Empire of the Sky

By Anthony Sampson

First published in 1984, explosively topical and penetrating in insight, this bestseller from the world's expert on international, high-flying big business is essential and fascinating reading for anyone who has ever looked down on the world from a plane and wondered how airlines have changed it.

• Language: English
• Publisher: Bloomsbury Publishing
• Release date: Dec 17, 2012
• ISBN: 9781448210664

Anthony Sampson

Anthony Sampson is the son of a research chemist in ICI, and was born in the company town of Billingham- on-Tees. He has been keenly interested in South African affairs since 1951 when, after leaving Oxford, he first went to South Africa to become editor of the black magazine ‘Drum’ in Johannesburg. He met Nelson Mandela that year in Soweto as Mandela was preparing for the Defiance Campaign against apartheid, which ‘Drum’ covered extensively.

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Introduction

The Air Change

Almost anyone who has lived through the air age, watching times and distances contract, must have wondered what this strange new form of transport has done to the world and to them. When I made my first long journey, from London to Cape Town in 1951, the cheapest way was still by sea, taking two weeks while the winter turned into summer, the swimming pools were filled and the decks were opened up to the tropical sun. When I came back three years later it was already cheaper to fly—on a DC-4 plane which took two days, whose propeller-engines seemed to bore into my mind and which landed every thousand miles or so at tiny airports where it stood alone on the airstrip: it circled Victoria Falls and followed the course of the Nile, low enough still to seem part of the continent and the landscape.

Three years later I flew round the world on Super Constellations taking two days and two nights to cross the Pacific and stopping at Fiji and Honolulu. It was still a time when journalists dramatically reported the take-offs and touchdowns of air journeys with awe, and when travel books began by describing the airport. But three years later the jet age had begun, and this extraordinary revolution in travelling quickly became too commonplace, too safe and uniform to provide much scope for description.

I spent more time in the air as I became interested in another aspect of the changing world—the influences of multinational corporations and banks who were using jet travel, together with international telephones, telexes and computers, to provide their own kinds of unity. While I flew between the continents I tried to work out how the airlines themselves, so global yet so national, fitted into the changing economic and political pattern. As the two oil shocks of 1973 and 1979 multiplied their fuel bills and the two recessions cut back their projections, the airlines were caught between two other dominant industries—paying far more to the oil companies and increasingly in debt to the bankers. And by the eighties they were facing the worst economic crisis in their history.

The actual stimulus to write this book came from an unexpected quarter. To my surprise I was invited by the International Air Transport Association, which represents most of the world’s airlines, to give a speech at their annual conference. I reminded them that in one of my books I had described them as one of the most hated cartels in the world. Had they not asked the wrong man? But no, they realised that and they were interested in critical views. After talking with airline chiefs and their critics I became intrigued by the debates that were raging through the airline business about deregulation and competition, and its state of crisis; and I began to trace how the airlines had first grown up in the political framework—and how they themselves had changed the world’s political attitudes. This book is the result.

It is not a book about the separate competition of the aircraft manufacturers—which has been vividly described by John Newhouse in his book The Sporty Game. Nor is it about the heroic exploits of the early pilots, which have been amply chronicled elsewhere. Nor is it about the domestic American airlines, except insofar that they fly abroad and influence foreign airlines. It is essentially about the politics of international airlines; how they first grew up in a highly politicised atmosphere, how their dazzling ambitions and technology were directed by political decisions and choices, how nations faced new problems as they extended their competition into the air, and how the planes in their turn influenced the politics on the ground.

In writing this book I have contracted no debts or obligations to any airline: I have accepted no free trips or junkets. I am grateful to many friends and acquaintances who have helped me with insights and information, most of whom would wish to remain anonymous. I was much encouraged by a chance meeting on a 747 with Vernon Crudge, the veteran consultant and former British Airways executive. I have had invaluable advice from Stephen Wheatcroft, the aviation economist, and Peter Martin, the aviation lawyer. The staff of IATA, particularly Geoffrey Lipman, have been generous with their time and assistance, whatever my criticisms. Sir Ian Pedder and Alan White of the Civil Aviation Authority in London have been patient with their explanations of the intricacies of air traffic control. I am indebted to many earlier books, which I have tried to acknowledge in the notes, including the important recent history of TWA, Howard Hughes’ Airline, by Robert Serling, and the two histories of Pan American: An American Saga by Robert Daley and Chosen Instrument by Marilyn Bender and Selig Altschul. I must also record a special debt to A History of the World’s Airlines by R. E. G. Davies, the indispensable reference book published in 1964.

In writing the book I owe most thanks to my IBM Personal Computer and the Wordstar word-processing programme. Alexa Wilson has once again helped me through the last ordeals; my wife Sally has been long-suffering as before. I am grateful to my publishers, Bob Loomis of Random House and Eric Major of Hodder & Stoughton, for their encouragement and advice; to my literary agents Michael Sissons and Sterling Lord; and I owe a special debt to Walter Anderson of Parade magazine who with characteristic decisiveness first commissioned me to investigate the Korean Air Line disaster.

Prologue

On Top of the World

I’ll put a girdle round about the earth

In forty minutes.

Puck, in Shakespeare’s Midsummer Night’s Dream

Lovers of air travel find it exhilarating to hang poised between the illusion of immortality and the fact of death.

Alexander Chase, 1966

Waking in the middle of the night—or is it day?—I ask myself like so many jet-lagged travellers, Where am I…? When am I? It’s harder than usual to guess the answer in this standardised hotel room. Then I remember that I had flown yesterday from the ghostly black hangar of Narita airport, after a two hours’ drive out of Tokyo; and that I was talking on the plane to a British businessman who had flown out to Tokyo for just two days, to look at new robots which would soon be able to make a complete shirt without use of human hands. On the JAL plane he’d asked the air hostess about women’s lib and she had sweetly explained that she didn’t understand it. Now I remember: I decided to stop in Anchorage in Alaska, on my way back to London; and in Anchorage the clock says it’s not the middle of the night but breakfast time, and not Tuesday but Monday again.

After breakfast I try to find out where I really am. Anchorage has one of the busiest international airports in the world: most of the big European airlines – British Airways, Lufthansa, Air France, SAS—stop here twice a day, but they are outnumbered by the two biggest users, Japan Air Lines—now the biggest international airline—and Korean. The new Anchorage airport is a triumph of the nowhere style: the rectangular slabs might have been lowered yesterday from the sky to fit neatly between the jumbo airliners which are lined up refuelling in rows. The planes seem to have converged on this arctic hide-out like a jumbos’ picnic-place, in this snowbound landscape. Inside the echoing airport it is only the airlines which seem to have any real identity, each with its own counter, manager and office decorated with its national flag and symbols, improbably awaiting passengers. In this outpost the staff sound all the more extravagantly French, English or Japanese.

This is America, of course, but it would be hard to guess: at the international airport all the airlines are European or Far Eastern, and the style belongs to the sky. Beyond the customs and security check lies the secret heart of the building, the transit area which is the limbo-land of all airports. Twice every day, after midnight and in the afternoon, the airport suddenly fills up with processions of lost souls from opposite ends of the world, who stare at each other with the familiar glazed dislocated look of passengers who have lost sight of place or time—Koreans on their way to New York, Scandinavians flying to Los Angeles, Japanese en route for London. In the concourse they are greeted by a huge stuffed polar bear standing upright, a menacing arctic wolf and an exorbitant duty-free shop which gives few clues (apart from Alaskan salmon) as to its geography—displaying Korean tape recorders, Dutch cigars and Scotch whisky which have been flown up here to sell to people flying out. Few passengers ever leave the transit area, and many airlines have not been granted what is grandly called the fifth freedom—the freedom for passengers to stop over in a foreign country: the airlines can fly passengers through the place, but not to it. Looking at the rows of apprehensive faces of all colours and shapes, each with the same forsaken look, they seem all to have been denied the freedom to belong anywhere, like flying Dutchmen in search of an unattainable love.

But even people like myself who have been allowed to leave the airport to stay in the town of Anchorage find it hard to come to terms with its geography. It is part of the United States, yes, but I soon found that it was far quicker to fly from here to London or Tokyo than to most other American cities: Anchorage is only eight hours’ flight from London, while to reach most of the southern forty-eight—as they call the rest of the United States up here—you must change planes at Seattle or Salt Lake City. Anchorage, though it calls itself the polar route, is on the same latitude as Helsinki and not much further north than Stockholm; but it is far more remote, with the Rocky Mountains and the frozen wastes of British Columbia to the south. The time-zones add to the disorientation; for Alaska is five hours out of sync with New York and shares its Yukon time only with Hawaii. The flight from Anchorage to London takes eight hours but crosses nine time-zones, and the British Airways man warns that it is famous for being the most jet-lagged of all journeys. But Alaska is also right up against the international date line; and passengers to and from the Far East have the disconcerting experience of having either two Mondays or none.

Anchorage owes its prosperity to oil but even more to the planes which have connected it both to the world and to the rest of Alaska. The Alaskans are known as the flyingest people under the American flag and the little airports and frozen lakes are full of light planes. The sea from the Cook Inlet makes Anchorage comparatively warm, and it has been a popular settling-place for Koreans, Japanese or Scandinavians as well as Americans and Canadians. The town centre of Anchorage, five minutes from the airport, still has a half-finished, accidental look and manages to look tame and suburban in spite of its exotic geography, with few signs of the wild bars of the forties. Only the distant peak of Mount McKinley—the highest mountain in North America—suggests the arctic splendour. The Captain Cook hotel, where I’m staying, has a tower block, a shopping arcade and homely waitresses who can serve brunch all day, excluding any local atmosphere; and the airlines add their own cosmopolitan confusion, filling up the lobby twice a day with pilots and crews from ten countries stopping over. Everyone knows that Anchorage depends on airlines, and they talk with dread about how long-range planes from Europe may eventually cut out this stop altogether on their way to the East, or fly across Siberia instead. Already Pan American, Japan and Northwest Airlines fly non-stop from New York to Tokyo, and Finnair flies direct from Helsinki to Tokyo—connecting Europe to the Far East in one fourteen-hour hop. Will Anchorage follow the fate of Gander or Shannon, which were once so indispensable to flights across the Atlantic, until technology left them behind?

It’s odd to be reminded, by the map in the Captain Cook hotel, that this is the famous north-west passage which had tantalised and frustrated the great explorers since the sixteenth century. If I should saile by way of the north-west, said Sebastian Cabot, I should by a shorter tract come into India. In 1778 Captain James Cook, having discovered New Zealand and Australia, surveyed North-West America right up to the Bering Straits and visited the shores of Siberia. The United States bought Alaska from Russia in 1867, and after that became more interested in the Arctic; but it was not until 1906 that the Norwegian Roald Amundsen finally navigated the passage to the Pacific through the Bering Straits. The result was an anti-climax, like much polar discovery; for the icy route was quite impractical for everyday trade.

But the north-west passage gained a thrilling new significance in the air age. Planes were not hemmed in by land-masses and ice-floes, and they could follow the Great Circles to make their own connections across the world. In 1931 Charles Lindbergh, four years after flying across the Atlantic, set out with his wife in a single-engined seaplane to follow the north-west passage across the pole. In the twentieth century we have turned to it again, wrote Anne Lindbergh, not as a myth, a feat for explorers, or an undiscovered path towards an unknown end, but as a practical route to the Orient. For we are again approaching an age of new transoceanic routes, new ways to link countries and continents, this time by air. The Lindberghs’ journey was full of hazardous navigation and landings, but they encountered no real political dangers: with their flying-machine they were enthusiastically welcomed by the peasants on the Soviet peninsula of Kamchatka, by Japanese fishermen on Kunashiri island, and by the Chinese in Nanking who asked them to help to survey the Yangtse floods.

Alaska soon became an aviator’s paradise. It had only one long road and a 470-mile railway where the frost made the engine jump the track, while the small planes could go almost anywhere. By 1939 its airlines carried twenty-three times as many passengers, proportionately, as the rest of the United States. Everybody travels by air in Alaska, wrote Jean Potter in her history of the Alaskan pilots in 1945, fishermen, miners, trappers, Congressmen, prostitutes, engineers, salesmen… During the Second World War seven thousand Lend-Lease bombers and fighters were ferried from Alaska to Siberia, to help the Soviet war effort; while the string of Aleutian Islands with their eerie names—Unalaska, Unimak, Umnak, Adak—which hang like a necklace between Alaska and Russia, acquired a new importance in the war against Japan. It was on Adak that Corporal Dashiel Hammett the thriller writer edited the air force paper The Adakian; and from there he flew into Anchorage, thrown out from one drinking place after another until he bought his own bar.

With peace Anchorage found new air opportunities, and by 1947 Northwest Airlines based on Minnesota began flying to Tokyo via Anchorage across the top of the world. The polar route became a symbol of global unity: when ten years later the Scandinavian Airline SAS made its inaugural flight from Copenhagen to Tokyo via Anchorage, the Danish Prime Minister H. C. Hansen broadcast a message promising goodwill and co-operation between nations as it flew over the pole. The other European airlines soon caught up with the Scandinavians, and business travellers began to take for granted this eerie journey where the sun and the moon seemed to stay fixed in the sky and time nearly stood still. The trade along this aerial north-west passage was very different from what Cabot or Cook had in mind: half the big planes passing through Anchorage are now cargo planes, carrying not spices or gold, but cassette players, watches or computers. The polar route in the end enriched the East more than the West, as it gave the dynamic Asian countries a short cut to their markets in America and Europe.

It was hard to connect such adventurous history with this ordinary town and a placeless airport filled with dazed passengers staring at a stuffed polar bear in a transit lounge. Was this really the outcome of all those centuries of daring exploration?

It is not as commonplace as it looks; for in political terms it is far from nowhere. The air-route to Japan and Korea, which pilots treat as a milk-run, is the now notorious Romeo Twenty which at one point flies only thirty miles from the Soviet Union: the pilots can look down with their radar on the American Aleutian Islands one moment, and on the Soviet Kuril Islands the next. The peninsula of Kamchatka where the Lindberghs were welcomed with such friendliness is now bristling with Soviet weaponry: the North Pacific is now a critical frontier of confrontation in the cold war of the eighties. The development of this busy air-route through a highly militarised region was to lead to one of the most horrifying tragedies in the history of aviation. It was a reminder that air travel can still be poised between extreme boredom and extreme danger; but also that the greatest perils today are the political dangers.

BUMS ON SEATS

The airline business, having so miraculously circumscribed the world, has reached a kind of limit which baffles and saddens the veterans who can look back to its origins six decades ago. For the first years aviation was a breathless race to reach destinations, to consolidate empires or to forge new trade-routes; and each seat on an airline was a precious prize. Gradually it became a more commonplace commercial service, a business which Eddie Rickenbacker, followed by others, called putting bums on seats. Then tourists began to outnumber officials and businessmen: there were no longer destinations needing planes, but planes needing destinations—until now there are far too many planes waiting for far too few passengers. Airlines which had been created by barnstormers and high-gambling entrepreneurs were taken over by marketing men, caterers or stockbrokers who saw their airliners largely in terms of rows of seats which had to be filled with bums—like Dick Ferris of United Air Lines who came from Westin hotels, Colin Marshall of British Airways from Avis Rent-A-Car, or Donald Burr who learnt about aviation on Wall Street before he founded People Express. They shocked the pilots and engineers by talking about airline seats as if they were like hotel beds or restaurant tables which only needed high occupancy rates and low overheads.

Any romantic passenger would find a contemporary airline conference a disillusioning experience. More mundane industrialists may sometimes adopt the emotive metaphors of the air—welcoming colleagues aboard, getting airborne, running into storms or fastening seat-belts for a bumpy ride. But the airline chiefs are determined to come down to earth, to discuss their exotic routes and amazing planes as if they were shopkeepers selling surplus goods in bargain basements or at January sales. They spend so much time flying from conference to conference—they give each other free passes to anywhere—that they long ago ceased to be surprised at waking up at the other end of the world; and the more businessmen travel, the more engrossed they become in their own industry. Since they all have the same basic problem—too many seats, too few bums—they are all caught in the same dilemma: they want to get together to fix the same fares, but they can never resist selling cut-price tickets under the counter, to increase their share of the market. For every empty seat adds to their losses, and the world airline industry, whatever its other achievements, is technically close to being bankrupt.

THE SKY CLUB

Every year the airline chiefs fly in from five continents to the annual meeting of their own club—the International Air Transport Association or IATA. The full members sit in rows in the conference hall behind the names of their airline from Aer Lingus to Zambia Airways, like a miniature United Nations. Only a few countries like Britain and America send delegates from more than one airline: most are represented by a single flag-carrier, ranging from Japan Air Lines which has forty-eight planes, most of them jumbos, to Air Ruanda which has one. When they vote, by holding up paddles on sticks saying AF or LH, they look like a line-up of nations rather than companies. The non-members of IATA like Singapore and Aeroflot sit at the back, together with the men from Boeing or McDonnell-Douglas. They all face the platform where their annual president sits beside the suave director-general Knut Hammarskjöld—whose uncle was the UN secretary-general—and who lends a tone of high statesmanship to the meeting.

But the arguments are far from diplomatic, and the recriminations have become more bitter as the airlines’ predicament has worsened. When IATA met in its home town of Geneva in November 1982 the industry faced the worst crisis in its history, having lost 1.2 billion dollars the previous year. We are walking a financial tightrope, Hammarskjöld warned them, with the abyss of bankruptcy on the one hand and the slippery slope of subsidisation or permanent bondage to the loan market on the other. The Swiss hosts extended their Calvinist morality into the air. Armin Baltensweiler the chairman of Swissair—the bankers’ favourite airline—insisted on careful husbandry, not reckless abandon. Professor Guldiman, the former director of Swiss aviation, gave a stern philosophical address reproving myopic consumerism and parasitism, and the degeneration of democracy into democratism like the decadence of Athens 2,500 years earlier. He quoted Hegel, Karl Barth and Valery—not even the future is what it has been in the past.

The airline chiefs seemed united against the myopic consumerists, and determined to stop each other filling up their seats with the cheap tickets which were being surreptitiously sold through the bucket-shops. No one will help us if we don’t help ourselves, warned Hammarskjöld, and no international organisation can be stronger than its members want to be. The lofty chief executive of TWA, Ed Meyer, called on them all to stamp out discounting and monitor any abuses, and others agreed: The time has come to show that we’re serious, said Vlad Slivitzky of Air Canada. Our credibility is at risk, said Sir Adam Thomson, the combative ex-pilot who runs British Caledonian. But many were sceptical, having noticed the behaviour of some of the most dignified airlines. The most pious airlines are sometimes the worst offenders, complained David Kennedy, the outspoken head of Aer Lingus, with a dig at his rivals British Airways.

Other airline chiefs were determined to show their own rugged independence from any agreement. This is the first IATA meeting I have ever attended and it will probably be the last, said the rumbustious new head of Air New Zealand, Bob Owens. The way things are going, the next annual meeting will probably be held in a church. It was left to Umberto Nordio of Alitalia, an intellectual in the industry, who had started his career in shipping, to sum up their problem with his typical bluntness. I first hoisted my sails in a world of seafaring crooks, and now I spread my wings in a world of airborne crooks. The airlines, he predicted, could never resist the temptation to offer discounts. We’re selling a product which is not stockable. It’s as if a car dealer were told that all his cars would be worth nothing tomorrow morning. Naturally he would rush to sell them—even for a dollar each.

After an acrimonious debate they passed a resolution promising that they would each personally supervise their own airline’s tariff integrity. In the following months IATA sent its inspectors round the bucket-shops to try to catch the airlines cheating, and they did manage to reduce the discounting in some regions. But there were still airlines like Garuda and Korean, not to mention Aeroflot, who were delighted to attract customers on to their half-empty planes; and in the meantime the American movement for deregulating the airlines was beginning to spread across the world. It was an ironic sequel to the collapse earlier in the year of Sir Freddie Laker, the champion of the forgotten man—the collapse which the other airlines welcomed as the return to more orderly business. For passengers were becoming more bargain-conscious than ever: Laker’s ghost stalked through the conference hall. And the airlines were becoming more desperate than ever to put bums on seats.

It was a come-down for the aviation industry which had begun as the greatest adventure of all, pushing back the new frontiers of the air, forging new trade-routes, transforming continents, girdling the world. It now seemed to be turning in on itself to become one of the most circumscribed of industries and, as Hammarskjöld warned them at Geneva, there were no new miracles or breakthroughs to rescue them. The supersonic era had been aborted, and the jumbos, which had been intended as stop-gaps, now seemed to be the last of the great innovations, like the giant steam engines a century ago. The airlines were forced to turn back to the perennial problems of the overcrowded planet: they could fly round the world in forty-eight hours, but they could not get past the traffic jams to the airports. In the space age, wrote Neil McElroy in 1958, man will be able to go around the world in two hours—one hour for flying, and the other to get to the airport.

They were now nearly all flying the same giant planes—Boeings, Douglases or Lockheeds—while each trying to claim that theirs were unique. They provided a classic challenge to the advertising agencies to try to detect and proclaim their unique selling proposition—the widest seat in the air, flights so good, you won’t want to get off or I want to stay up here with you for ever. Their sameness also provided a paradise for economic theorists. As military strategists are fascinated by desert warfare which offers neither side any special advantage of terrain, so competition in the air offers a special purity now that airlines fly the same planes along the same routes. After the United States deregulated the airlines in 1978 the economists could test out their theories and arguments between controls and free entry, between open skies and protection, in the great laboratory of the sky, and the arguments extended round the world. Yet however bright and clear the economists looked inside their own airspace, they became overclouded as they crossed the frontiers into the international arena. For they came up against all the obstacles of sovereignty and national pride, and no nation would allow its own airline to go bankrupt. The arguments between cartels and competition which had been fought out over so many industries reached a caricature in the airline business, which swung from one extreme to the other. The nations, however huge the losses, could not do without their own airlines, while the consumers still clamoured for lower fares.

The airlines, though they seemed to defy geography, are among the most national of industries, inextricably bound up with their home country’s ambitions and security. Their competition may look like a contest between smiles or leg-room, but it is chiefly a question of air-routes and frequencies which have been thrashed out in hundreds of tough secret deals between governments;