concorde and the non-availability within the envisaged timeframe of widebodied aircraft that were smaller and carried a lower price tag than the Boeing 747, which would have made them better suited to the type of operation proposed.
Caledonian's net profit grew to nearly £550,000 on turnover of £16.7 million in its 1969–70 financial year.
In spring 1970, Caledonian won a renewable, one-year contract from Qantas to carry migrants from Europe to Australia. The initial contract was worth £4.3 million. It was a sub-charter providing for the carriage of up to 40,000 passengers on approximately 220 flights.
Becoming an all-jet operator
From 1968, the Britannias were gradually replaced with state-of-the-art Boeing 707 jet equipment on long-haul routes. BAC One-Eleven 500s replaced the remaining Britannias on the company's short-/medium-haul European IT operations from 1969.
From Wikipedia’s article on Caledonian Airways, shared under CC BY-SA 4.0.3