8/21/1985: Sir Freddie Laker-BA US$8m Settlement

DALLAS - Today, in 1985, Sir Freddie Laker accepts a US$8m out-of-court settlement from British Airways (BA). The aviation entrepreneur had claimed that BA, amongst others, had tried to drive his airline out of business.

The original pioneer of low-cost trans-Atlantic flights, Sir Freddie created his airline Laker Airways (GK) in 1966.

Bold Ambitions

Initially, short-haul charter flights were operated from its London Gatwick (LGW) base. But Sir Freddie had bold ambitions. On June 30, 1971, he announced his intentions to launch a new discount 'Skytrain' service between London and New York.

Then, in November 1972, GK became the first airline outside of the US to introduce the McDonnell Douglas DC-10.

However, approval for Skytrain was withheld by the relevant authorities. Finally, on September 26, 1977, the first Skytrain service left LGW bound for New York JFK.

The new service recorded a record profit of £2m in its first year and added new routes to Los Angeles and Miami. But competition from other airlines namely BA and British Caledonian (BR) severely impacted GK.

Various proposals put forward such as new routes to Hong Kong and expanding Skytrain in to Europe were continuously rejected by the Civil Aviation Authority (CAA).

Boom to Bust

Mounting losses and intense pressure from its rivals led to GK collapsing on February 5, 1982, with debts of £270m.

Sir Freddie was not about to take this lying down. He went on to sue 12 IATA member carriers for conspiracy to put his airline out of business by predatory pricing, under US anti-trust laws.

In July 1985, he eventually agreed to a US$35m out-of-court settlement from ten of the IATA members. This was followed a month later by BA who agreed to a US$35m settlement, plus US$8m for Sir Freddie himself.

Sir Freddie Laker's idea for Skytrain was simple, to create an airline that ran like a train. Despite its failure, Sir Freddie is credited with inspiring a new generation of low-cost carriers including easyJet (U2), Norwegian Air Shuttle (DY), and Richard Branson's Virgin Atlanic (VS). Featured image: Laker Airways A300.