Laker Airways is undoubtedly one of the most famous failed experiments in the airline
industry: an attempt to extend the concept of low-cost air travel to the transatlantic
market. At least, that's what they're famous
Laker was founded by British entrepeneur Freddie Laker in 1966, with two Bristol Britannia aircraft purchased from the defunct BOAC. Originally, they flew holiday charter flights from Gatwick Airport, outside of London, and were reasonably successful. In 1968, they got rid of the Britannias, purchasing four BAC 111 aircraft and leasing two Boeing 707's from another defunct British carrier, British Eagle.
In 1972, Laker applied for permission to start scheduled service between Gatwick and John F. Kennedy International Airport in New York. At the time, the New York-London market was dominated by British Airways and Trans World Airlines, and ticket prices were fairly expensive: around $600 round trip at the cheapest. Laker decided that, by doing away with reservations and other in-flight amenities, he could offer service between the two cities for only $100 each way.
He didn't receive permission from the U.S. government until 1977, when Jimmy Carter finally gave him the go-ahead. By then, Laker had purchased two new McDonnell Douglas DC-10 aircraft, which would bring down his costs even more in comparison to the older 707's.
His transatlantic service, appropriately called "Skytrain," began on September 26, 1977, and as promised, one-way fares were around $100. With no reservations system, passengers simply queued up at the airport several hours in advance to get a seat. With no meals on the plane, passengers brought their own sandwiches and drinks. Most travellers didn't mind this arrangement if it meant saving four hundred dollars on their ticket, and both BA and TWA realized they would have to fight back if they wanted to save their own transatlantic services. Soon enough, both airlines lowered their fares to levels just above Laker's, in an attempt to drive the upstart out of the market.
That didn't happen right away. Laker was knighted in 1978, the same year that he launched Skytrain service from Gatwick to Los Angeles International Airport. In 1979, he signed an order to Airbus for ten new Airbus A300s, which, along with his nine DC-10's, would form the backbone of a sprawling international carrier he dubbed "Globetrain."
Two years later, he put the first of these A300's to use on the new "Metro" service between Manchester and Zurich. However, his airline was facing opposition from Britain's Civil Aviation Authority, which turned down most of Laker's 600 requests for international route licences. Laker maintained that this violated the antitrust laws put in place by the European Economic Community, and filed suit against the CAA and DTI.
By then, however, airline deregulation and the late-70's recession had put airlines into dire straits, and Laker was stepping on the toes of several majors, all of whom wanted to drive his service off of the map. On February 6, 1982, much to everyone's surprise, Laker Airways went bankrupt. At 10 AM, all of Laker's aircraft were ordered to land, stranding a total of six thousand passengers at several isolated airports. Upwards of $2 million were raised by the public in an attempt to bail out Laker, but it ultimately wasn't enough money to do any good.
Why did Skytrain suddenly fail? Laker had received an $86 million mortgage on his aircraft from the U.S. government's Export-Import Bank. As airlines like Pan Am and TWA were floundering in the face of Laker's competition, they pressured the Reagan administration to have Ex-Im call in Laker's debt. In addition, the Thatcher government in Britain was worried that Laker might eventually eclipse the parastatal British Airways. Taking away Laker's capital, paradoxically enough, was a way of saving the airline industry in both the U.S. and Britain.
Laker Doesn't Leave
Freddie Laker was understandably more than a tad pissed off at the majors, and in January 1985, he filed suit against twelve major airlines from around the world, who had allegedly conspired to drive Skytrain into the ground. At first, they offered him a $50 million settlement, but as Laker dug his heels in, the value of the settlement grew progressively smaller. By August, Laker finally gave up and accepted a $20 million settlement from British Airways.
Laker got to keep three of his DC-10's, which hung around Gatwick Airport for a decade before seeing service again. In the mid-1990's, he rechristened Laker Airways as a UK domestic carrier, but again ran out of capital and had to ditch the operation.
Laker is now based out of Freeport in the Bahamas, and flies tourists around with a small fleet of Boeing 727 aircraft. It makes money, and that seems to be enough for Freddie Laker... at least for the time being.