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Innovation in commercial air transportation: are historical changes in factor proportions explained by… Robson, John Wilfred 1975

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INNOVATION I N COMMERCIAL A I R TRANSPORTATION:  ARE  HISTORICAL CHANGES I N FACTOR PROPORTIONS EXPLAINED BY RELATIVE FACTOR P R I C E S ?  by  JOHN WILFRED ROBSON B.Sc.  M.E., U n i v e r s i t y o f M a n i t o b a , 1 9 7 1  A Thesis Submitted i n P a r t i a l F u l f i l m e n t of the Requirements  f o r t h e Degree o f  MASTER OF ARTS in Interdisciplinary Studies  We a c c e p t t h i s t h e s i s a s c o n f o r m i n g t o t h e required standard  THE UNIVERSITY OF B R I T I S H COLUMBIA A p r i l , 1975  In p r e s e n t i n g an the  thesis  advanced degree at Library  I further for  this  shall  the  in p a r t i a l  fulfilment of  University  of  make i t f r e e l y  agree t h a t p e r m i s s i o n  s c h o l a r l y p u r p o s e s may  by  his  of  this  written  representatives. thesis for  be  available  for  for extensive  granted  by  the  It i s understood  financial  gain  permission.  Depa r t m e n t The U n i v e r s i t y o f B r i t i s h V a n c o u v e r 8, Canada  British  Columbia  shall  requirements  Columbia,  Head o f my  be  I agree  r e f e r e n c e and copying of  that  not  the  that  study.  this  thesis  Department  copying or  for  or  publication  allowed without  my  ABSTRACT  An examination o f h i s t o r i c a l changes i n t e c h n i c a l e f f i c i e n c y i n the U.S. a i r t r a n s p o r t a t i o n i n r e l a t i v e factor prices reveals consistent  industry  and t r e n d s  a r e l a t i o n s h i p that i s  w i t h the economic theory o f p r o d u c t i o n .  The study  attempts t o show the e x t e n t t o which t h i s r e l a t i o n s h i p reflects causality. selected  Average f a c t o r p r o d u c t i v i t i e s f o r  a i r c r a f t i n t r o d u c e d between 1948 and 1972 were  c a l c u l a t e d on an ad hoc b a s i s t o document the p a r t i c u l a r events t h a t e s t a b l i s h e d efficiency.  the o v e r a l l trends i n t e c h n i c a l  Those a i r c r a f t and i n n o v a t i o n s t h a t had  characteristics consistent incentives  with p r e v a i l i n g factor  price  were i d e n t i f i e d and the circumstances surrounding  their introduction  analyzed t o determine whether  factor  p r o p o r t i o n s had been s e t i n accordance w i t h these I t i s found t h a t exogenous t e c h n o l o g i c a l considerations  incentives.  developments and  r e l a t e d t o the improvement o f q u a l i t y o f  output had j u s t as g r e a t an i n f l u e n c e  i n establishing  i n t e c h n i c a l e f f i c i e n c y as c o n s i d e r a t i o n s maximization o f economic e f f i c i e n c y .  trends  r e l a t e d t o the  The i n f l u e n c e  of the  m i l i t a r y , o l i g o p o l i s t i c interdependence i n the a i r c r a f t manufacturing i n d u s t r y , of output c r e a t e d  and the e f f e c t s of speed on q u a l i t y  problems o f i d e n t i f i c a t i o n .  Possible  e f f e c t s on past events of a h i g h e r r e l a t i v e p r i c e f o r energy  ii  were examined.  I t i s shown t h a t t h i s m o d i f i c a t i o n o f f a c t o r  p r i c e c o n d i t i o n s would q u i t e  l i k e l y have had a  significant  i m p a c t on t h e h i s t o r i c a l p a t t e r n o f t e c h n o l o g i c a l  iii  development.  TABLE OF  CONTENTS Page  L I S T OF TABLES  v i i  L I S T OF FIGURES  x  INTRODUCTION Statement o f the Problem P a s t Trends i n F a c t o r P r i c e s and F a c t o r Productivity Study O b j e c t i v e s . E a r l i e r Studies . :. The A p p r o a c h O r g a n i z a t i o n o f t h e Study  1 1 •  CHAPTER I THE PISTON ERA INTRODUCTION PART I : EVENTS SURROUNDING THE INTRODUCTION OF SELECTED PISTON AIRCRAFT The F i r s t L o n g - H a u l A i r c r a f t E a r l y Postwar Events New S h o r t - H a u l A i r c r a f t Too L a r g e , Too Soon The ' S t r e t c h i n g ' P r o c e s s Turbo-Compound P o w e r .. PART I I : CHANGES I N TECHNICAL E F F I C I E N C Y AND OPERATING COSTS The G e n e r a l T r e n d H i s t o r i c a l Cost Data: Aggregate Results Experience of Individual Carriers Changes i n T e c h n i c a l . E f f i c i e n c y Summary CHAPTER I I THE TRANSITION PERIOD INTRODUCTION PART I : EVENTS SURROUNDING THE INTRODUCTION OF VARIOUS AIRCRAFT The F i r s t J e t s The F i r s t C o m m e r c i a l D e v e l o p m e n t s The V i e w i n t h e U.S The S t a g e i s S e t The M a r k e t Emerges The S h o r t - H a u l M a r k e t PART I I : CHANGES I N TECHNICAL E F F I C I E N C Y AND OPERATING COSTS The G e n e r a l T r e n d H i s t o r i c a l Cost Data iv  3 11 12 13 15 17 17 17 17 21 23 25 26 28 33 33 34 43 43 53 58 58 58 58 61 64 67 69 71  ..  73 73 75  Page Changes i n T e c h n i c a l E f f i c i e n c y Summary  .... .  CHAPTER I I I THE RECENT PERIOD INTRODUCTION PART I : EVENTS SURROUNDING THE INTRODUCTION OF VARIOUS AIRCRAFT The F i r s t R e f i n e m e n t s . ... E n g i n e Improvements Short-Haul Jets The ' S t r e t c h i n g ' P r o c e s s R e d u c t i o n s i n t h e F l i g h t Crew Wide-Body T e c h n o l o g y PART I I : CHANGES I N TECHNICAL E F F I C I E N C Y AND OPERATING COSTS The G e n e r a l T r e n d Comparison o f P r e d i c t e d and A c t u a l R e l a t i v e Costs Summary  81 96 100 100 100 100 102 105 110 114 116 122 122 128 146  CHAPTER I V AN EXAMINATION OF INNOVATIVE BEHAVIOUR. INTRODUCTION An O u t l i n e o f M a r k e t B e h a v i o u r E x p e c t e d Response t o I n n o v a t i o n Summary PART I : THE RATE OF TECHNOLOGICAL CHANGE The I n f l u e n c e o f t h e A i r c r a f t M a n u f a c t u r e r s .... The I n f l u e n c e o f t h e M i l i t a r y D i f f u s i o n o f New T e c h n o l o g y PART I I : THE DIRECTION OF TECHNOLOGICAL CHANGE INTRODUCTION FLAYING PERSONNEL R e d u c e d Crew C o m p l e m e n t s I n c r e a s e d A i r c r a f t Speed Increased A i r c r a f t Capacity ENERGY Engine E f f i c i e n c y Overall Energy-Efficiency CAPITAL Distortions Affecting Capital Productivity Measurement D i s t o r t i o n s i n the Cost o f C a p i t a l E v i d e n c e o f I n n o v a t i v e Response t o t h e R e l a t i v e Price of Capital CONCLUSIONS ..  150 150 150 152 154 155 155 158 160 165 165 165 166 168 172 173 174 178 180  REFERENCES  19 0  BIBLIOGRAPHY  205  APPENDICES  209 v  181 184 186 188  ACKNOWLEDGMENTS The  author  w i s h e s t o t h a n k P r o f e s s o r s G. R. B r o w n , G.  Stead,  and W. G. W a t e r s I I f o r t h e i r comments a n d a s s i s t a n c e  during  the p r e p a r a t i o n o f the study.  vi  L I S T OF TABLES Table 1.1  Page H i s t o r i c a l Trend i n the Cost o f C a p i t a l , :1936-71, . ;  1.1  6  H i s t o r i c a l O p e r a t i n g C o s t D a t a f o r DC-4/DC-6/ L-049  36  H i s t o r i c a l O p e r a t i n g C o s t D a t a f o r DC-6/DC-6B/ DC-7  38  H i s t o r i c a l O p e r a t i n g Cost Data f o r L-049/ L-1049  39  1.4  H i s t o r i c a l O p e r a t i n g C o s t D a t a f o r DC-6B/ DC-7/DC-7C  41  1.5  H i s t o r i c a l O p e r a t i n g C o s t D a t a f o r L-1049G/ L-1649A . .  42  Direct Operating Costs of Piston by C a r r i e r  44  1.2 1.3  1.6  Aircraft,  1.7  A c t u a l and P r e d i c t e d R e l a t i v e S e a t - M i l e F l y i n g P e r s o n n e l E x p e n s e s o f D o u g l a s P i s t o n A i r c r a f t ...  47  1.8  R e l a t i v e Output P e r U n i t o f I n i t i a l for Piston Aircraft  51  Investment  1.9  O r i g i n a l Cost P e r Seat f o r Short-Range Range P i s t o n A i r c r a f t  1.10  D i r e c t M a i n t e n a n c e E x p e n s e s , DC-6 a n d DC-7, 1967-68  54  R e l a t i v e Average F a c t o r P r o d u c t i v i t i e s o f Piston Aircraft  55  2.1  H i s t o r i c a l O p e r a t i n g Cost Data f o r T r a n s i t i o n Period A i r c r a f t  76  2.2  Airplane - Mile Costs of T r a n s i t i o n A i r c r a f t , 1 9 5 9 , 1963  79  2.3  O r i g i n a l Cost Per Seat f o r T r a n s i t i o n A i r c r a f t , 1956-59  2.4  R e l a t i v e Output P e r U n i t o f I n i t i a l Investment f o r T r a n s i t i o n P e r i o d A i r c r a f t , 1956-59  1.11  vii  and Long-  Period Period  52  82 83  Table 2.5 2.6 2.7  '  Page  A c t u a l and P r e d i c t e d R e l a t i v e S e a t - M i l e F l y i n g P e r s o n n e l Expenses o f T r a n s i t i o n P e r i o d A i r c r a f t -^Direct Maintenance Expenses of P e r i o d A i r c r a f t , 1967-68  85  Transition 91  F u e l Consumption Per A i r c r a f t - M i l e f o r Transition Period A i r c r a f t  2.8  Average F u e l P r o d u c t i v i t y Aircraft .  2.9  R e l a t i v e Average F a c t o r P r o d u c t i v i t i e s o f Transition Period A i r c r a f t  3.1  Predicted Relative Seat-Mile Flying Expense f o r J e t A i r c r a f t  . ...  129  3.2  Comparison o f A c t u a l and P r e d i c t e d Relative H o u r l y F l y i n g P e r s o n n e l Expense o f J e t A i r c r a f t .  131  F l y i n g P e r s o n n e l Expenses o f J e t A i r c r a f t P e r Hour, A i r c r a f t - M i l e , and S e a t - M i l e  134  3.4  O r i g i n a l C o s t P e r S e a t f o r J e t A i r c r a f t , 1968-74.  135  3.5  D i r e c t Maintenance Costs P e r Seat-Hour f o r J e t A i r c r a f t , 1967-72  140  3.6  S e a t - M i l e Maintenance Expenses o f U n i t e d A i r l i n e s  3.3  of Transition  92 Period  Personnel  J e t A i r c r a f t , 1971-72  92 97  142  3.7  F u e l Consumption Per M i l e  for Jet Aircraft  143  3.8  Average F u e l P r o d u c t i v i t y  of Jet A i r c r a f t  144  3.9  Relative  Average F a c t o r P r o d u c t i v i t i e s o f  Jet A i r c r a f t  147  D.l  E f f e c t of High Fuel P r i c e s :  1950 C o n d i t i o n s  233  D.2  E f f e c t of High Fuel P r i c e s :  1960 C o n d i t i o n s  234  D.3  E f f e c t of High Fuel P r i c e s :  1970 C o n d i t i o n s  235  D.4  C o n v e r s i o n o f DC-6B t o Turbo-Compound P o w e r with Higher Fuel Prices viii  237  Table D.5 D.6  Page F u e l P r i c e R e q u i r e d f o r C o n v e r s i o n o f DC-8-20 t o T u r b o f a n Power  238  E c o n o m i c s o f C o n v e r s i o n o f DC-8-61 t o H i g h Bypass Engines  2 39  ix  L I S T OF FIGURES Figure  Page  1.1  The H i s t o r i c a l T r e n d i n A v e r a g e F a c t o r v i t i e s ..  1.1  F u e l Consumption P e r A i r c r a f t M i l e and Turbo-Compound P i s t o n A i r c r a f t  3.1  Producti-  f o r Standard 49  S e a t - M i l e C o s t Range o f S e l e c t e d J e t A i r c r a f t , 1967-72  3.2  Cost Structure Aircraft  3.3  Average  4.1  H i s t o r i c a l Trend i n A i r c r a f t C r u i s i n g  •. ...  124  o f V e r s a t i l e and S p e c i a l i z e d  Speed V e r s u s Stage L e n g t h  1948-70  8  126 133  Speed,  .-  169  A.i  A Two-Factor  Isoquant  211  A.2  A Two-Factor  Isocost  212  A.3  The E f f e c t o f an I n c r e a s e i n t h e P r i c e o f Labour  214  A. 4  The O p t i m a l C o m b i n a t i o n o f I n p u t s  215  A.5  Change i n B e s t P r a c t i c e T e c h n i q u e A f t e r Change i n R e l a t i v e  Factor  a  Prices  A.6  Effect of a Neutral  A.7  E f f e c t o f a ' B i a s e d ' Change i n T e c h n o l o g y  A. 8  A S e c o n d Type o f ' B i a s e d ' Change  217  Change i n T e c h n o l o g y  x  219 ......  220 2 22  INTRODUCTION  Statement o f t h e Problem Recent concern over d e c l i n i n g energy s u p p l i e s has given r i s e  t o comments t o t h e e f f e c t t h a t e n e r g y  consumption  has n o t r e c e i v e d s u f f i c i e n t a t t e n t i o n i n t h e p a s t and as a r e s u l t e n e r g y h a s b e e n wasted.''"  The f o c u s o f t h i s  concern  h a s b e e n p e t r o l e u m - b a s e d e n e r g y s u p p l i e s a n d i t was  inevit-  a b l e t h a t e n e r g y u s e i n t r a n s p o r t a t i o n became s u b j e c t t o s c r u t i n y because consumption.  i t accounts f o r such a l a r g e p o r t i o n o f t o t a l o i l P a s t t r e n d s i n energy use i n passenger  trans-  p o r t have n o t been s u c h as t o g i v e encouragement  t o those  promoting t h e c o n s e r v a t i o n o f energy s u p p l i e s .  I t i s appar-  ent, f o r example, modes  t h a t t h e r e has been a s h i f t o v e r time from  (e.g. bus and r a i l )  consumption per u n i t  that are r e l a t i v e l y  low i n energy  (i..e. s e a t m i l e ) o f o u t p u t t o those ( e . g . 2  auto and a i r ) t h a t a r e r e l a t i v e l y h i g h i n energy In a d d i t i o n ,  consumption.  t h e r e i s some e v i d e n c e t h a t e n e r g y r e q u i r e m e n t s  per s e a t m i l e have i n c r e a s e d o v e r time w i t h i n  individual  modes. As a r e s u l t o f g r o w i n g c o n c e r n f o r d w i n d l i n g supplies, call  energy  t h e above o b s e r v a t i o n s o c c a s i o n a l l y g i v e r i s e  f o r changes  to a  i n p u b l i c p o l i c y i n o r d e r t o s h i f t demand t o  t h e more ' e n e r g y - e f f i c i e n t ' modes a n d e n c o u r a g e i m p r o v e d 3 ' e f f i c i e n c y ' f o r a l l modes. E c o n o m i s t s , however, a r e l i k e l y  2 to  c o n s i d e r such responses i l l - a d v i s e d because they  s o c i a l v a l u e o f non-energy r e s o u r c e s the s o c i a l value modes. follows:  attached  as w e l l as d i f f e r e n c e s i n  t o t r a n s p o r t a t i o n by t h e v a r i o u s  A more r a t i o n a l s o l u t i o n m i g h t be s u g g e s t e d t o be a s i ) a l l o w f i r m s engaged i n t h e p r o v i s i o n o f t r a n s -  p o r t a t i o n t o take i n t o account t h e p r i c e o f energy to  ignore the  relative  t h a t o f o t h e r i n p u t s and s e l e c t t h e optimum t r a n s p o r t  nology a c c o r d i n g l y and,  i i ) a l l o w consumers t o choose  among t h e v a r i o u s modes whose p a r t i c u l a r e n e r g y will  requirements  above i s , i n f a c t ,  the general  context  i n which  most e c o n o m i s t s w o u l d v i e w t h e e m p i r i c a l o b s e r v a t i o n s torical  changes i n e n e r g y - i n t e n s i t y  of his-  ( i . e . energy r e q u i r e d t o  produce a g i v e n o u t p u t such as a s e a t m i l e ) . a matter o f response to r e l a t i v e p r i c e s .  I t has a l l been  The p r i c e o f e n e r g y  t e n d e d t o be l o w i n t h e p a s t a n d as a c o n s e q u e n c e i t h a s  been used h e a v i l y i n o r d e r  t o save on o t h e r  labour, or increase the q u a l i t y of output, for  freely  be r e f l e c t e d i n t h e i r r e s p e c t i v e f a r e s . The  has  tech-  i n p u t s s u c h as by i n c r e a s i n g speed  example. This  l i n e of reasoning  poses t h e q u e s t i o n :  can past  changes i n energy consumption p e r u n i t o f o u t p u t w i t h i n a g i v e n mode by e x p l a i n e d s i m p l y  i n t e r m s o f an h i s t o r i c a l  ponse t o r e l a t i v e f a c t o r p r i c e s ?  I n t h e more g e n e r a l  rescontext  o f changes i n f a c t o r p r o p o r t i o n s , t h i s q u e s t i o n p r o v i d e s t h e basis o f t h i s study.  The s t u d y w i l l  examine t e c h n o l o g i c a l  c h a n g e , as i t a f f e c t e d f a c t o r p r o p o r t i o n s , i n t h e d o m e s t i c  3 trunk a i r t r a n s p o r t a t i o n i n d u s t r y o f the U n i t e d S t a t e s between the years  1948  and  1972.  P a s t T r e n d s i n F a c t o r P r i c e s and F a c t o r P r o d u c t i v i t y Before going f u r t h e r i n t h i s paper, to a c q u a i n t themselves  wish  w i t h t h e e c o n o m i c t h e o r y on w h i c h i t  i s based, the theory of p r o d u c t i o n , which A p p e n d i x A.  r e a d e r s may  i s outlined i n  B e f o r e p u r s u i n g t h e s t u d y i t a l s o seems  worth-  while to e s t a b l i s h whether there i s s u f f i c i e n t evidence compliance  w i t h p r i n c i p l e s o f the economic theory o f  t i o n to warrant c a n i t be  a more d e t a i l e d e x a m i n a t i o n .  shown i n t h e a i r t r a n s p o r t a t i o n i n d u s t r y t h a t t h e r e  f a c t o r p r i c e s and  nical efficiencies? and  produc-  In o t h e r words,  h a s b e e n an a s s o c i a t i o n b e t w e e n t h e h i s t o r i c a l tive  of  the h i s t o r i c a l  trend i n rela-  trend i n relative  Factor p r i c e trends are o u t l i n e d  techbelow  then compared w i t h t r e n d s i n t e c h n i c a l e f f i c i e n c y t o  t a b l i s h whether the h i s t o r i c a l  es-  r e l a t i o n s h i p s were c o n s i s t e n t  w i t h e x p e c t a t i o n s a r i s i n g from the economic theory of produce tion. i) Factor Price  • 4  M i l l e r and  Sawers  f l i g h t crew s a l a r i e s  c a l c u l a t e d an h i s t o r i c a l  f o r t h e U.S.  domestic  index  trunks which  v e a l e d t h a t t h e a v e r a g e wage r a t e f o r f l y i n g p e r s o n n e l  of  rerose  a t an a v e r a g e compound r a t e o f j u s t o v e r 5 p e r c e n t a n n u a l l y b e t w e e n 1948 f o r one  and  of the  1963.  'Big Four'  F r o m 1960  t o 1966,  f l i g h t c r e w wages  t r u n k s i n c r e a s e d 4.6  per cent  per  year  while  t h e a v e r a g e wage r a t e f o r a l l U.S. a i r c a r r i e r s  r o s e an a v e r a g e o f 9.2 p e r c e n t p e r y e a r b e t w e e n 1967 a n d 1 9 7 3 . I n terms o f c u r r e n t volved 1948  d o l l a r s t h e n , t h e wage r a t e f o r l a b o u r i n - ,  i n the operation  o f a i r c r a f t has r i s e n s t e a d i l y between  a n d 1972 a n d a t a f a s t e r r a t e i n t h e l a t t e r p a r t , o f t h i s  period. In contrast,  t h e p r i c e f o r energy t h a t has f a c e d t h e  U.S. a i r c a r r i e r s o v e r t h i s p e r i o d h a s h a d two m a i n istics:  character-  i t has been low i n r e l a t i v e terms and has been con-  stant o r d e c l i n i n g over time.  M i l l e r and Sawers' p r i c e i n -  7 dex  i n d i c a t e d t h a t b e t w e e n 1948 a n d 1957 t h e p r i c e o f a v i a -  tion gasoline  increased  c r e a s e i n wages. ever,  a t less than one-third  S u c h d a t a must be u s e d w i t h  the rate of i n caution,  how-  because o f changes i n f u e l q u a l i t y ( p r i m a r i l y o c t a n e  rating) that occurred  over the period.  Other sources  that the price o f a v i a t i o n gasoline.declined over t h i s period;  prices given  suggest  i n absolute  p e r U.S. g a l l o n w e r e :  terms  16.7  c e n t s i n 1 9 4 9 , 20.0 c e n t s i n 1 9 5 1 , 16.0 c e n t s i n 1 9 5 9 , a n d g  15.9  c e n t s i n 1967.  An o v e r a l l d e c l i n e i n t h e p r i c e o f e n -  e r g y i s c e r t a i n l y a p p a r e n t when a c c o u n t i s t a k e n o f t h e t r a n s i t i o n to lower-priced  turbine  fuel.  The p r i c e f o r t h i s  ker-  o s e n e - b a s e d f u e l was 12.0 c e n t s p e r g a l l o n i n 1 9 5 1 , 9.1 c e n t s i n 1 9 5 9 , a n d 9.5-10.0 c e n t s i n 1 9 6 7 . The  9  average p r i c e o f investment c a p i t a l o r the 'cost  o f money' i s m e a s u r e d b y a n i n t e r e s t r a t e w h e r e t h e c a p i t a l i n p u t i s t o be m e a s u r e d i n t e r m s o f c u r r e n t  d o l l a r s as i t was  5 f o r l a b o u r and e n e r g y . rates  As shown i n T a b l e 1.1,  f a c e d by t h e U.S.  domestic  f i n a n c i n g were r e l a t i v e l y  interest  trunks f o r long-term  c o n s t a n t f r o m 194 8 u n t i l  debt  1965  at  which p o i n t they doubled over a p e r i o d of f i v e y e a r s . study " 11  1  airlines 1959.  One  e s t i m a t e d t h a t long-term r a t e s of i n t e r e s t f o r the averaged Another  a p p r o x i m a t e l y 5.0  p e r c e n t b e t w e e n 1939  source"''"'" s u g g e s t s t h a t f r o m 1964  t e r e s t on l o n g - t e r m d e b t f i n a n c i n g a v e r a g e d B e c a u s e f i n a n c i n g was  4.85  a r r a n g e d p r i o r t o 1968  t o 1966 i n per cent.  f o r t h e most  recent a i r c r a f t c o n s i d e r e d i n the study, these data t h a t i t would c a p i t a l was  and  suggest  n o t be i n a p p r o p r i a t e t o assume t h a t t h e p r i c e  essentially  c o n s t a n t over the p e r i o d of  of  concern.  I n summary, 1 9 4 8 - 1 9 7 2 . h a s b e e n a p e r i o d i n w h i c h , measured i n c u r r e n t d o l l a r s , stantly,  t h e p r i c e o f l a b o u r has  the p r i c e o f energy has  c a p i t a l has  remained  unchanged.  fallen,  and  risen  the p r i c e  t h a t , w i t h i n the range o f t e c h n i c a l p o s s i b i l i t i e s , p o r t i o n s would use o f e n e r g y  t e n d t o c h a n g e i n s u c h a way relative  the  predicts  factor  pro-  as t o i n c r e a s e t h e  In addition,  the  use  the theory of  i n d u c e d i n n o v a t i o n p r e d i c t s on t h e b a s i s o f t h e s e trends i n r e l a t i v e  A)  t o t h a t o f c a p i t a l and r e d u c e  of labour r e l a t i v e to c a p i t a l .  of  Under t h e s e c o n d i t i o n s  economic t h e o r y o f p r o d u c t i o n ( o u t l i n e d i n Appendix  con-  factor prices that s c i e n t i f i c  long-term effort  would  e n d e a v o u r t o f i n d means t o r e d u c e p r o d u c t i v e r e q u i r e m e n t s f o r l a b o u r r a t h e r than energy  or  capital.  6  TABLE I . 1 HISTORICAL TREND I N THE COST OF C A P I T A L (1936-71)  Year  Carrier  1936  1  1948  1949  2  2  1956  3  4 196 8* 4 1971  A i r c r a f t Financed  I n t e r e s t Rate  American  DC-3  5%  Eastern  L-649  United  DC-6  Northwest  N/A  2%  Northwest  N/A  n3o  Eastern  DC-8  United  DC-8  4%  American  707  4%  Eastern  N/A  4J-6%  Eastern  N/A  2-3J%  8-1/3%  S e l i g A l t s c h u l , "Equipment Trusts Loom Larger", A v i a t i o n Week, V o l . 48, No. 1 (Jan. 5, 1948) p.37. 2 __, "Bank C r e d i t s S t i l l A i d A i r l i n e s " , A v i a t i o n Week, V o l . 49, No. 9 (Aug. 30, 1948) p.33. 3 Alpheus, W. Jessup, " A i r l i n e s ' High C r e d i t Eases J e t Financing", A v i a t i o n Week, V o l . 64, No. 2 (Jan. 9, 1956) pp.96-7. ^Eastern A i r l i n e s Inc., Annual Reports, 1968-1973.  7 ii)  Factor  Productivity  The h i s t o r i c a l  trend  i n average f a c t o r  productivities  f o r t h e ' B i g F o u r ' d o m e s t i c t r u n k s i s shown i n F i g u r e 1.1 i n terms o f s e a t - m i l e outputs p e r u n i t age  factor input.  a n n u a l o u t p u t p e r e m p l o y e e i s shown t o h a v e  s t e a d i l y over the period  ( i n current  time but remained w i t h i n  The t r e n d  dollars)  investment over the period varied  varied  i n the average cyclically  over  t w e n t y - f i v e per cent o f a nominal  v a l u e o f 40 a n n u a l a v a i l a b l e s e a t m i l e s  also  increased  o f c o n c e r n t o a l e v e l i n 19 71 w h i c h  was a l m o s t n i n e t i m e s t h a t o f 194 8. product of c a p i t a l  The a v e r -  1948-1966.  (ASM) p e r d o l l a r o f Energy  c y c l i c a l l y o v e r time b u t energy  productivity  i s the only  t o show a n e t d e c r e a s e o v e r t i m e i n a v e r a g e  factor  productivity,  l a r g e l y a s a r e s u l t o f a s h a r p downward t r e n d  b e t w e e n 195 8 a n d  12 1961. On t h e b a s i s dence t h a t tivity the  o f these aggregate data, there i s e v i -  t h e d i r e c t i o n o f changes i n average  (or t e c h n i c a l  historical  trend  factor  efficiency) i s systematically i n relative  factor prices,  produc-  related to  i n that i t  reflects: - a monotonic increase for that  factor  i n average  factor  productivity  ( l a b o u r ) whose p r i c e r o s e s t e a d i l y  over the period. - no c o n s i s t e n t productivity  u p w a r d o r downward t r e n d f o r that  factor  i n average  ( c a p i t a l ) whose  price  8 FIGURE  1.1  THE' HISTORICAL TREND I N AVERAGE FACTOR PRODUCTIVITIES  9  FIGURE  1.1  THE HISTORICAL TREND I N AVERAGE FACTOR PRODUCTIVITIES  AVERAGE C A P I T A L P R O D U C T I V I T Y U.S.  L  BIG  FOUR' DOMESTIC TRUNKS 1948-1966  (CURRENT D O L L A R S )  LU I—  FIGURE  1.1  THE HISTORICAL TREND I N AVERAGE FACTOR PRODUCTIVITIES  c)  AVERAGE FUEL U.S.  PRODUCTIVITY  'BIG FOUR' DOMESTIC TRUNKS 1951-1970  YEAR  11 was  e s s e n t i a l l y c o n s t a n t over the  - a decline  i n average p r o d u c t i v i t y  ( e n e r g y ) whose p r i c e a b s o l u t e and Study  period.  fell  for that  over the  period  factor i n both  r e l a t i v e terms.  Objectives A g g r e g a t e d a t a f o r U.S.  air,transportation  h i s t o r i c a l r e l a t i o n s h i p between changes i n f a c t o r  reveal  productivity  and  trends i n r e l a t i v e factor prices  that  the  economic t h e o r y of p r o d u c t i o n .  This study w i l l  i s consistent  with  analyze  t h i s r e l a t i o n s h i p f u r t h e r by  examining selected  b r o u g h t i n t o use  t r u n k c a r r i e r s b e t w e e n 1948  1972.  The a)  by  the  study w i l l  document t h e  U.S.  attempt  aircraft and  to:  changes i n t e c h n i c a l  accompanied the  an  introduction  efficiency  of p a r t i c u l a r  that  air-  craft; b)  e s t a b l i s h whether or not  p a r t i c u l a r changes i n  t e c h n i c a l e f f i c i e n c y were c a u s a l l y tor price  incentives  r e l a t e d to  (i.e. reflected  fac-  conscious  e f f o r t s to optomize economic e f f i c i e n c y ) ; c)  e s t a b l i s h whether or  not  r e s e a r c h e f f o r t s were  ' b i a s e d ' by  economic i n c e n t i v e s  whether the  range of  the  (i.e. establish  technically  feasible  expanded i n response t o economic i n c e n t i v e s a t an  autonomous r a t e ) ;  and  or  d)  outline the extent  t o which past  technological  e v e n t s m i g h t have d i f f e r e d had t h e p r i c e o f energy been Earlier  higher.  Studies A i r t r a n s p o r t a t i o n h a s b e e n t h e s u b j e c t o f many  from the p o i n t s o f view o f technology, economic performance.  studies  market s t r u c t u r e , and  Rarely, however, has economic a n a l y s i s  been r e l a t e d t o t e c h n o l o g i c a l development w i t h i n a s i n g l e study. dustry  Caves, i n h i s c l a s s i c  study  o f t h e U.S. t r u n k l i n e i n -  c a l l e d t h e a i r c r a f t i n v e s t m e n t d e c i s i o n "by f a r t h e m o s t 13  important  aspect  o f market conduct."  influence of the m i l i t a r y  He a c k n o w l e d g e d t h e  on c o m m e r c i a l a i r c r a f t  development  and  a l s o argued t h a t government r e g u l a t o r y p o l i c i e s had had 14 i m p o r t a n t e f f e c t s on t h i s development. In another study, 15 . . Gellman  a t t r i b u t e d government r e g u l a t o r y p o l i c y w i t h  over-  whelming i n f l u e n c e i n t h e p a t t e r n o f a i r c r a f t a c q u i s i t i o n s by t h e U.S. t r u n k  carriers.  The v i e w o f b o t h a u t h o r s was t h a t  t h e s e i n f l u e n c e s were such t h a t c o s t c o n s i d e r a t i o n s r i v a l r y were  and p r i c e  suppressed. 16  A recent  study  by P h i l l i p s  w h i c h was c o n c e r n e d p r i ^  m a r i l y w i t h t h e m a r k e t s t r u c t u r e o f c o m m e r c i a l a i r c r a f t manuf a c t u r i n g found t h a t low o p e r a t i n g  c o s t s were a n e c e s s a r y b u t  i n s u f f i c i e n t f e a t u r e o f new a i r c r a f t t o a s s u r e 17  commercial suc-  cess.  documented t h e  Another study,  by M i l l e r a n d S a w e r s ,  t e c h n i c a l d e v e l o p m e n t of. a v i a t i o n t e c h n o l o g y  and t r a c e d  changes  13 i n operating features.  costs  to p a r t i c u l a r inventions  all  the  above s t u d i e s ,  is,  i n terms of  the  t h i s was  In the  labour,  tion, the  an  costs  rather  costs  e n e r g y , and that i s of  that  relative  m a i n t e n a n c e compon- . interest.  In  addi-  into  e f f e c t s o f changes i n t e c h n i c a l e f f i c i e n c y ( i . e . average  l i g h t of  the  and  changes i n f a c t o r p r i c e s .  of  For  above f a c t o r p r i c e d a t a , i n c r e a s e s  p e r s o n n e l expenses need n o t  have i n d i c a t e d  an  example, i n  in  on  the  o t h e r hand, d i d not  flying  increase  l a b o u r s i n c e wage r a t e s w e r e i n c r e a s i n g .  i n energy c o s t s ,  energy d e c l i n e d  over  in  necessarily r e f l e c t price  time.  initial  r e q u i r e m e n t o f t h i s s t u d y i s a method  documenting changes i n average f a c t o r p r o d u c t i v i t i e s f o r air carriers. between the industry  There i s , however, always a g e s t a t i o n  time best p r a c t i c e becomes f u l l y  t e c h n i q u e c h a n g e s and  a d j u s t e d t o new  tions.  This implies  portions  o f b e s t p r a c t i c e t e c h n i q u e and  ed  of  Approach The  the  the  Reductions  improved t e c h n i c a l e f f i c i e n c y f o r energy because the  The  in  than p a r t i c u l a r  a t t e m p t i s made t o s e p a r a t e c h a n g e s i n c o s t s  productivity)  use  were c o n s i d e r e d  p r e s e n t study i t i s the  capital,  ents of t o t a l operating  costs  done i n a g g r e g a t e t e r m s ;  trends i n t o t a l  components.  share of  engineering  .  Although a i r c r a f t operating  cost  and  i n the  a persistent  gap  o v e r a l l performance of the  the  the  time condi-  factor  technique  industry.  the  period  factor price  between the  of  pro-  reflect-  Aggregate  14 m e a s u r e s o f p r o d u c t i v i t y s u c h as t h o s e 1.1/  depicted i n Figure  i n o t h e r words, respond r a t h e r s l o w l y t o changes i n  relative  f a c t o r p r i c e s because they  e x i s t i n g stock of c a p i t a l  are a r e f l e c t i o n of  equipment. 18  In a d d i t i o n , Caves, aggregate production appropriate  19 Keeler,  f u n c t i o n s and  f o r a n a l y s i s of a i r l i n e  f o u n d an ad hoc  combination  and  o t h e r s have  costs.  Both  o f s t a t i s t i c a l and 20  dures were adopted i n t h i s study on d i s a g g r e g a t e d  relative  authors  engineering Similar  proce-  p r i m a r i l y because the  focus  c o s t s - o f v a r i o u s a i r c r a f t as  posed t o the a g g r e g a t e d c o s t l e v e l s o f v a r i o u s In l i g h t of these  found  c o s t f u n c t i o n s t o be i n -  c o s t f u n c t i o n s t o be t h e b e s t a l t e r n a t i v e .  is  the  observations,  op-  airlines.  t h i s study  has  been  b a s e d on an a n a l y s i s o f t h e f a c t o r i n p u t c o m b i n a t i o n s  embodied  i n v a r i o u s a i r c r a f t a c q u i r e d by  period  of i n t e r e s t .  This  the  c o r r e s p o n d s t o an e x a m i n a t i o n  ments a t t h e m a r g i n t o t h e  i n f l u e n c e of r e l a t i v e  Changes i n f a c t o r p r o p o r t i o n s w i l l indices of put,  c a r r i e r s over the  be  represented  of  adjust-  factor prices. i n terms  f a c t o r r e q u i r e m e n t s p e r u n i t o f an u n c h a n g i n g  a v a i l a b l e seat miles  (ASM).  of  out-  These i n d i c e s of t e c h n i c a l  e f f i c i e n c y a r e b a s e d on m e a s u r e s o f a v e r a g e f a c t o r p r o d u c t i v ity  f o r v a r i o u s a i r c r a f t c a l c u l a t e d f r o m p h y s i c a l and  ance c h a r a c t e r i s t i c s . s p e e d and  perform-  F o r example, crew complement, average  a i r c r a f t capacity provide  p r o d u c t i v i t y of f l y i n g personnel  a measure o f t h e  w h i c h can  be  average  compared  with  15 average p r o d u c t i v i t i e s of o t h e r a i r c r a f t to e s t a b l i s h the trend over time i n t e c h n i c a l e f f i c i e n c y . data are  analyzed  Historical  cost  both to confirm p r e d i c t i o n s of r e l a t i v e  b a s e d on t h e e s t i m a t e s  o f a v e r a g e p r o d u c t i v i t y and  v i d e a p r o x y measure o f t e c h n i c a l e f f i c i e n c y In a d d i t i o n , h i s t o r i c a l  cost data provide  a l s o to  economic e f f i c i e n c y  factor  a means f o r  identiover-  ( i . e . a v e r a g e c o s t s b a s e d on a l l  components). Once t h e h i s t o r i c a l  n i c a l e f f i c i e n c y and lished,  those  proportions c o u l d be  t r e n d o f changes i n r e l a t i v e  o v e r a l l e c o n o m i c e f f i c i e n c y was  aircraft  identified.  On  of  had  the i n t r o d u c t i o n of these  a c a u s a l e f f e c t on  O r g a n i z a t i o n of the The chapters  estab-  production  t h e b a s i s o f an o u t l i n e o f t h e aircraft,  a t t e m p t i s t h e n made t o d e t e r m i n e w h e t h e r r e l a t i v e p r i c e s had  their  ciran  factor  development.  Study  f i r s t p a r t of the study  which correspond  t h e p e r i o d 1948-1972.  i s comprised of  to three minor  three  ' t e c h n o l o g i c a l epochs'  These c h a p t e r s  have  two-part  formats w h i c h d i s c u s s the events which surrounded the d u c t i o n o f s e l e c t e d a i r c r a f t and o p e r a t i n g c o s t s and  tech-  t h a t b r o u g h t about changes i n f a c t o r  t h a t were c o n s i s t e n t w i t h the t h e o r y  cumstances surrounding  in  pro-  f o r maintenance.  f y i n g t h e e f f e c t o f c h a n g e s i n t e c h n i c a l e f f i c i e n c y on all  costs  intro-  then examine changes i n d i r e c t  c a l c u l a t e changes i n t e c h n i c a l e f f i c i e n c y .  Chapter I i s concerned w i t h the p i s t o n era I I w i t h t h e t r a n s i t i o n t o t u r b i n e power  (1948-1957), Chapter  (JL958-1961)  and  Chapter I I I with  the  recent  Chapter IV d i s c u s s e s transportation and  examines the  technological ed  industry  (1962-1972).  market b e h a v i o u r of the  as i t a f f e c t s t e c h n o l o g i c a l  extent to which the  change i n the  r a t e and  U.S.  air  change  d i r e c t i o n of  p e r i o d o f c o n c e r n can  be  attribut-  a r i s i n g from r e l a t i v e f a c t o r p r i c e s .  Dif-  f e r e n c e s i n p a s t t e c h n o l o g i c a l e v e n t s t h a t m i g h t have  arisen  had  to i n c e n t i v e s  period  the  r e l a t i v e p r i c e of energy been h i g h e r  i n Appendix  D.  are  discussed  CHAPTER I THE PISTON ERA  INTRODUCTION The port  i n t r o d u c t i o n o f t h e DC-3 made a i r p a s s e n g e r  an e c o n o m i c a l l y v i a b l e o p e r a t i o n  trans-  and by t h e end o f W o r l d  War I I t h e a i r l i n e s e n j o y e d a r a p i d r a t e o f g r o w t h a n d w e r e established This  as i m p o r t a n t r i v a l s  chapter i s concerned with  t o o t h e r modes o f t r a n s p o r t . t h e a i r c r a f t t h a t were d e v e l o p e d  t o accommodate t h i s g r o w t h u n t i l ports.  Part  I gives  the general  a i r c r a f t and d e s c r i b e s troduction.  t h e appearance o f j e t  trans-  characteristics of selected  the circumstances surrounding t h e i r i n -  Part I I analyzes differences  i n operating  costs  among t h e s e a i r c r a f t a n d d e v e l o p s i n d i c e s t o m e a s u r e t h e i r r e l a t i v e t e c h n o l o g i c a l e f f i c i e n c e s i n the use o f labour, tal,  energy, and maintenance  PART I : The  EVENTS SURROUNDING PISTON AIRCRAFT  F i r s t Long-Haul  effort. THE INTRODUCTION OF SELECTED  Aircraft  Two y e a r s a f t e r i t h a d b e e n i n t r o d u c e d its of per  capi-  sponsor, American A i r l i n e s , the 'Big Four' trunks.  t h e DC-3 d o m i n a t e d t h e f l e e t s  , The a i r c r a f t c r u i s e d a t 170 m i l e s  hour and had a c a p a c i t y  r a n g e o f 500-600 m i l e s .  i n t o s e r v i c e by  o f t w e n t y - f o u r p a s s e n g e r s and a  I n s p i t e o f i t s low o p e r a t i n g  costs,  18 the a i r l i n e s  soon found t h a t they  c o u l d use a l a r g e r a i r c r a f t .  Because o f the overwhelming success approached t o design Pan  o f t h e DC-3, D o u g l a s was  a new t r a n s p o r t t o t h e s p e c i f i c a t i o n o f  American and t h e 'Big Four' c a r r i e r s .  D e s i g n work on t h e  new m o d e l , t h e DC-4E, b e g a n i n 1936 w i t h d e v e l o p m e n t from the a i r l i n e s . and  funding  I t was t o h a v e g r e a t e r p a s s e n g e r  r a n g e i n e x c e s s o f one t h o u s a n d m i l e s  to allow  capacity  one-stop  t r a n s c o n t i n e n t a l s e r v i c e compared w i t h t h e t h r e e s t o p s by  required  t h e DC-3. S e v e r a l m i n o r i n n o v a t i o n s w e r e i n c o r p o r a t e d i n t h e new  d e s i g n , b u t i n 19 39, when t h e a i r c r a f t was r e a d y t o go i n t o production, der.  only United A i r l i n e s  The o t h e r c a r r i e r s  came f o r w a r d  apparently  decided  t y p e was t o o l a r g e a n d t o o c o m p l i c a t e d ; duction plans  and immediately  down v e r s i o n , t h e DC-4. can  with a firm orthat the proto-  Douglas c a n c e l l e d  pro-  began development o f a scaled--  Two o f t h e p a r t i c i p a n t s , P a n A m e r i -  and Trans World A i r l i n e s  (TWA), became d i s e n c h a n t e d  with the  D o u g l a s p r o g r a m a n d e l e c t e d t o p u r c h a s e an a i r c r a f t b u i l t by Boeing,  t h e B-30 7. The  B-307, w h i c h e n t e r e d  s e r v i c e i n 1 9 4 0 , was t h e f i r s t  commercial t r a n s p o r t t o i n c o r p o r a t e t h e four-^engined, c o n f i g u r a t i o n which had been p i o n e e r e d  by a m i l i t a r y  ( t h e B o e i n g B-17 S t r a t o f o r t r e s s ) a n d h a s s i n c e become design p r a c t i c e f o r large transports.  low-wing aircraft standard  The a i r c r a f t was s m a l l ^ -  e r t h a n t h e DC-4E a n d was m o s t s i g n i f i c a n t i n t h a t i t was surized.  Although  the cabin pressure  pres-  d i f f e r e n t i a l was r a t h e r  19 l o w i t was s u f f i c i e n t t o a l l o w a n i n c r e a s e i n c r u i s i n g tude o f a p p r o x i m a t e l y and  f u e l economy.  6000 f e e t ,  thus i n c r e a s i n g both  speed  The a i r c r a f t was a p p a r e n t l y c h e a p t o o p -  e r a t e b u t i t s low speed and s m a l l c a p a c i t y soon proved advantage.  alti-  a  Thus, w h i l e t h e f i v e a i r c r a f t o r d e r e d by  1  remained in' s e r v i c e u n t i l by a n y o t h e r t r u n k  1 9 5 0 , t h e B-307 was n o t  dis-  TWA  purchased  carrier.  The r e v i s e d D o u g l a s d e s i g n , t h e DC-4,  flew i n late  1942  a f t e r e a r l y o r d e r s had been o b t a i n e d from A m e r i c a n , E a s t e r n , and  United f o r a t o t a l of sixty-one a i r c r a f t .  a straightforward engined  e x t e n s i o n o f t h e DC-3 h a v i n g  c o n f i g u r a t i o n a s t h e B-307.  modate f o r t y - f o u r  The DC-4  first-class  t h e same f o u r -  I t was d e s i g n e d  passengers  was  t o accom-  i n a flat-sided  fuse-  lage which Douglas used i n a l l i t s subsequent p i s t o n a i r c r a f t . The p a s s e n g e r c a b i n was u n p r e s s u r i z e d a l t h o u g h made f o r i n c o r p o r a t i n g t h i s  p r o v i s i o n was  feature i n a later version.  Wing  l o a d i n g was i n c r e a s e d a n d t o t a l p o w e r was i n c r e a s e d t o 4400 horsepower  (hp) f r o m a b o u t 2000 hp i n t h e DC-3, r e s u l t i n g i n a  c r u i s i n g s p e e d o n t h e DC-4  o f 210 m i l e s p e r h o u r w i t h a n accom2  p a n y m g i n c r e a s e i n runway l e n g t h  requirements.  A t t h e same t i m e L o c k h e e d was d e v e l o p i n g a l a r g e r a n d more a m b i t i o u s 3 o f TWA.  d e s i g n t o meet t h e r e q u i r e m e n t s  The new a i r c r a f t was t h e L o c k h e e d  o f Howard Hughes Constellation,  f i r s t o f a s e r i e s t h a t was t o p r o v e t h e o n l y m a j o r t o t h e DC-4  and i t s s u c c e s s o r s u n t i l  appeared i n January  competition  the m i d - f i f t i e s .  It  1 9 4 3 , e l e v e n months a f t e r i t s D o u g l a s c o u n -  20 terpart.  The i n i t i a l  e r t h a n t h e DC-4  m o d e l , t h e 0 4 9 , was s u b s t a n t i a l l y  and had f u l l y  twice  t h e power  a b l i n g i t t o c r u i s e a t 280 m i l e s p e r h o u r . Lockheed a i r c r a f t a l s o d i f f e r e d in and  that i t s fuselage  perhaps  p r o d u c t i o n was t a k e n  relative  provided  to i t s over-  The C o n s t e l l a t i o n h a d  higher  a n d g r e a t e r r a n g e , a b o u t 1500 m i l e s .  S h o r t l y a f t e r t h e DC-4  made i t s i n i t i a l  o v e r by t h e m i l i t a r y  as t h e C-54  flight,a l l  a s t h e U.S.  The D o u g l a s a i r c r a f t was o r d e r e d  into  entered large-  t r a n s p o r t a n d by t h e e n d o f t h e war  more t h a n one t h o u s a n d h a d b e e n b u i l t . ities  whale-shaped  c l e a n e r , was l e s s s p a c e - e f f i c i e n t and  w i n g l o a d i n g t h a n t h e DC-4  scale production  triple-tailed.  This design, while  l e n g t h and o u t s i d e d i a m e t e r .  W o r l d War I I .  The  ( w h i c h was p r e s s u r i z e d ) was  a s m a l l e r s e a t i n g c a p a c i t y t h a n t h e DC-4, all  (8800 h p ) , e n -  f r o m t h e s i n g l e - t a i l e d DC-4 „  of circular cross-section.  aerodynamically  larg-  The p r o d u c t i o n  o f t h e L o c k h e e d Company w e r e c o n v e r t e d  m a n u f a c t u r e o f C - 5 4 s , and o n l y t h e i n i t i a l  facil-  to a s s i s t i n the  production  run of  t w e n t y C o n s t e l l a t i o n s was u s e d by t h e m i l i t a r y . The DC-4  b e n e f i t t e d from i t s m i l i t a r y  c a r e e r as b o t h  t h e a i r c r a f t and i t s e n g i n e s were i m p r o v e d i n s e r v i c e and  their  reliability  be  operated  increased.  I t was f o u n d t h a t t h e DC-4  could  a t t a k e - o f f weights f o r t y per cent greater than  before  w i t h an i n c r e a s e i n w i n g l o a d i n g t o 50.1 p o u n d s p e r s q u a r e and  a n i n c r e a s e i n runway r e q u i r e m e n t s t o 5,250 f e e t .  foot  Range  was i n c r e a s e d t o o y e r 1,800 m i l e s , n e a r l y as l o n g a s t h a t o f the C o n s t e l l a t i o n .  A t t h e end  o f t h e war,  were r e l e a s e d from m i l i t a r y all  l a r g e numbers o f C-54s  service.  the trunk c a r r i e r s except  TWA  c o m m e r c i a l s e r v i c e i n t h e U.S..  (DC-4s)  Many w e r e a c q u i r e d  and  by  1947,  Two  years  169  had  l a t e r TWA  by  entered had  p l a c e d t h i r t e e n DC-4's i n s e r v i c e , m a k i n g i t t h e f i r s t a i r c r a f t s i n c e t h e DC-3  • 4 t o enjoy widespread use.  o f DC-3s w e r e a l s o a c q u i r e d f r o m t h e m i l i t a r y w e r e b e i n g r e m o v e d f r o m t r u n k l i n e s e r v i c e by m a i n e d more t h a n carriers  Large  and  though  1946,  1946,  three hundred a n d , s i x t y i n s e r v i c e w i t h  i n 1948.  605  Military  p r o d u c t i o n had  and o n l y f i v e  for  E a r l y Postwar  Events  thus g i v e n Douglas  1945  compared t o t w e n t y - f o u r 5  D o u g l a s was  The w a r ' s end  D o u g l a s was new  i n the f i n a l t h e DC-6,  stages  t h e same w i n g as t h e DC-4  50-55 p a s s e n g e r s  of  developing  r e l e a s e d p r o d u c t i o n t o the a i r l i n e s  able to o f f e r commercial d e l i v e r i e s  m o d e l had  f o r Lockheed  u n d e r a 1944. m i l i t a r y  ( l a t e r up  (2400 hp  was  t o 76 i n c o a c h c o n f i g u r a t i o n ) .  c o m p a r e d w i t h 1450  i n c r e a s e d c r u i s i n g s p e e d t o 285 than the C o n s t e l l a t i o n .  The  accommodation t o  i n c r e a s e i n g r o s s w e i g h t , i n c r e a s e d w i n g l o a d i n g and  powerful engines  conand  i n 1947.  but the fuselage  stretched eight f e e t to increase f i r s t - c l a s s  The  carriers.  Boeing.  the f i r s t postwar a i r c r a f t , tract.  trunk  a i r c r a f t o f Douglas m a n u f a c t u r e were i n s e r v i c e  w i t h the trunk c a r r i e r s ,  By  they  there re-.  t h e d o m i n a n t p o s i t i o n as s u p p l i e r o f a i r c r a f t t o U.S. In  numbers  hp  i n the  more DC-4)  m i l e s p e r h o u r , somewhat f a s t e r  P r e s s u r i z a t i o n of the c a b i n , i n -  creased  f u e l c a p a c i t y , and  a s l i g h t r e d u c t i o n i n engine  consumption r e s u l t e d i n a s t i l l - a i r 2,500 m i l e s . U n i t e d had other  A t t h e end  DC-6's i n s e r v i c e w h i l e  t r u n k s , B r a n i f f , N a t i o n a l , and  D e l t a had  a g r e e m e n t s i g n e d by L o c k h e e d and  development of the C o n s t e l l a t i o n c o n t a i n e d t h e a i r c r a f t c o u l d n o t be  approximately  o f 194 7, b o t h A m e r i c a n A i r l i n e s  more t h a n t h i r t y  The  range of  fuel  three  smaller  TWA  and  fleets.  during  the  a provision that  s o l d to other a i r l i n e s  operating  7  transcontinental routes. U.S.  Thus TWA  and  E a s t e r n were the  c a r r i e r s o p e r a t i n g C o n s t e l l a t i o n s a t the time.  The  n i f i c a n c e o f t h i s market impediment c o u l d n o t have been b e c a u s e t h e DC-6 stage  had  lower  o p e r a t i n g c o s t s , but  i t set  siggreat  the  f o r t e c h n o l o g i c a l e v o l u t i o n over the next decade.  a i r c r a f t a c q u i s i t i o n s of the D o u g l a s and  entered  ' B i g F o u r ' were s p l i t  L o c k h e e d , e n c o u r a g i n g t h e two  introduce competitive  designs.  commercial s e r v i c e i n A p r i l ,  l o n g e r range  The  between  manufacturers  to  Thus s h o r t l y a f t e r t h e 1947,  t h e f i r s t p o s t w a r C o n s t e l l a t i o n , t h e 649, the  only  Lockheed and  DC-6  introduced  s i x months  later  749.  E a r l y i n t h e p o s t w a r p e r i o d t h e r e w e r e moves w i t h i n t h e i n d u s t r y t o r e d u c e c o s t s and  increase output through  i n t r o d u c t i o n of coach s e r v i c e w i t h f a r e s lower first-class d u c e t h e new  fares.  C a p i t a l A i r l i n e s was  the  than first  the  existing to  c l a s s o f s e r v i c e a f t e r a p p l y i n g t o t h e CAB  introin  8 1948.  The  would simply  B o a r d was  at f i r s t convinced t h a t coach 9 d i l u t e revenues and made an a t t e m p t t o  fares differs  e n t i a t e t h e s e r v i c e from f i r s t - c l a s s off-peak  (night)  a result,  operations  equipment.  As  the e f f e c t i v e s e a t i n g c a p a c i t y o f contemporary  air-  c r a f t was i n c r e a s e d ; configured in  by r e s t r i c t i n g c o a c h t o  with high-density  C a p i t a l ' s DC-4s f o r e x a m p l e w e r e t o be  f o r 64 p a s s e n g e r s i n c o a c h s e r v i c e c o m p a r e d t o 44  first-class. In the f a l l  o f 194 8, A m e r i c a n A i r l i n e s was p r o m p t e d  to  remove t h e t e n p e r cent»equipment s u r c h a r g e t h a t h a d p r e v i o u s ly  e x i s t e d o n a l l s e r v i c e s p e r f o r m e d w i t h DC-6s.  c h a r g e was g r a d u a l l y other  carriers/^  The s u r -  removed f r o m t h e f a r e s t r u c t u r e o f a l l  f o r c i n g o l d e r equipment  s u c h a s t h e DC-4  t o compete a t t h e same f a r e l e v e l w i t h t h e more a t t r a c t i v e postwar a i r c r a f t .  This  gradual  took a f u r t h e r step  i n 1951 when t h e CAB a p p r o v e d an a p p l i c a -  t i o n by N a t i o n a l A i r l i n e s with  r e s t r u c t u r i n g o f t h e market  to provide  daytime coach  service  t h e DC-6, a l l o w i n g t h e new f a r e s t o be o f f e r e d a t a t t r a c -  t i v e departure times w i t h  up-to-date  equipment.  New S h o r t - H a u l A i r c r a f t While Lockheed for long-haul  and Douglas were c o m p e t i n g i n t h e market  aircraft,  two o t h e r  manufacturers attempted t o  p r o d u c e a r e p l a c e m e n t f o r t h e v e n e r a b l e DC-3 f o r . s h o r t - r a n g e operations. because  The e f f o r t p r o v e d d i f f i c u l t , h o w e v e r , p r i m a r i l y  o f t h e l a r g e number o f s u r p l u s  a v a i l a b l e a t low cost  DC-3s t h a t h a d b e e n made  from t h e military."'"^  t o r s emerged, C o n s o l i d a t e d  and M a r t i n .  Two m a j o r  competi-  Consolidated  d e v e l o p e d t h e C o n v a i r 240  f o r an  American  12 Airlines one  requirement  year delay  and  c a u s e d by  i t entered  development d i f f i c u l t i e s .  postwar short-range design ever,  was  the M a r t i n  Northwest A i r l i n e s ,  and  36  one  dred  two  Convair,  not.  i n 194 7  with  The  configuration, with  260  miles and  per  two  capaci-  h o u r , was  i t was  Range o f b o t h was  Martin  202  slight-  pressurized,while  a p p r o x i m a t e l y s i x hun-  s u f f e r e d from a s t r u c t u r a l  As  a result,  c r a s h e d soon a f t e r  no  other  A subsequent v e r s i o n of the tural modifications chased i t . forty  The  was  carrier  Martin  202  404,  a  weakness  they  purchased the within four  1950,  'stretched'  but  hundred  C o n v a i r was  version  Two  trunks, Eastern  340,  years.  and  pur-  accommodaand TWA  was purcha;  t h e more s u c c e s s f u l m a n u f a c t u r e r o f  r i e r s besides American.  and 13  aircraft.  r a n g e a i r p l a n e s ; C o n v a i r 240s w e r e o p e r a t e d by  ed v e r s i o n , the  202  o n l y TWA  f i r s t - c l a s s p a s s e n g e r s a p p e a r e d i n 1951  a t o t a l o f one  entered  i n c o r p o r a t i n g major s t r u c -  d e v e l o p e d by  somewhat more s u c c e s s f u l . ed  c o m m e r c i a l s e r v i c e , how-  o f N o r t h w e s t ' s a i r c r a f t were r e t i r e d  ting  first  f i r s t - c l a s s passengers r e s p e c t i v e l y .  Northwest a i r c r a f t  service. all  The  a  miles. The  and  and  than t h a t of the M a r t i n  t h e M a r t i n was  after  of the medium-sized t r u n k s .  i n size  C r u i s i n g speed o f the l y higher  to enter  20 2 w h i c h b e g a n o p e r a t i o n s  a i r c r a f t were s i m i l a r t i e s o f 40  s e r v i c e i n 1948  United  i n 1952  and  Airlines this  four  trunk  p u r c h a s e d an  aircraft  shortcar-  enlarg-  as w e l l as  the  still  l a r g e r C o n v a i r 440 w e r e u s e d b y s i x t r u n k  carriers.  These C o n v a i r d e s i g n s , a l l o f w h i c h used t h e P r a t t and W h i t ney T w i n Wasp e n g i n e w h i c h a l s o p o w e r e d t h e DC-6, became t h e s t a n d a r d s h o r t - a n d m e d i u m - r a n g e a i r c r a f t i n t h e U.S. years.  f o r many  Many o f them - s i n c e c o n v e r t e d t o t u r b i n e p o w e r -  remain i n s e r v i c e  today.  Too L a r g e , Too Soon A t t h e same t i m e as t h e DC-3 was b e i n g r e p l a c e d b y  new  s h o r t - h a u l d e s i g n s , s e v e r a l m a n u f a c t u r e r s were a t t e m p t i n g t o s e l l new a i r p l a n e s w h i c h w e r e c o n s i d e r a b l y l a r g e r t h a n t h e s t a n d a r d l o n g - r a n g e a i r c r a f t , t h e DC-6  and C o n s t e l l a t i o n .  L a r g e s t o f t h e s e r i e s was t h e C o n v a i r XC-99, a t r a n s p o r t  ver-  s i o n o f t h e B-36 bomber w h i c h was p o w e r e d by s i x e n g i n e s h a v ing pusher p r o p e l l o r s . hundred  The XC-99, w h i c h accommodated  troops i n i t s m i l i t a r y  four  c o n f i g u r a t i o n , had a t a k e - o f f  w e i g h t o f 265,000 p o u n d s , more t h a n two and a h a l f t i m e s of  t h e DC-6.  Slightly  s m a l l e r was t h e L o c k h e e d  a four-engined transport which - l i k e deck  fuselage.  that  Constitution,  t h e XC-99 ^ h a d a d o u b l e -  A 128 p a s s e n g e r c o m m e r c i a l v e r s i o n was  planned  b u t n e i t h e r t h e C o n s t i t u t i o n n o r t h e XC-9 9 p r o c e e d e d p a s t t h e p r o t o t y p e s t a g e e v e n as m i l i t a r y f o u r - e n g i n e d d e s i g n , t h e C-74 by D o u g l a s Airlines  transports.  Another  large  Globemaster, had been developed  d u r i n g t h e war f o r t h e m i l i t a r y .  Pan American  - a t t r a c t e d by t h e p r o s p e c t o f l o w s e a t - m i l e c o s t s -  p l a c e d an o r d e r f o r t w e n t y - s i x b u t t h i s was l a t e r c a n c e l l e d i n 1945 and as a r e s u l t no c o m m e r c i a l v e r s i o n o f t h e C-74  appeared.  26 What t o l d a g a i n s t t h e s e a i r c r a f t , a p a r t f r o m a n y d e f e c t s i n t h e i r d e s i g n , was t h e i r  size.  The a i r l i n e s w e r e  simply not i n t e r e s t e d i n a i r c r a f t which could c a r r y 200 p a s s e n g e r s b e c a u s e  150 o r  t h e i r use would have r e q u i r e d an unac14  ceptable reduction i n departure frequencies.  .The o n l y  l a r g e a i r c r a f t t o e n j o y e v e n a m o d e r a t e d e g r e e o f s u c c e s s was the  B o e i n g B-377 S t r a t o c r u i s e r ,  airliner er.  a long-range  double-deck  t h a t was d e v e l o p e d f r o m t h e B-2 9 S u p e r f o r t r e s s  bomb-  N o r t h w e s t p u t t h i s a i r c r a f t i n t o s e r v i c e i n 1949, con-  figured  f o r eight-one f i r s t - c l a s s passengers, b u t used i t  p r i m a r i l y on i n t e r n a t i o n a l r o u t e s . a l s o used by Pan A m e r i c a n A i r l i n e s o p e r a t i n g i t on t h e i r  The S t r a t o c r u i s e r was a n d i n 1951 U n i t e d b e g a n  service to Hawaii.  A l t h o u g h t h e B-377  o f f e r e d a h i g h e r degree o f passenger comfort i n i t s s p a c i o u s c a b i n a n d h a d g r e a t e r s p e e d t h a n t h e DC-6, i t h a d r e l a t i v e l y h i g h o p e r a t i n g c o s t s a n d was n e v e r u s e d i n t h e t r a n s c o n t i n e n t ^ al The  market. 'Stretching'  Process  A s i d e from t h e S t r a t o c r u i s e r ,  t h e o n l y a i r c r a f t t o be  used i n t h e l o n g - h a u l market u n t i l t h e a r r i v a l o f t h e j e t s w e r e t h o s e d e v e l o p e d f r o m t h e D o u g l a s DC-6 a n d L o c k h e e d stellation.  F i r s t t o a p p e a r was t h e DC-6B, a  v e r s i o n o f t h e DC-6. ant, DC-6.  Con-  'stretched'  I t had been p r e c e e d e d by a c a r g o v a r i -  t h e DC-6A, w h i c h was f i v e  f e e t l o n g e r than the o r i g i n a l  The p a s s e n g e r - c a r r y i n g DC-6B was a n o t h e r f o o t l o n g e r  a n d e n t e r e d s e r v i c e two y e a r s l a t e r , i n 1 9 5 1 .  Both used t h e  27 same 2400 hp e n g i n e s as t h e DC-6 increase.  The  and c r u i s i n g s p e e d s d i d n o t  DC-6B h a d 55 f i r s t - c l a s s  s e a t s and was  later  u s e d i n c o a c h c o n f i g u r a t i o n w i t h as.many as 82 s e a t s . still-air  r a n g e was  The  t h e same a s t h e DC-6,  DC-6B was  Its  a b o u t 2,500 m i l e s .  t h e most e c o n o m i c a l p i s t o n - e n g i n e d  c r a f t e v e r p r o d u c e d and i t r e m a i n e d i n p r o d u c t i o n u n t i l U.S.  airthe  j e t t r a n s p o r t s were a b o u t t o a p p e a r , by w h i c h t i m e a l m o s t  t h r e e hundred had been m a n u f a c t u r e d . came t h e p r i m a r y l o n g - r a n g e e q u i p m e n t  The DC-6/6B s e r i e s f o r both United  A m e r i c a n a n d by 1957 b o t h a i r l i n e s h a d f l e e t s o f  be-  and  ninety-five  15 such a i r c r a f t .  The  DC-6  and DC-6B w e r e u s e d f o r n o n - s t o p  o p e r a t i o n s between  C h i c a g o and C a l i f o r n i a and a l t h o u g h b o t h  had t r a n s c o n t i n e n t a l range a t r e d u c e d p a y l o d , t h e y were n e v e r o p e r a t e d i n t h i s manner b y any o f t h e TWA, lied  trunks.  t h e m a j o r c o m p e t i t o r o f U n i t e d a n d A m e r i c a n , rep-  s o l e l y o n L o c k h e e d a i r c r a f t and w e r e t h e o n l y t r u n k  d i d n o t a t some p o i n t o p e r a t e p o s t w a r D o u g l a s Lockheed designed t h e i r a i r c r a f t p r i m a r i l y o f TWA  and E a s t e r n a n d w e r e more d r a s t i c  that  equipment.  to the  specification  than Douglas i n modi-  f y i n g t h e i r C o n s t e l l a t i o n s e r i e s a l t h o u g h they were f a r l e s s s u c c e s s f u l i n terms o f s a l e s .  Lockheed began by  lengthening  t h e f u s e l a g e o f t h e o r i g i n a l C o n s t e l l a t i o n by e i g h t e e n f e e t t o p r o d u c e t h e L-1049 S u p e r C o n s t e l l a t i o n . f a s t e r t h a n t h e DC-6B, t h e L-1049 was  L a r g e r and  somewhat  n o n e t h e l e s s an u n s u c c e s s -  f u l d e s i g n b e c a u s e o f i t s h i g h o p e r a t i n g c o s t s and o n l y f o u r were produced.  The  L-1049 was  twenty-  introduced into service  by  28 Eastern A i r l i n e s  i n December, 1 9 5 1 , e i g h t m o n t h s a f t e r t h e  DC-6B a n d was. a l s o o p e r a t e d by L o c k h e e d ' s tomer,  other reliable  cus-  TWA.  Turbo-Compound Power A more s u c c e s s f u l S u p e r C o n s t e l l a t i o n , t h e L - 1 0 4 9 C , appeared  two y e a r s l a t e r ,  i n 1953.  D e r i v e d from a t r a n s p o r t  d e v e l o p e d f o r t h e U.S. Navy, t h i s v e r s i o n was p o w e r e d b y a new t y p e o f p i s t o n e n g i n e , t h e W r i g h t turbo-compound."  The e n - ,  gine incorporated t u r b i n e s i n the exhaust stream which  aug-  m e n t e d t h e power t r a n s m i t t e d t o t h e p r o p e l l o r s h a f t t h e r e b y i n c r e a s i n g engine horsepower  f r o m 2700 hp t o 3250 hp w h i l e a t  the  same t i m e r e d u c i n g  specific  f u e l consumption. ^  Cruis-  ing  s p e e d o f t h e L - 1 0 4 9 C i n c r e a s e d t o 315 m i l e s p e r h o u r b u t  1  c a p a c i t y r e m a i n e d t h e same - 60 p a s s e n g e r s i n f i r s t - c l a s s f r o m 88 t o 99 i n m i x e d o r a l l - c o a c h  and  configuration.  Douglas responded t o the speed advantage which t h e L-1049C h a d o v e r t h e DC-6B b y d e v e l o p i n g t h e DC-7, a  'stretch-  e d ' a i r c r a f t w h i c h h a d t h e new t u r b o - c o m p o u n d e n g i n e s . c a b i n s t r e t c h i n g was r e l a t i v e l y m i n o r  The.  ( j u s t o v e r two f e e t ) s o  t h e r e was o n l y a s l i g h t i n c r e a s e i n c a p a c i t y c o m p a r e d t o t h e DC-6B.  American A i r l i n e s ,  the f i r s t  t o o r d e r t h e new  air-^  c r a f t , were a t t r a c t e d by t h e i n c r e a s e i n speed and range e d b y t h e DC-7.  offer-  W i t h a c r u i s i n g s p e e d o f o v e r 325 m i l e s p e r  h o u r , t h e DC-7 was some f i f t y m i l e s p e r h o u r f a s t e r t h a n t h e DC-6B a n d more i m p o r t a n t l y , i t was s l i g h t l y L-1049C a n d h a d g r e a t e r  range.  f a s t e r than the  29 I n t r o d u c e d i n 1 9 5 3 , t h e DC-7 was t h e f i r s t  commercial  t r a n s p o r t which could c a r r y i t s f u l l payload nonstop over t r a n s c o n t i n e n t a l r o u t e s i n b o t h e a s t e r l y and w e s t e r l y tions.  American i n i t i a l l y  o f f e r e d an e i g h t hour  direc-  transcontin-  e n t a l s c h e d u l e w h i c h n o t o n l y g a v e them an a d v a n t a g e o v e r TWA's L-1049C s e r v i c e  (which r e q u i r e d a r e f u e l l i n g  stop west-  bound) b u t a l s o a l l o w e d them t o o p e r a t e t h e r o u t e w i t h a s i n gle  . 1 7 crew p e r f l i g h t . TWA's r e s p o n s e t o t h i s e q u i p m e n t h a n d i c a p i s i n d i c a -  t i v e o f t h e f o r m o f c o m p e t i t i v e b e h a v i o u r w h i c h was b e c o m i n g c h a r a c t e r i s t i c o f the a i r l i n e s been f i r s t  industry.  The a i r l i n e h a d  t o o f f e r a n e a s t b o u n d n o n s t o p , b u t how f a c e d one  and a h a l f y e a r s o f A m e r i c a n A i r l i n e s '  DC-7 s e r v i c e a n d a l m o s t  a f u l l y e a r o f U n i t e d A i r l i n e s DC-7 s e r v i c e b e f o r e t h e y w o u l d r e c e i v e a comparable a i r c r a f t ,  t h e L-1049G.  TWA u r g e d Lock^-  heed t o i n c r e a s e t h e speed o f t h e Super C o n s t e l l a t i o n s and w i t h some m i n o r a e r o d y n a m i c r e f i n e m e n t s a t e n m i l e s p e r h o u r i n c r e a s e i n c r u i s i n g s p e e d was a c h i e v e d . ^ 1  Prompted  i n p a r t by t h i s equipment d i s a d v a n t a g e , t h e  b a s i c m a r k e t o u t l o o k w i t h i n TWA u n d e r w e n t  substantial  change.  The a i r l i n e b e g a n t o e x p a n d c o a c h o p e r a t i o n s a n d b y t h e summer o f 1953 t h e i r s h a r e o f f i r s t - c l a s s  traffic  t r a n s c o n t i n e n t a l markets began t o d e c l i n e .  i n t h e major  By mid-1954 TWA 19  was i n t h e f i r s t - c l a s s m a r k e t o n l y t o a l i m i t e d  degree.  I t was o n l y upon d e l i v e r y o f t h e L-10 49G t h a t T r a n s W o r l d made a b i d to recapture t h i s t r a f f i c  from American and U n i t e d .  30 Shortly a f t e r the inauguration transcontinental introduced strategy.  service with  o f nonstop  t h e new a i r c r a f t ,  w h a t was t h e n a m a j o r i n n o v a t i o n  first-class  the a i r l i n e  i n marketing  D r a w i n g upon t h e i r e x p e r i e n c e i n i n t e r n a t i o n a l  s e r v i c e , TWA i n t r o d u c e d i n d u s t r y by c o n v e r t i n g  mixed-class a i r c r a f t t o the domestic t h e f o r w a r d compartment o f t h e i r 20  L-1049GS t o c o a c h c o n f i g u r a t i o n .  The o t h e r  tal  c a r r i e r s were a p p a r e n t l y  but  w i t h i n a y e a r b o t h American and U n i t e d 21  transcontinen-  c a u g h t by s u r p r i s e by t h i s  o f t h e i r DC-7s t o c o a c h c o n f i g u r a t i o n .  move  h a d c o n v e r t e d some Equipment  rivalry  b e t w e e n members o f t h e ' B i g F o u r ' was t h u s r e s p o n s i b l e f o r b r i n g i n g a b o u t some i m p o r t a n t c h a n g e s i n t h e m a r k e t i n g b e h a v 22 lour of the industry. These l a s t a i r c r a f t o f t h e p i s t o n e r a a r e a good  refle  t i o n o f t h e t y p e o f b e h a v i o u r t h a t was r e s u l t i n g f r o m r e g u l atory  r e s t r a i n t and t h e o l i g o p o l i s t i c  try.  The DC-7, f o r e x a m p l e , r e p r e s e n t e d i n one s e n s e a r e t r o  gressive  step  i n technological  i n g c o s t s were h i g h e r first  structure of the indus-  development because i t s o p e r a t -  t h a n t h o s e o f t h e DC-6B.  T h i s was t h e  t i m e t h a t a new a i r c r a f t h a d b e e n o r d e r e d t o r e p l a c e  e a r l i e r d e s i g n h a v i n g l o w e r c o s t s , a n d i t was q u i t e t h a t t h e c a r r i e r s had r e a l i z e d t h a t o p e r a t i n g  an  clear  costs would i n -  23 crease.  The l e v e l o f p a s s e n g e r c o m f o r t a l s o f e l l w i t h t h e  DC-7; i t s c a b i n was n o i s e r  t h a n t h a t o f t h e DC-6B a n d i t sufr-  f e r e d more f r o m e n g i n e v i b r a t i o n .  Douglas apparently  d i d n o t even want t o p r o c e e d  t h e DC-7 p r o g r a m b e c a u s e t u r b o - p r o p  with  and j e t a i r c r a f t were a l -  r e a d y b e i n g d e v e l o p e d by o t h e r m a n u f a c t u r e r s .  The company 24  went ahead o n l y a t t h e u r g i n g o f A m e r i c a n A i r l i n e s while  t h e DC-7 gave i t s o p e r a t o r s  and  an a d v a n t a g e o v e r t h o s e u s -  i n g Lockheed equipment, American had themselves been prompted to order be  t h e DC-7 o n l y b e c a u s e t h e y  getting faster,  longer-range  knew t h a t TWA w o u l d  soon  v e r s i o n s o f r t h e Super C o n s t e l -  25 lations. A m e r i c a n ' s move i n t u r n f o r c e d U n i t e d t o f o l l o w e v e n t h o u g h t h e y w o u l d h a v e p r e f e r r e d t h a t t h e DC-7 h a d n e v e r 26 been d e v e l o p e d . By  1956, t h r e e o f t h e m i d d l e - s i z e d t r u n k s ,  Braniff,  D e l t a , a n d N a t i o n a l h a d t h e new a i r c r a f t i n t h e i r f l e e t s a n d D o u g l a s h a d a l s o won o v e r L o c k h e e d ' s m a j o r c u s t o m e r , 27 A i r l i n e s w i t h t h e DC-7.  Eastern  Some o f t h e s e  o r d e r s w e r e f o r two  v e r s i o n s o f t h e DC-7 t h a t a p p e a r e d l a t e r ,  t h e DC-7B a n d DC-7C.  Both o f these  a i r c r a f t had g r e a t e r range than r e q u i r e d f o r  domestic operations  and were d e s i g n e d  primarily  f o rlong  haul  international service. The  DC-7B was s i m p l y  e r f u e l c a p a c i t y and h i g h e r i n 1955.  a l o n g e r r a n g e DC-7 h a v i n g gross weight.  I t entered  The u l t i m a t e D o u g l a s p i s t o n d e s i g n ,  appeared a year  later.  greatservice  t h e DC-7C,  I t s f u s e l a g e was f o r t y i n c h e s  longer  t o i n c r e a s e i t s s e a t i n g c a p a c i t y i n t y p i c a l c o n f i g u r a t i o n s by six,  t o 76 s e a t s .  creased  F u e l c a p a c i t y and range were f u r t h e r i n -  and t h e a i r c r a f t p r o v i d e d  nonstop t r a n s - A t l a n t i c cap-  ability  f o r the f i r s t  time.  W i t h t h e DC-7C, D o u g l a s f i n a l l y made a m a j o r c h a n g e i n the design of the wing of t h e i r p i s t o n t r a n s p o r t s which u n t i l t h e n b e e n t h e same as  t h a t o f t h e DC-4  structural modifications.  W i n g s p a n was  greater l i f t a five  and  with only  had minor  increased to  provide  f u e l c a p a c i t y f o r t h e DC-7C by i n c o r p o r a t i n g  f o o t e x t e n s i o n of each wing a t i t s j u n c t i o n w i t h  fuselage.  T h i s movement o f t h e e n g i n e s  wing helped  t o reduce the c a b i n n o i s e l e v e l but  the  f a r t h e r o u t on  the  t h e r e was  accompanying i n c r e a s e i n drag which reduced c r u i s i n g  an  speed.  N o r t h w e s t p u r c h a s e d DC-7Cs f o r d o m e s t i c s e r v i c e t o 28 r e p l a c e DC-4s  although  t h e a i r c r a f t had been d e s i g n e d  marily for international operations. d o u b t made a p r o f i t on  Although  t h e m a n u f a c t u r e o f 121  the a i r l i n e s d i d not operate h i g h o p e r a t i n g c o s t s and  orders  long-range  been t a k e n .  again l e s s s u c c e s s f u l than Douglas.  failure.  slightly  their  three  years  t o D o u g l a s , devel^-  The  first  company  was  They p l u n g e d i n t o an  ex-  development program f o r t h e i r l a s t p i s t o n a i r c r a f t  which remained i n p r o d u c t i o n cial  DC-7Cs, m o s t o f  p i s t o n a i r c r a f t even a f t e r the  f o r j e t a i r l i n e r s had  pensive  no  e a r l y r e t i r e m e n t s a t low d i s p o s a l  Lockheed f o l l o w e d a p a t t e r n s i m i l a r ultra  Douglas  them p r o f i t a b l y b e c a u s e o f  p r i c e s when t h e j e t s w e r e i n t r o d u c e d l e s s t h a n li a t4- e r . 29  oping  pri-  less  T h i s a i r c r a f t was  l a r g e r than  t h a n a y e a r a n d was t h e L-1649A  a commer-  Starliner,  t h e S u p e r C o n s t e l l a t i o n and  having  a range  i n e x c e s s o f 6,000 m i l e s .  The  L-1649A was  range i n t e r n a t i o n a l markets but a f t e r the  designed for  s i n c e i t appeared a year  DC-7C m o s t o f t h e p o t e n t i a l s a l e s had  Douglas.  long-  Only f o r t y - f i v e were b u i l t  and  been l o s t  once a g a i n  to  TWA  30 (who  o r d e r e d t w e n t y - n i n e ) was  the major customer.  I n p r o d u c i n g t h e S t a r l i n e r , L o c k h e e d was attempting  to extend p i s t o n a i r c r a f t t e c h n o l o g y beyond i t s  economic p o t e n t i a l . tirely  new  heed o n l y  The  wing design,  a i r c r a f t , which incorporated  The  i f t h e company had  intended. OPERATING  Trend  Cost reductions  were c l e a r l y not  the s o l e d r i v i n g  f o r c e behind t e c h n o l o g i c a l development i n the postwar era. ing  The  p r i m a r y t h r u s t was  speed.  Capacity  s l o w p a c e , and  was  toward increased  increased  the  the  for  the  the a i r c a r r i e r  toward improvements i n v a r i o u s  of s e r v i c e o f f e r e d .  For  example,  adequacy of d e p a r t u r e f r e q u e n c i e s  c o n s t r a i n t on  a i r c r a f t c a p a c i t y and  cruisrather  c e r t a i n l y not  space a v a i l a b l e i n e x i s t i n g d e s i g n s .  t r e n d was  'quality'  had  at a  c a p a b i l i t i e s of t e c h n o l o g y , nor  of the p e c u l i a r c h a r a c t e r i s t i c s of  piston  r a n g e and  s t e a d i l y , but  development i n t h i s r e s p e c t  exploited fully matter the  en-  been s u c c e s s f u l i n s e l l i n g a t u r -  CHANGES IN TECHNICAL E F F I C I E N C Y AND COSTS  General  an  c o u l d have been p r o f i t a b l e f o r Lock-  b i n e - p o w e r e d v e r s i o n as o r i g i n a l l y PART I I :  actually  for  As  that  a result  industry,  aspects of  the  considerations  w e r e an  important  t h i s i n t u r n l i m i t e d the  34 i n c r e a s e s i n a i r c r a f t p r o d u c t i v i t y w h i c h were  achieved.  However, w h i l e c o n s i d e r a t i o n s r e l a t e d t o e c o n o m i c s w e r e n o t o v e r r i d i n g and  were perhaps s e c o n d a r y  non-cost f a c t o r s , i t i s t r u e t h a t u n t i l the p i s t o n e r a e a c h new In t h e i r Miller  study  and  design  had  the twenty year  31  brought about c o s t  t o 1956  aircraft,  produced.a  over  decrease  i n o p e r a t i n g costs of about t h i r t y per cent.  This  h o w e v e r , w a s o n l y as  achieved  earlier to  aircraft  l a r g e as w h a t t h e DC-3  had  reduction,  i n a s i n g l e step, thus l e a d i n g these  t e r m t h e p e r i o d w h i c h f o l l o w e d t h e DC-3  the  reductions.  . s t a t e d t h a t improvements i n d e s i g n  p e r i o d f r o m 1936  to  l a s t p a r t of  of the t e c h n i c a l development of  Sawers  operating  over authors  a'technological  32 plateau!.  They a l s o n o t e d t h a t t h e r e had  been a steady  d u c t i o n i n o p e r a t i n g c o s t s u n t i l the i n t r o d u c t i o n o f the 33 compound p o w e r e d DC-7 This  and  i t s Lockheed  turbo-  counterparts.  s e c t i o n comprises a documentation of the  changes  i n o p e r a t i n g c o s t s t h a t took place d u r i n g the p i s t o n era an e x a m i n a t i o n  re-  and  o f the p a r t i c u l a r changes i n t e c h n i c a l e f f i c i -  e n c y w h i c h c a u s e d them.  Historical  cost data  are  examined  and  DC-6  first. H i s t o r i c a l Cost Data: i ) DC-4/ DC-6/ L-049 Since  Aggregate  Results  t h e c r e w c o m p l e m e n t s o f t h e DC-4  t h e same, t h e h i g h e r  speed and  c a p a c i t y of the l a t t e r  technical efficiency  for f l y i n g personnel.  were improved  In the absence  of  an i n c r e a s e i n f a c t o r p r i c e , t h i s improvement s h o u l d be re-r f l e e t e d i n a corresponding seat-mile  (ASM).  reduction i n costs per a v a i l a b l e  T a b l e 1.1 r e v e a l s t h a t t h e improvement i n  t e c h n i c a l e f f i c i e n c y exceeded any i n c r e a s e i n wage r a t e s because t h e DC-6 had lower crew c o s t s than t h e DC-4 e v e r y between 1948 and 1951.  year  Neither a i r c r a f t exhibited a clear  s u p e r i o r i t y i n r e s p e c t o f f u e l expense p e r ASM a l t h o u g h t h e DC-6 might have been e x p e c t e d t o have had lower c o s t s because of i t s improved e n g i n e s , capacity.  Apparently  c a b i n p r e s s u r i z a t i o n , and i n c r e a s e d  these e f f e c t s were o f f s e t by t h e i n -  c r e a s e i n c r u i s i n g speed and use o f h i g h e r octane  (higher  priced) gasoline. Although  a p r i o r i p r e d i c t i o n s o f a i r c r a f t maintenance  c o s t s a r e seldom a c c u r a t e , lower expenses s h o u l d have been e x p e c t e d on t h e DC-6 because i t was s i m p l y an e n l a r g e d and im p r o v e d d e r i v a t i v e o f t h e DC-4.  The d a t a i n T a b l e 1.1 b e a r  out t h i s p r e d i c t i o n b u t must be i n t e r p r e t e d w i t h c a u t i o n because o f d i f f e r e n c e s i n t h e average age o f t h e two a i r c r a f t . I t i s a p p a r e n t t h a t f u e l and l a b o u r c o s t s o f t h e Lockheed 049 were comparable t o t h e DC-6 b u t maintenance c o s t s were h i g h e r T h i s c o n f i r m s t h e t r a d i t i o n t h a t Douglas t r a n s p o r t s were more e a s i l y maintained  than t h e i r  contemporaries.  i i ) DC-6/ DC-6B/ DC-7 S i n c e t h e DC-6B was s i m p l y a ' s t r e t c h e d ' DC-6, i t s h o u l d be e x p e c t e d t o have had lower l a b o u r , f u e l , and d i r e c t  36  TABLE 1.1 HISTORICAL  OPERATING COST DATA FOR DC-4/DC-6/L-049  1  SEAT-MILE EXPENSE (cents) Flying Personnel  Year  Aircraft  1948  DC-4 DC-6 L-049  .245 .186 .213  1949  DC-4 DC-6 L-049.  1950  1951  Fuel and Oil  Direct Maintenance  Total Incl. 'Other  1  Depreciation  Total Incl. Dep.  .465 .496 .490  .437 .376 .649  1.285 1.200 1.565  .561 .370 .536  1.846 1.570 2.101  .296 .230 .219  .567 .505 .526  .452 .406 . .543  1.486 1.290 1.457  .459 .338 .419  1.945 1.628 1.876  DC-4 DC-6 •L-049  .280 .248 .239  .522 .504 .543  .388 .363 .503  1.379 1.255 1.492  .291 .312 .456  1.670 1.567 1.948  DC-4 DC-6 L-049  .256 .254 .272  .479 .544 .566  .381 .381 .506  1.282 1.330 1.536  .186 .319 .421  1.468 1.649 1.957  .  cased on Aggregate Trunkline Experience. Source:  R. M i l l e r and D. Sawers, The Technical Development o f Modern A v i a t i o n (London, 1968) pp.288-291.  m a i n t e n a n c e e x p e n s e s p e r ASM. g i v e n i n T a b l e 1.2  However, t h e a g g r e g a t e d a t a  r e v e a l no c l e a r r e d u c t i o n i n e i t h e r  or f l i g h t p e r s o n n e l expenses per s e a t - m i l e .  fuel  Maintenance  e x p e n s e s o f t h e DC-6B w e r e l o w e r t h a n t h o s e o f t h e DC-6,  but  t h i s m u s t be a t t r i b u t e d i n p a r t t o t h e f a c t t h a t i t was newer  aircraft. R e f l e c t i n g the e f f e c t s of increased hourly  productivity, p e r ASM  a  t h e DC-7  t h a n t h e DC-6  improvement  had l o w e r f l i g h t p e r s o n n e l expenses a n d DC-6B i n 1954  and 1955  i s not apparent i n l a t e r years.  s e a t - m i l e f u e l expenses c o n s i s t e n t l y than the e a r l i e r Douglas d e s i g n s . had been i m p r o v e d and  seat-mile  although the  The DC-7  20-25 p e r c e n t h i g h e r Because engine e f f i c i e n c y  a e r o d y n a m i c d e s i g n was  virtually  changed, t h i s must have been t h e r e s u l t o f i n c r e a s e d speed o r t h e use o f h i g h e r - p r i c e d g a s o l i n e . c o m p l e x i t y a s s o c i a t e d w i t h turbo-compounding e c t m a i n t e n a n c e c o s t s on t h e DC-7  un-  cruising  Increased engine resulted i n dir-  t h a t were a l m o s t f i f t y  c e n t h i g h e r t h a n t h o s e o f t h e DC-6  and DC-6B.  per  Even w i t h o u t  t h i s increase i n maintenance, the high seat-mile f u e l o f t h e DC-7  had  expense  more t h a n o f f s e t t h e s a v i n g i n f l i g h t p e r s o n n e l  e x p e n s e , m a k i n g i t more e x p e n s i v e t o o p e r a t e t h a n t h e DC-6B. iii)  L-749/  L-1049  C o m p a r i s o n o f T a b l e s 1.2  a n d 1.3  r e v e a l s that the  L-749 h a d f l i g h t p e r s o n n e l a n d f u e l e x p e n s e s v e r y c l o s e t o t h o s e o f t h e DC-6  and DC-6B b u t h i g h e r e x p e n s e s f o r m a i n t e n -  38 TABLE 1.2 HISTORICAL OPERATING COST DATA FOR DC-6/DC-6B/DC-7  1  SEAT-MILE EXPENSE (cents) Flying Personnel  Fuel and Oil  Direct Maintenance  Total Incl. 'Other'  Depreciation  Total Incl. Dep.  Year  Aircraft  1953  DC-6 DC-6B  .300 .294  .522 .561  .363 .302 '  1.327 1.288  .292 .433  1.619 1.721  1954  DC-6 DC-6B DC-7  .283 .294 .248  .510 .553 .618  .325 .320 .505  1.255 1.328 1.497  .319 .251 .571  1.574 1.579 2.068  1955  DC-6 DC-6B DC-7  .270 .297 .263  .457 .536 .587  .337 .324 .430  1.200 1.391 1.427  .159 .285 .465  1.359. 1.676 1.892  1956  DC-6 DC-6B DC-7  .288 .276 .281  .487 .468 .581  .375 .301 .482  1.272 1.317 1.492  .118 .267 .489  1.390 1.584 1.981  1957  DC-6 DC-6B DC-7  .279 .275 .281  .459 .497 .597  .417 .326 .487  1.290 1.299 1.514  .040 .275 .501  1.330 1.574 2.015  Based on Aggregate Trunkline Experience. Source:  R. M i l l e r and D. Sawers, The Technical Development o f Modern A v i a t i o n (London, 1968) pp.289-90.  39  TABLE 1.3 HISTORICAL OPERATING COST DATA FOR L^-049/L-1049  1  SEAT-MILE EXPENSE (cents)  Year  Aircraft  1956  L-049  1957  1958  Flying Personnel  Fuel and Oil  Direct Main-; tenance  Total Incl. 'Other'  Depreciation  Total Incl. Dep.  .287  .511  .573  1.545  .067  1.612  L-1049G  .262  .535  .493  1.435  .033  1.468  L-049  .325 '  .545  .435  1.666  .170  1.836  L-1049G  .275  .563  .378  1.565  .396  1.961  L-749  .404  .642  .500  1.787  .058  1.845  L-1049G  .312  .620  .563  1.691  .426  2.117  2  2  Based on Aggregate Trunkline Experience. 2 Includes L-049, used where data f o r longer-range model 749 i s unavailable. Source: R. M i l l e r and D. Sawers, The Technical Development o f Modern A v i a t i o n (London, 1968) pp.291-92.  40 ance.  The L - 1 0 4 9 , i n t u r n , h a d l o w e r f l i g h t p e r s o n n e l e x -  p e n s e s t h a n t h e L-749 - a n e x p e c t e d r e s u l t o f i t s g r e a t e r speed and c a p a c i t y - b u t f u e l and maintenance  c o s t s were n o t  c h a n g e d i n a c o n s i s t e n t way. iv)  DC-6B/ DC-7/ DC-7C T a b l e 1.4 shows t h a t t h e DC-7C h a d l o w e r f l i g h t  s o n n e l expenses  p e r s e a t - m i l e t h a n t h e DC-7 w h i c h was i n t u r n  l o w e r t h a n t h e DC-6B. i n c r e a s e d speed  per-  This i s consistent with the e f f e c t of  and c a p a c i t y .  c r a f t were s i m i l a r .  Fuel costs of the three  The DC-7C was s l i g h t l y  air-  better i n this  r e s p e c t t h a n t h e DC-7 a s a . r e s u l t o f t h e i n c r e a s e i n c a p a c i t y , achieved through airframe ' s t r e t c h i n g ' .  Direct  maintenance  c o s t s o f t h e t u r b o - c o m p o u n d p o w e r e d DC-7 a n d DC-7C w e r e , a s e x p e c t e d , h i g h e r t h a n t h o s e o f t h e DC-6B. v) L-1049G/ L-1649A In expenses  the three years f o r which data are a v a i l a b l e ,  o f b o t h t h e L-1049 a n d L-1649 w e r e h i g h e r t h a n t h e  DC-7 s e r i e s e v e n t h o u g h m a t e l y t h e same s p e e d . v e a l s t h a t t h e Lockheed expenses  fuel  t h a n t h e DC-7s.  a l l h a d t h e same e n g i n e s a n d a p p r o x i Comparison  o f T a b l e s 1.4 a n d 1.5 .re-  t r a n s p o r t s a l s o had h i g h e r Both f u e l and f l i g h t  c o s t s o f t h e L-1649 e x c e e d e d  maintenance  personnel  t h o s e o f t h e L-1049.  T h i s may  have been t h e r e s u l t o f e i t h e r l o w e r s e a t i n g d e n s i t y on t h e L-1649 o r e l s e h i g h e r f u e l c o n s u m p t i o n  a n d h i g h e r wage r a t e s .  41 TABLE 1.4 HISTORICAL  OPERATING COST DATA FOR  DC-6B/DC-7/DC-7C  1  SEAT-MILE EXPENSE (cents) Flying I ersonnel 5  Fuel and Oil  Direct Maintenance  Total Incl. 'Other  Deprecia' tion  Total Incl. Dep.  "5fear  Aircraft  ] L958  DC-6B DC-7 DC-7C  .285 .274 .237  .480 .524 .505  .250 .320 .323  1.219 1.277 1.220  .297 .425 .414  1.515 1.702 1.634  ] L959  DC-6B DC-7 DC-7C  .322 .286 .275  .488 .502 .491  .305 .488 .412  1.343 1.431 1.415  .229 .455 .374  1.572 1.886 1.789  ] L960  DC-6B DC-7 DC-7C  .351 .345 .273  .502 .527 .481  1.448 .520 .482  .278 1.564 1.486  .278 .547 .357  1.725 2.111 1.834  1  Based on Aggregate Trunkline Experience. Source:  R. M i l l e r and D. Sawers, The Technical Development o f Modern A v i a t i o n (London, 1968) pp.289-90.  42 TABLE 1.5 HISTORICAL OPERATING COST DATA FOR L-1049G/L-1649A  1  SEAT-MILE EXPENSE (cents) Fuel and Oil  Direct Maintenance  Total Incl. 'Other  Depreciation  Total Incl. Dep.  Year  Aircraft  Flying Personnel  1958  L-1049G  .312  .620  .563  1.691  .426  2.117  L-1649A  .396  .745  .702  2.131  .697  2.828  L-1049G  .342  .598  .486  1.646  .545  2.191  L-1649A  .354  .542  .684  1.832  .512  2.344  L-1049G  .408  .592  .635  1.863  .650  2.513  1-1649A  .416  .570  .645  1.920  .907  2.827  1959  1960  1  "^Based on Aggregate Trunkline Experience. Source:  R. M i l l e r and D. Sawers, The Technical Development Of Modern A v i a t i o n (London, 1968) p.292.  . 4 3 Experience  of Individual Carriers  T a b l e 1.6 p r e s e n t s  cost data  f o r s e l e c t e d a i r c r a f t by  i n d i v i d u a l c a r r i e r and a l l o w s a t e s t o f t h e above w h i c h were based on a g g r e g a t e d a t a . e a r l i e r data,  observations  Consistent with the  a l l c a r r i e r s b u t one h a d l o w e r  costs with the  DC-6 t h a n w i t h t h e DC-4, b a s e d o n f i r s t - c l a s s c a p a c i t i e s . H o w e v e r , t h e d i f f e r e n c e s w e r e m i n o r a n d m i g h t s i m p l y be t h e r e s u l t o f the longer average l e n g t h of haul operated DC-6. had  by t h e  Two c a r r i e r s o p e r a t i n g t h e DC-6 a n d DC-6B i n 1958 b o t h  lower  seat-mile costs with the l a t t e r .  p e r i o d , however, n o t a l l c a r r i e r s had h i g h e r  I n t h e same costs with the  DC-7 s e r i e s t h a n w i t h t h e DC-6 s e r i e s e v e n i n t e r m s o f a i r c r a f t - m i l e expenses. versus  The r e l a t i v e e c o n o m i c s o f t h e DC6/6B  t h e DC-7/7C o n a s e a t - m i l e b a s i s a r e shown i n T a b l e  1.6  t o depend on t h e p a r t i c u l a r s e a t i n g c o n f i g u r a t i o n s c h o s e n . The  data  f o r Lockheed a i r c r a f t are u n s a t i s f a c t o r y f o r  making comparisons because o f the extremely o f a l l a i r c r a f t e x c e p t t h e L-1649A. had  Even t h e l a t t e r ,  operating costs considerably higher  las a i r c r a f t operated Changes i n T e c h n i c a l i) F l y i n g  by t h e o t h e r  s h o r t average  hauls  however,  t h a n m o s t o f t h e Doug-  carriers.  Efficiency  Personnel  Based on a c a l c u l a t i o n o f h o u r l y s e a t m i l e f l i g h t crew and c a b i n crew r e q u i r e m e n t s ,  output,  and e x p e c t e d  wage r a t e s f o r e a c h c r e w member, an e s t i m a t e  relative  of seat^mile pro-  44 TABLE  1.6  DIRECT OPERATING COSTS OF PISTON AIRCRAFT, BY CARRIER  Ax 7P^ TVs  Aircraft  Carrier  rr&  Stage Length (miles)  D.O.C./ASM (cents) n o r* / Aircraft First-Class Coach Trunk Mile Seating Seating Average (cents) Density Density (year)  FIRST QUARTER 7 952 DC-4  Braniff Capital C & S Delta National Northwest United Western  202 452 232 226 427 310 288 191  74.1 79.8 62.3 66.5 70.1 83.7 56.8 56.5  1.68 1.81 1.42 1.51 1.59 1.90 1.29 1.28  1.12 1.04 1.33 1.01 1.06 1.40 0.86 0.94  1.357  DC-6  American Braniff Delta National United  606 478 371 569 568  75.6 72.6 73.5 55.0 65.6  1.51 1.45 1.47 1.10 1.31  1.08 1.04 1.05 0.79 0.94  1.425  L-749  Capital C & S  424 401  81.6 98.9  1.51 1.83  1.26 1.52  1.461  FIRST QUARTER 1958 DC-6'  American Braniff Delta National United  239 363 237 309 568  101.8 94.1 105.5 106.0 121.8  2.04 1.88 2.11 2.12 2.44  1.45 1.34 1.51 1.51 1.74  1.251  DC-6B  National Northeast Northwest United Western  364 701 382 448 199  104.2 91.5 113.8 108.3 93.7  1.89 1.66 2.07 1.97 1.70  1.27 1.12 1.39 1.32 1.14  1.219  Continued  45 TABLE 1.6 Continued  Aircraft  Average Stage Length (miles)  Carrier  D.O.C./ASM (cents) D.O.C./ Trunk A i r c r a f t F i r s t - C l a s s Coach Seating Se a t i n g Average Mile • (year) Density (cents) Etensity  FIT 1ST  QUARTER 7958  612 425 221 974  100.0 110.5 113.1 103.5  1.82 2.17 2.06 1.88  1.11 .1.33 1.26 1.15  1.277  582 1660  104.2 100.0  1.68 1.61  1.13. 1.09  1.220  138 360  115.5 115.8  2.14 2.14  1.78 1.78  1.787  Eastern 253 Eastern (-C:) 133 TWA 302  118.5 126.2 134.0  1.98 2.10 2.23  1.67 1.78 1.89  1.691  TWA  116.3  1.94  -  2.131  DC-7  American Delta National United  DC-7C  Braniff Northwest  L-749  Eastern TWA  L-1049  L-1649  Source:  1580  Aaron J . Gellman, The E f f e c t o f Regulation on A i r c r a f t Choice, unpublished Ph.D. t h e s i s , M a s s a c h u s e t t s I n s t i t u t e o f Technology (1968) pp.340-406.  46 d u c t i v i t y per 'equivalent' aircraft.  c r e w h o u r c a n be made f o r a  The r e s u l t s f o r D o u g l a s p i s t o n a i r c r a f t ,  A p p e n d i x B, r e v e a l t h a t t h e p r o d u c t i v i t y o f f l y i n g increased cost  s t e a d i l y b e t w e e n 1948 a n d 1 9 5 7 .  given i n  personnel  Because  average  i s inversely proportional to factor productivity, this  would i n d i c a t e that f l y i n g personnel costs per seat mile l o w e r on l a t e r Douglas a i r c r a f t compared t o e a r l i e r An 1.7,  given  were  designs.  e x a m i n a t i o n o f t h i s phenomenon i s made i n T a b l e  where t h e s e a t m i l e  aircraft relative  f l y i n g p e r s o n n e l expenses o f v a r i o u s  t o t h o s e o f t h e DC-6B a r e c o m p a r e d i n  selected years with  c o s t r a t i o s p r e d i c t e d on t h e b a s i s o f t h e  productivity calculations.  Inspection  o f the data  that h i s t o r i c a l cost r e l a t i o n s h i p s are generally with predicted relationships.  reveals  consistent  E x a c t agreement w i t h  predic-  t i o n s c a n n o t be e x p e c t e d b e c a u s e o f t h e p r e s e n c e i n h i s t o r i c a l c o s t d a t a o f d i s t o r t i o n s due t o d i f f e r e n c e s i n wage r a t e s a n d operating  c o n d i t i o n s . . The e s s e n t i a l p o i n t t o be n o t e d i s  t h a t t h e two e a r l i e r a i r c r a f t , higher and  t h a n t h e DC-6B w h i l e  DC-7C, h a v e l o w e r c o s t s .  increase ii)  t h e DC-4 a n d DC-6, have, c o s t s  t h e two l a t e r m o d e l s , t h e DC-7 This  i s c o n s i s t e n t with a steady  over time i n the p r o d u c t i v i t y o f f l y i n g  personnel.  Fuel No c l e a r p a t t e r n e m e r g e d w i t h  respect  t o the expected  f u e l consumption of turbo-compound p i s t o n a i r c r a f t r e l a t i v e t o e a r l i e r ones and i t i s w o r t h w h i l e t o i n v e s t i g a t e o t h e r  sources.  TABLE 1.7 ACTUAL AND PREDICTED RELATIVE SEAT-MILE F L Y I N G PERSONNEL EXPENSES OF DOUGLAS PISTON AIRCRAFT  Aircraft  Predicted Seat-Mile Cost Year R e l a t i o n s h i p 1948  1949  A c t u a l Seat-Mile Cost R e l a t i o n s h i p  1950  1951  1952 1953 1954 0.94 1.00  1.29  1.30  -  .96  .91  1.04  1.01  0.99  1.06  1.02  1.02  .96  .89  .83  .85  -  -  -  -  -  0.86  -  -  -  -  -  -  .84  .89  0.81  —'  —  —  —  —  —  —  —  1.10  DC-7/DC-6B DC-7C/DC-6B  "Calculations i n Appendix B. 'From Tables 1-4.  1.02  1959  1.22  1.01  DC-6/DC-6B  1958  1956  1.13  1.58  1957  1955  1.29  DC-4/DC-6  1.32  2  —  —  - •  -  48 The o n l y ent  d a t a a v a i l a b l e was t h e a v e r a g e p e r f o r m a n c e o f d i f f e r -  airlines  i n t h e y e a r s 196 7 a n d 196 8,  service lives of piston transports. interpreted with caution,  rather  late i n the  W h i l e t h e d a t a m u s t be  i t i s i n t e r e s t i n g t o note i n F i g u r e  1.1 t h a t t h e DC-7 a n d DC-7C a r e n o t shown c o n c l u s i v e l y t o be higher  i n f u e l c o n s u m p t i o n t h a n t h e DC-6 a n d DC-6B e v e n i n  terms o f g a l l o n s p e r a i r c r a f t m i l e . c a p a c i t y o f .the  f o r m e r , t h e d a t a s u g g e s t t h a t the~ t u r b o - c o m -  pound t r a n s p o r t s iii)  I n view o f the greater  had lower f u e l  consumption p e r seat  mile.  Capital De f a c t o c a p i t a l e x p e n s e s p e r u n i t o u t p u t i n a i r t r a n s -  p o r t a t i o n a r e i n f l u e n c e d b y a number o f f a c t o r s i n c l u d i n g : i n t e r e s t r a t e s , average stage l e n g t h , aircraft service lines.  utilization  r a t e s and  However, i n a g i v e n p e r i o d  the r e l a -  t i v e c a p i t a l c o s t s o f two a i r c r a f t a r e i n d i c a t e d , c e t e r i s paribus, put  simply  by t h e i n i t i a l  r a t e of each.  c o s t and h o u r l y  That i s , t h e annual  seat mile  out-  c a p i t a l cost o f each  a i r c r a f t i s a f u n c t i o n o f the p r e v a i l i n g i n t e r e s t r a t e ; expected service l i f e , nual put. given  and o r i g i n a l c o s t o f the a i r c r a f t .  output i s a f u n c t i o n o f annual u t i l i z a t i o n and h o u r l y A l l other  things being  equal,  unit c a p i t a l costs  out-  f o ra  a i r c r a f t a r e d i r e c t l y p r o p o r t i o n a l t o o r i g i n a l c o s t and  inversely proportional to hourly  output.  n i c a l e f f i c i e n c y i n t h e use o f c a p i t a l al  An-  to hourly  Equivalently,  i sdirectly  tech-  proportion-  output and i n v e r s e l y p r o p o r t i o n a l t o o r i g i n a l  Figure 1.1 Fnel Consumption Per A i r c r a f t M i l e f o r Standard and Turbo-Compound P i s t o n A i r c r a f t  PER AIRCRAFT MII-E-  zs-t U-I049&  2.0 +  J3  Q- -  DC-7/7C  1.5 4-  X  Source-.Civil Aeronautics Board, A i r c r a f t Operating Cost and Performance Report, V o l . I l l (August 1969) 5oo  IOOO  ,  'ERA&E  S  0  °  X  S T A 6 C UENfrTH ( M l u E S )  4=  50 cost. B a s e d o n c a l c u l a t i o n s w h i c h a p p e a r i n A p p e n d i x C, estimates  w e r e made o f t h e r e l a t i v e o u t p u t p e r u n i t o f i n v e s t -  ment i n v a r i o u s preclude  a i r c r a f t f o r selected years.  I n order to  t h e i n c o r p o r a t i o n o f a n y d i s t o r t i o n w h i c h may be  present i n a p r i c e index, comparison between dollars.  c a l c u l a t i o n s were a r r a n g e d t o a l l o w  d i f f e r e n t a i r c r a f t i n terms o f c u r r e n t  The r e s u l t s , g i v e n  i n T a b l e 1.8, r e v e a l t h a t  techni-  c a l e f f i c i e n c y i n t h e use o f c a p i t a l r e a c h e d a peak w i t h t h e DC-6/6B s e r i e s o f a i r c r a f t a n d d e c l i n e d t i o n s show, f o r e x a m p l e , higher  Calcula-  t h a t t e c h n i c a l e f f i c i e n c y was f a r  f o r t h e DC-6 t h a n f o r t h e DC-4 i n 1 9 4 7 .  DC-6B a p p e a r a b o u t e q u a l i n 19 51, w h i l e p i s t o n a i r c r a f t appear i n f e r i o r sequent  thereafter.  The DC-6 a n d  t h e turbo-compound  t o t h e DC-6B i n 1953 a n d s u b -  years. T a b l e 1.9 s h o w s , o n t h e b a s i s o f 1956 p r i c e s ,  the with the  initial  cost per seat  a i r c r a f t ranges.  f o r various  a i r c r a f t was c o r r e l a t e d  I t c a n n o t be assumed, t h e r e f o r e ,  that  d a t a i n T a b l e 1.8 r e v e a l a f a c t o r s u b s t i t u t i o n o r s i m i l a r  e f f e c t i n the post-1953 p e r i o d .  I t may be m e r e l y a r e f l e c t i o n  o f t h e f a c t t h a t a i r c r a f t r a n g e was i n c r e a s i n g o v e r iv)  that  time.  Maintenance Because i t i s i m p o s s i b l e  of u n i t inputs  to define  a u n i q u e measure  f o r maintenance, t e c h n i c a l e f f i c i e n c y i n t h e  use o f m a i n t e n a n c e c a n be a n a l y z e d  only  i n terms o f r e l a t i v e  51 TABLE 1.8 RELATIVE OUTPUT PER UNIT OF I N I T I A L INVESTMENT FOR PISTON AIRCRAFT 1947 - 1 9 5 7 1947  1951  1953  1956  1957  1  DC-4  DC-6  L-649  1.0  2.38-2.59  2.13-2.37  DC-6  DC-6B  L-749  L-1049  1.0  0.93-0.99  0 .99-1.15  0.83-0.87  DC-6B  DC-7  L-1049C  1.0  0.78-0.92  0.81-0.83  DC-6B  DC-7B  DC-7C  1.0  0.79-0.85  0.63-0.68  DC-6B  DC-7B  L-1049G  L-1649A  1.0  0.76-0.90  0.67-0.70  0.55-0.58  Based on c a l c u l a t i o n s  g i v e n i n A p p e n d i x C.  52 TABLE 1.9 ORIGINAL COST PER SEAT FOR SHORT RANGE AND LONG RANGE PISTON  AIRCRAFT  1956  Aircraft  Still-Air Range (miles)  Initial Cost (U.S.$)  F i r s t Class Capacity (Passengers)  I n i t i a l Cost (U.S.$) P e r Seat  900  658,750  44  14,970  DC-6B  2,600  1,141,000  55  20,760  DC-7B  4,000  1,893,250  55  34,420  DC-7C  5,000  2,230,000  62  35,970  L-1049G  4,000  2,027,000  60  33,780  CV-440  I n i t i a l c o s t data frcm:  Aaron J . Gellman, The E f f e c t o f Regulation on A i r c r a f t Choice, unpublished Ph.D. t h e s i s , M.I.T. (Cambridge, Mass. 1968).  53 costs for different a i r c r a f t . earlier  T h i s h a s b e e n done i n an  s e c t i o n a l t h o u g h no a t t e m p t was  made t o s e p a r a t e t h e  e f f e c t s of a i r c r a f t p r o d u c t i v i t y from those of  maintenance  requirements i n a b s o l u t e ( i . e . per a i r c r a f t hour r a t h e r per seat mile)  than  terms.  C o s t d a t a g i v e n i n T a b l e 1.10 show t h a t m a i n t e n a n c e  requirements  f o r t h e 1967-68 p e r i o d  f o r turbo-compound  air-  c r a f t were s u f f i c i e n t l y h i g h t o overcome t h e e f f e c t s o f i n creased a i r c r a f t productivity. frame maintenance  expenses  DC-7  s e r i e s a i r c r a f t had  air-  per b l o c k hour one-quarter h i g h e r  t h a n t h e DC-6/6B and e n g i n e m a i n t e n a n c e  expenses  more t h a n  t w i c e as h i g h . Summary i) Technical Efficiency T a b l e 1.11  gives i n d i c e s developed  f o r Douglas  piston  a i r c r a f t t o show r e l a t i v e  technical efficiency  four factor inputs.  f o l l o w i n g o b s e r v a t i o n s c a n be made  The  r e g a r d i n g the d i r e c t i o n of i n n o v a t i o n i n the a) The  i n t h e use  of  period:  productivity of f l y i n g personnel increased  s t e a d i l y as a r e s u l t o f i n c r e m e n t a l i n c r e a s e s in  speed  and  capacity.  b) A l t h o u g h i n f l u e n c e d by a number o f i n t e r d e p e n d e n t e f f e c t s , energy stant.  p r o d u c t i v i t y was  Reductions i n engine  essentially  specific  fuel  conconsump-  t i o n and i n c r e a s e s i n c r u i s i n g a l t i t u d e s t e n d e d  to  TABLE  1.10  DIRECT MAINTENANCE DC-6 AND  EXPENSES,  DC-7  1967 - 1968  Block Hour Expense ($) Airframe Engine  Aircraft  DC-6/6B  1  DC-7/7B/7C  2  Total  Engine Percent of T o t a l  37.55  35.38  72.93  48.5%  45.78  87.91  133.69  65.8%  "Average o f middle seven c a r r i e r s o u t o f eleven reporting. 'Average o f middle two c a r r i e r s o u t o f four reporting. Source:  C i v i l Aeronautics Board, A i r c r a f t Operating Cost and Performance Report, V o l . I l l (Washington, August 1969).  55 TABLE 1.11 RELATIVE AVERAGE FACTOR PRODUCTIVITIES OF PISTON  AIRCRAFT  1  (INDEXED TO DC-4)  A I R C R A F T DC-6B DC-7  Factor  DC-4  DC-6  Flying Personnel  1.00  1.58  1.83  Capital  1.00  1.09  Energy.  1.00  Maintenance  1.00  DC-7B  DC-7C  2.14  2.14  2.27  . 1.17  0.90  0.85  0.68  1.00  1.00  1.00  1.00  1.10  1.11  1.29  0.77  0.77  0.83  'Based on data presented i n Chapter 1, P a r t I I as f o l l o w s : DC-6B C a p i t a l P r o d u c t i v i t y (ASM/Unit Investment) =1.17 x DC-4 .*. DC-6B Index = 1.17. DC-7 C a p i t a l P r o d u c t i v i t y =0.77 times t h a t o f the DC-6B .*. DC-7 Index = (0.77) (1.17) = 0.90.  4  be  o f f s e t by  c) The  increases  i n c r u i s i n g speed,  upward t r e n d i n t e c h n i c a l e f f i c i e n c y f o r  c a p i t a l and duction  m a i n t e n a n c e peaked upon t h e  of turbo-compound a i r c r a f t even though  a i r c r a f t p r o d u c t i v i t y continued Cost/Quality a) U n t i l t h e craft, able  i n t r o d u c t i o n of the  in operating and  increases  range, etc.) costs.  The  L-1049C r e v e a l e d  important consideration c r e a s e d r a n g e and  b)  The  unit  had  as w e l l as  reductions  i n t r o d u c t i o n of that  s i n c e they provided  speed o n l y  an in-  a t the expense  of  aircraft  a c o m p r o m i s e o f c o s t and  'quality  o f c o s t was  e f f o r t t o r e d u c e c o s t s was  revealed  service.  hampered w h e n e v e r :  involved increasing a i r c r a f t capacity.  ed'  the  ' q u a l i t y ' was  a t t e n t i o n paid to frequency of  i n d i c a t e d by  been  (higher  f a c t t h a t the o b j e c t i v e f u n c t i o n i n  the  air-  in 'quality'  r a t h e r than the m i n i m i z a t i o n  The  turbo-compound  costs.  a c q u i s i t i o n was  by  increase.  changes i n p i s t o n a i r c r a f t d e s i g n  to provide  higher  to  Trade-offs  speed, longer  DC-7  intro-  the delayed i n t r o d u c t i o n of  d e s i g n s and  the  This !  stretch-  t o t a l commercial f a i l u r e  several large military  transports.  is  of  Exogenous a) One  influence o f the most i m p o r t a n t non-market e f f e c t i n the  period War  arose from American  I I which e s t a b l i s h e d  manufacturer of transport  p a r t i c i p a t i o n i n World  Douglas  as t h e d o m i n a n t  a i r c r a f t and  d e s i g n o f t h e most e c o n o m i c a l p i s t o n the  l e d to the  transport,  DC-6.  b) The m i l i t a r y h a d an i m p o r t a n t i n f l u e n c e c r a f t engine development. i n the period ated with  on  A l l commercial  r e l i e d on e n g i n e s w h i c h h a d  the m i l i t a r y .  airaircraft origin-  They w e r e t h e f i r s t  to  use t u r b o - c o m p o u n d e n g i n e s b u t s u b s e q u e n t l y , a b a n d oned p i s t o n engine r e s e a r c h i n f a v o u r o f the engine.  As a r e s u l t , no new  commercial  e n g i n e s were d e v e l o p e d a f t e r the e a r l y period.  turbine  piston  postwar  CHAPTER I I THE TRANSITION PERIOD  INTRODUCTION The  prototype of the f i r s t  B o e i n g 70.7, h a d i t s m a i d e n f l i g h t  U.S. c o m m e r c i a l  j e t ,the  i n J u l y , 1954 - j u s t  months a f t e r t h e DC-7 h a d e n t e r e d s c h e d u l e d s e r v i c e . quently, end  t o the s e r v i c e l i f e  of the l a t t e r  series of aircraft i n  t o be a n a b r u p t t e c h n o l o g i c a l  transition.  ever, the d e s c r i p t i o n o f the events i n t h i s period, I of this chapter, reveal  gradually  that  technological  In Part  I I the operating  given i n  costs  technological and r e l a t i v e  e f f i c i e n c i e s o f s e l e c t e d a i r c r a f t from b e f o r e  and a f t e r t h e t r a n s i t i o n t o t u r b i n e  PART I :  How-  the t r a n s i t i o n took p l a c e  a n d was n o t o f t h e n a t u r e o f a s u d d e n  breakthrough.  The  Subse-  t h e r a p i d i n t r o d u c t i o n o f t h e j e t s b r o u g h t an e a r l y  what appeared  Part  eight  power a r e c o m p a r e d .  EVENTS SURROUNDING THE INTRODUCTION OF VARIOUS AIRCRAFT  First  Jets  Following  the e a r l y experiments with  B r i t a i n by i t s i n v e n t o r ,  Frank W h i t t l e  j e t - p o w e r e d a i r p l a n e was d e v e l o p e d  the j e t engine i n  i n t h e 1920's, t h e f i r s t  i n Germany i n 1 9 3 9 .  The  Germans i m m e d i a t e l y r e c o g n i z e d t h e m i l i t a r y s i g n i f i c a n c e o f t h e jet  engine, b u t t h e B r i t i s h had o f f e r e d W h i t t l e 58  little  encour-  59 agement a n d i t was ing  engine.  of  193 7 t h a t he h a d d e v e l o p e d a w o r k -  I n Germany, c o n s i d e r a b l e w o r k was  b a s i c aerodynamic military  not u n t i l  r e s e a r c h f o r j e t a i r c r a f t and on  a p p l i c a t i o n s o f t h e new  t h e s e c o n d W o r l d War  whose f i r s t  done on  their  possible  engine, but towards  l e a d was  j e t aircraft flew i n  both  the  l o s t to the B r i t i s h  1941.  S o o n , d e v e l o p m e n t i n B r i t a i n b e g a n on a l a r g e r w i t h two c o m p a n i e s ,  scale  R o l l s - R o y c e and de H a v a i l l a n d , p r o d u c i n g  4000 pound t h r u s t t u r b o j e t s a r o u n d  1944.  Both o f . t h e s e en-  g i n e s , t h e Nene and G h o s t r e s p e c t i v e l y , h a d c e n t r i f u g a l pressors .  com-  A t a b o u t t h e same t i m e R o l l s - R o y c e d e v e l o p e d  D a r t , a 1000  h o r s e p o w e r t u r b o p r o p and  A v o n , a 6500 pound t h r u s t t u r b o j e t , an a x i a l  end  some t i m e l a t e r  their  first  engine  the  the to  use  compressor. Manufacturers i n America  f i r s t began e x p r e s s i n g i n -  t e r e s t i n the European developments  around  1940.  Several  c o m p a n i e s w e r e g i v e n r e s e a r c h c o n t r a c t s by t h e U.S. t o d e v e l o p new  t u r b i n e e n g i n e s w h i l e o t h e r s began t o work  license directly manufacturers  government  on W h i t t l e ' s d e s i g n s .  The  established  d i d not take p a r t i n these e f f o r t s  government had d e t e r m i n e d  that their  full  under engine  because the  r e s o u r c e s s h o u l d be  d i r e c t e d toward the p r o d u c t i o n o f p i s t o n engines  f o r the  war  effort. By t h e e n d o f t h e w a r ,  both American  o r i t i e s had e s t a b l i s h e d t h a t e x c e p t perhaps b o m b e r s , a l l new  military  and B r i t i s h  auth-  f o r long-range  a i r c r a f t s h o u l d be p o w e r e d by t u r b o -  60 jet  engines.  Turboprops  were f e l t  t o be a more  satisfactory  p o w e r p l a n t f o r l a r g e bomber a i r c r a f t and t h u s i n t h e i r t a r y development  programs,  the B r i t i s h continued to  the  e n g i n e s t h a t had been d e s i g n e d d u r i n g t h e war,  the  Dart turboprop.  a t e d c o m p l e t e l y new  The A m e r i c a n s development  mili-  refine including  on t h e o t h e r h a n d  programs,  initi-  virtually  a l l of  t h e J-4 7 t u r b o j e t  engine  w h i c h were f o r t u r b o j e t e n g i n e s . General E l e c t r i c produced for  t h e B o e i n g B-47  bomber a n d s u b s e q u e n t l y b e g a n w o r k i n g  on  a n o t h e r a x i a l - f l o w d e s i g n , t h e J - 7 9 , w h i c h was  t o be u s e d i n  a n o t h e r bomber.  aircraft  P r a t t and W h i t n e y ,  m a n u f a c t u r e r i n t h e U.S.  the major  were i n i t i a l l y b e h i n d t h e  engine  state-of-  t h e - a r t r e p r e s e n t e d by B r i t i s h e n g i n e s s u c h as t h e R o l l s - R o y c e A v o n , b u t d e t e r m i n e d a t t h e o u t s e t t o c a t c h up by d e s i g n i n g an engine of g r e a t e r t h r u s t .  Thus i n 1946  P r a t t and W h i t n e y  s i g n e d another m i l i t a r y engine, the J-57, t o produce  de-^-  10,000  p o u n d s o f t h r u s t c o m p a r e d t o t h e 6,500 p o u n d t h r u s t A v o n . T h i s e n g i n e , d e v e l o p e d w i t h g o v e r n m e n t f u n d i n g o f $150  million"'"  l a t e r became t h e f i r s t A m e r i c a n - m a d e j e t e n g i n e s u i t a b l e f o r use on c o m m e r c i a l the  B o e i n g 707 was  a i r c r a f t a n d t h e f i r s t U.S.  j e t transport,  b u i l t around i t .  A l t h o u g h they were f o r a time b e h i n d t h e B r i t i s h i n engine technology, the Americans development,  t o o k an e a r l y l e a d i n a i r c r a f t  b e n e f i t t i n g from t h e i r e x t e n s i v e wartime  ence i n the p r o d u c t i o n of l a r g e m i l i t a r y a i r f r a m e s . first  t o adopt the aerodynamic  experiThey w e r e  r e f i n e m e n t s s u g g e s t e d by  pre-war  61 German r e s e a r c h a n d d e v e l o p e d t h e f i r s t  aircraft with  swept-  b a c k w i n g s , t h e B-47 bomber w h i c h f i r s t  f l e w i n 1947.  The  B r i t i s h w e r e more c a u t i o u s , a n d w h i l e t h e y h a d s u p e r i o r e n gines i n t h e i r f i r s t  j e t bomber - t h e E n g l i s h E l e c t r i c  b e r r a w h i c h f l e w i n 19 49 - t h e y d i d n o t i n t r o d u c e wings u n t i l  1951, on t h e V i c k e r s V a l i a n t .  p e r f o r m a n c e o f t h i s a i r c r a f t was i n f e r i o r  Can-  swept-back  Even t h e n t h e to that of the  A m e r i c a n B-47. The F i r s t C o m m e r c i a l  Developments  The B r a b a z o n C o m m i t t e e , in  s e t up by t h e B r i t i s h  194 2 t o d e t e r m i n e t h e p a t t e r n w h i c h t h e c o m m e r c i a l  government aircraft  m a n u f a c t u r i n g i n d u s t r y s h o u l d take a f t e r the war, agreed  that  one o f t h e f i r s t p r o j e c t s s h o u l d be a j e t t r a n s p o r t f o r t h e trans A t l a n t i c a i r mail service. ment's d e s i r e t o see t h e B r i t i s h  S u p p o r t e d by t h e g o v e r n lead i n j e tengines  into a lead i n the design of j e t a i r c r a f t , Company Comet.  t h e de H a v a i l l a n d  d e c i d e d i n 1946 t o p r o c e e d w i t h d e v e l o p m e n t T h i s was t o be t h e f i r s t  translated  of the  c o m m e r c i a l j e t a n d was t o  c a r r y p a s s e n g e r s as w e l l as m a i l . The company r e l i e d o n p r o v e n t e c h n o l o g y as much a s p o s s i b l e t o a l l o w more r a p i d d e v e l o p m e n t early the  l e a d over o t h e r manufacturers..  i n order to exploit  their  The e n g i n e c h o s e n f o r  Comet was de H a v a i l l a n d ' s own G h o s t t u r b o j e t ,  a p r o v e n de-  s i g n t h a t w o u l d become a v a i l a b l e some t i m e b e f o r e a n y o t h e r j e t engine.  The G h o s t , a 5000 p o u n d t h r u s t c e n t r i f u g a l  design,  was b a s e d o n w a r t i m e  t e c h n o l o g y a n d was b o t h s m a l l e r a n d l e s s  e f f i c i e n t than t h e Avon.  Because o f t h e low t h r u s t o f t h e  e n g i n e , t h e Comet u n v e i l e d i n 1949 h a d a c a p a c i t y o f o n l y t h i r t y - s i x p a s s e n g e r s a n d a c r u i s i n g s p e e d o f 460 m i l e s p e r hour, rather slow f o r a j e ta i r c r a f t . swept w i n g and c o n v e n t i o n a l ed l i t t l e  i n appearance  absence o f p r o p e l l o r s .  I n f a c t , w i t h i t s un-  fuselage design,  t h e Comet  from a p i s t o n t r a n s p o r t a s i d e The a i r c r a f t ' s h i g h  fuel  differfrom the  consumption  a n d s m a l l s i z e a l s o meant t h a t i t h a d i n s u f f i c i e n t r a n g e t o provide  nonstop trans A t l a n t i c s e r v i c e . The  s h o r t c o m i n g s o f t h e Comet t e n d e d t o r e i n f o r c e t h e  s u s p i c i o n s t h a t many a i r l i n e s bojet-powered a i r c r a f t ;  and m a n u f a c t u r e r s had a b o u t  they were c o n s i d e r e d  specialized applications.  suitable only f o r  T e c h n i c a l l y t h e t u r b o j e t was  able f o r long-range operations  tur-  suit-  w h e r e i t s s p e e d w o u l d be a n a d -  v a n t a g e and where t h e a i r c r a f t c o u l d c r u i s e a t h i g h speed and high a l t i t u d e ly,  to provide  e f f i c i e n t performance.  however, t h e e a r l y t u r b o j e t s were i l l - s u i t e d  because  Operationalto this  task  o f t h e i r h i g h f u e l consumption and low t a k e - o f f t h r u s t .  There remained c o n s i d e r a b l e  i n t e r e s t i n turboprop propulsion  i n w h i c h p r o p e l l o r s w o u l d r e m a i n b u t p i s t o n e n g i n e s w o u l d be r e p l a c e d by t u r b i n e s . flexible  This  t y p e o f p o w e r p l a n t was b o t h more  a n d more s u i t a b l e f o r l o n g - r a n g e o p e r a t i o n  turbojet since i t provided  than the  g r e a t e r t h r u s t a t t a k e - o f f and  s p e e d s up t o 4 50 m i l e s p e r h o u r i t h a d l o w e r f u e l  at  consumption.  The B r i t i s h u n d e r t o o k prop a i r c r a f t ,  two o f w h i c h  to develop  several early  are s i g n i f i c a n t  g r e a t success, the o t h e r f o r i t s complete c e s s f u l d e s i g n was a s h o r t - r a n g e V i c k e r s V i s c o u n t , which first  f l e w i n 1948.  turbo-  - one f o r i t s  failure.  The  four-engined turboprop, the  used the R o l l s - R o y c e Dart engine  With  suc-  a range o f approximately  and  eight  h u n d r e d m i l e s , t h e 310 m i l e s p e r h o u r V i s c o u n t , was n o t a r a d i c a l d e s i g n b u t showed i t s e l f superior to piston a i r c r a f t . in  almost  immediately  t o be  I t entered service i n B r i t a i n  1953 and s o o n became p o p u l a r w i t h b o t h p a s s e n g e r s  and  operators. In  1954, C a p i t a l A i r l i n e s ,  trunks, ordered ty  one o f t h e m i d d l e - s i z e d  f o r t y V i s c o u n t s and s i g n e d a n o p t i o n f o r t w e n -  more - t h e l a r g e s t s i n g l e o r d e r i n t h e V i s c o u n t ' s  When C a p i t a l p u t t h e a i r c r a f t i n s e r v i c e i n J u l y , became  the f i r s t  U.S. c a r r i e r t o o p e r a t e  1955  they  t u r b i n e equipment and  a l s o t h e f i r s t e v e r t o u s e an, a i r c r a f t o f f o r e i g n The V i s c o u n t p r o v e d  history.  manufacture.  j u s t a s p o p u l a r i n t h e U.S. a s i t was o n  the o t h e r s i d e of the A t l a n t i c  and C a p i t a l e n j o y e d  able c o m p e t i t i v e advantage over  their rivals  a consider-  for several  3 years. The u n s u c c e s s f u l B r i t i s h range t r a n s p o r t designed the-100 passenger in  Bristol  t u r b o p r o p was a huge l o n g -  to serve the North A t l a n t i c Brabazon.  1949 a n d h a d a t a k e - o f f w e i g h t  market,  The a i r c r a f t f i r s t  of approximately  pounds, g r e a t e r than t h e f i r s t American j e t s which  flew  300,000 d i d not en-  64 ter service u n t i l almost t e n years l a t e r .  The B r a b a z o n was  powered by e i g h t l a r g e t u r b i n e e n g i n e s c o u p l e d i n p a i r s t o f o u r p r o p e l l o r s a n d h a d a c r u i s i n g s p e e d o f 330 m i l e s  per hour.  The  a i r c r a f t never got past the prototype  however, and  was  i n many r e s p e c t s  stage,  s i m i l a r t o t h e e a r l i e r U.S. a t t e m p t s t o  p r o d u c e huge p i s t o n t r a n s p o r t s .  N o t o n l y was t h e d e s i g n  over-ambitious t e c h n i c a l l y , i t s expensive development program was  c a r r i e d o u t i n s p i t e o f t h e d i s i n t e r e s t shown b y t h e a i r -  lines The  i n such an a i r c r a f t .  V i e w i n t h e U.S. A m e r i c a n m a n u f a c t u r e r s w e r e w e l l aware o f t h e B r i t i s h  e f f o r t s and w i t h  t h e B o e i n g B-4 7 a n d l a t e r  ers entering production the  long  t h e B-52 j e t bomb-  i n t h e U.S. i t was b e c o m i n g c l e a r  l i n e o f c o m m e r c i a l p i s t o n a i r c r a f t w o u l d become o b -  s o l e t e i n t h e near f u t u r e .  In fact,  a s e a r l y a s 1 9 4 9 , two  U.S. m a n u f a c t u r e r s b e g a n d i s c u s s i n g d e s i g n s , f o r j e t with  that  the a i r l i n e s , but only  aircraft  Pan A m e r i c a n e x p r e s s e d any i n t e r 4  e s t a n d no f u r t h e r a c t i o n was Several  taken.  f a c t o r s account f o r the delays.  Most obvious  were t h e t e c h n i c a l l i m i t a t i o n s o f t h e e a r l y t u r b o j e t w h i c h , l i k e t h e B r i t i s h ones had l o w t a k e - o f f consumption, and s h o r t  engines.  thrust, high 5  s e r v i c e l i v e s between o v e r h a u l s .  fuel High  f u e l c o n s u m p t i o n i n t u r n meant t h a t t h e a i r c r a f t w o u l d h a v e t o be  built  l a r g e and w i t h  achieve acceptable as  increased  seating capacity  range and economic p e r f o r m a n c e .  i n order t o However,  a l w a y s , t h e U.S. a i r l i n e s w e r e somewhat r e l u c t a n t t o e n c o u r -  65 age  the manufacture of l a r g e r a i r c r a f t because of t h e i r  of overcapacity or reduced departure The  U.S.  carriers  er's airplane'.  frequencies.  l o o k e d u p o n t h e Comet as  l y a p i o n e e r i n g a i r c r a f t w h i c h was  popular w i t h passengers i n B r i t a i n .  B.O.A.C.'s r o u t e s t h a t i f one  and was  to A f r i c a .  'manufactur-  p r o v i n g t o be  therefore profitable I t was  recognized,  on  t h e Comet, o t h e r s operating  h i g h - c o s t a i r c r a f t w h i c h c o u l d n o t be p r o f i t a b l e a t  existing  f a r e l e v e l s a t the l o a d f a c t o r s t h a t would r e s u l t .  p o r t s w h i c h was and  no one  w o u l d be willing  was  w h i c h w o u l d use  and  profitable service  t o u p s e t t h e s t a t u s quo  only a t r a n s i t o r y advantage. to await  In  a large f l e e t of p i s t o n t r a n s -  giving safe, reliable, willing  high  however,  e a c h c a r r i e r w o u l d t h e n be  a d d i t i o n , e a c h o f t h e t r u n k s had  very  I t a t t r a c t e d very  of the domestic trunks ordered  w o u l d h a v e f o l l o w e d &nd  essential-  uneconomic - a  However, t h e Comet was  l o a d f a c t o r s ( o v e r 80%)  fear  The  f o r what  carriers  the appearance of A m e r i c a n - b u i l t  appeared  jet aircraft  the l a r g e r t u r b o j e t s t h a t were t h e n  being  g  developed  by  the  T h e r e was turboprop  military. a t t h e same t i m e  continuing interest i n  t r a n s p o r t s on t h e p a r t o f b o t h m a n u f a c t u r e r s  l i n e s i n t h e U.S.  j u s t as t h e r e was  in Britain.  a p p a r e n t i n an a n a l y s i s o f t h e m a r k e t s i t u a t i o n i n  and  This i s 1953:  W h i l e t h e p u r e j e t h a s t h e s p e e d (above 500 mph), i t i s known t o be an o p t i m u m p e r f o r m e r o n l y a t c e r t a i n r a n g e s , a f a c t t h a t may put  air-  66 s e v e r e r e s t r i c t i o n s on t h e s i z e o f i t s market._ In e f f i c i e n c y alone, i n c l u d i n g operating cost p e r t o n - m i l e and r a n g e and a i r p o r t v e r s a t i l i t y , t h e t u r b o p r o p i s b e l i e v e d t o be a s u p e r i o r a i r p l a n e ... b u t p a s s e n g e r r e v e n u e d e p e n d s upon some unknowns W i t h r e g a r d t o p a s s e n g e r desires. A c c o r d i n g l y , the b u i l d e r s of j e t planes may h a v e t o g a m b l e on t h e a t t r a c t i v e n e s s o f t h e m a g i c c a r p e t ( s i c ) a t somewhat . h i g h e r f a r e s . o  A t t h e t i m e , B o e i n g was t h a t was  f i r m l y committed  t h e o n l y U.S.  manufacturer  t o the t u r b o j e t engine.  f o r e x a m p l e , s o o n a f t e r i n t r o d u c t i o n o f t h e DC-7,  Douglas, expressed  i n t e r e s t i n d e v e l o p i n g a DC-7D t u r b o p r o p w h i c h w o u l d 15-20  per c e n t i n c r e a s e i n speed.  to i t s development appeared proven  turboprop engine.  on t u r b o p r o p s i n t h e U.S.  t o be  The  s e r i o u s l y t h e company was s i n c e t h e DC-7  was  suitable,  l i t t l e w o r k b e i n g done  a n d as a r e s u l t D o u g l a s 9  t h e use o f a R o l l s - R o y c e e n g i n e .  considered  I t i s not c l e a r j u s t  considering the project,  s t r u c t u r a l m o d i f i c a t i o n s and d e s i g n company t h a t r e m a i n e d  who  specifically The  U.S.  craft  1 1  produced  thus  expensive  changes. ^* 1  more d e e p l y i m p r e s s e d w i t h  t h e c a p a b i l i t i e s o f t h e t u r b o p r o p was Lockheed,  how  however,  n o t s t r e s s e d f o r t u r b i n e power and  c o n v e r s i o n c o u l d not have been a c c o m p l i s h e d w i t h o u t  The  a  principal obstacle  the l a c k o f a  T h e r e was  offer  Douglas'  competitor,  t h e L-1649A p i s t o n t r a n s p o r t w i t h w i n g s  designed f o r l a t e r conversion to turbine  A i r Force tested a turboprop version of t h i s but a commercial  v e r s i o n was  never developed.  power. airLater,  67 however, Lockheed.went ahead w i t h p r o d u c t i o n of another prop.  The  company d i d n o t d e v e l o p  turbo-  a commercial j e t u n t i l a l -  most a decade l a t e r even though t h e y , t . a l o n g w i t h B o e i n g , been the f i r s t I t was  t o come up w i t h a d e s i g n p r o p o s a l . Boeing  tune circumstances In jet  t h a t was  f o r c r e a t i n g a commercial j e t t r a n s p o r t .  a i r c r a f t , t h e B-47  and  B-52  tion experience. w o u l d be  already producing  b o m b e r s , i n two m a j o r  large  military  Boeing  b u t a l s o gave them u n i q u e p r o d u c -  anticipated that tanker  aircraft  required f o r i n - f l i g h t r e f u e l l i n g of t h e i r  gambled t h a t t h e government would d e c i d e  a i r c r a f t f o r t h i s task r a t h e r than  t h e y w e r e a s s i g n e d t o an i n - h o u s e tanker prototype.  bombers  to acquire a  convert e x i s t i n g  T h u s , as d e s i g n s t a f f w e r e r e l e a s e d f r o m t h e B-52  a new  two  T h i s h o t o n l y p r o v i d e d t h e company w i t h a l a r g e  income i n the e a r l y f i f t i e s  and  p r e s e n t e d w i t h t h e most oppor-  t h e f i r s t p l a c e t h e company was  programs.  had  new  aircraft.  program  program f o r development of  T h i s p r o t o t y p e was  also to  serve  as B o e i n g ' s e n t r a n t i n t h e c o m m e r c i a l j e t m a r k e t i n t h e company's renewed e f f o r t  t o j o i n D o u g l a s and  L o c k h e e d i n manu-  f a c t u r i n g commercial a i r c r a f t . The  Stage i s Set M e a n w h i l e de H a v a i l l a n d , r e c o g n i z i n g t h e  o f t h e o r i g i n a l Comet, p r o p o s e d t o i n t r o d u c e an  shortcomings improved y e r r  s i o n which would take advantage of the l a t e s t advances i n B r i t i s h engine  design.  This v e r s i o n , the f o r t y - e i g h t  g e r Comet I I , u s e d R o l l s - R o y c e A v o n e n g i n e s  a n d was  to  passenbe  68 a v a i l a b l e i n 1 9 5 4 . The Comet I I r e c e i v e d o r d e r s f r o m s e v e r a l non-U.S. a i r l i n e s .  Others  intended t o wait f o r the seventy-  s i x p a s s e n g e r Comet I I I w h i c h was t o be b r o u g h t o u t i n 1 9 5 6 . B.O.A.C. w e r e b y t h e n o p e r a t i n g t h e Comet r p r o f i t a b l y o n t h e i r A f r i c a n r o u t e s and planned  t o extend  j e tservice to  J a p a n a n d A u s t r a l i a a n d l a t e r t o S o u t h A m e r i c a when t h e Comet I I became a v a i l a b l e .  The Comet I I I was t o be u s e d o n t h e  N o r t h A t l a n t i c r u n soon a f t e r i t s c e r t i f i c a t i o n ,  planned f o r  1956 . These p l a n s prompted a r e a c t i o n i n A m e r i c a . American, a c a r r i e r  t h a t made a t r a d i t i o n o f b e i n g a t t h e f o r e -  f r o n t o f commercial a i r c r a f t technology, Comet I l l ' s more.  Pan  i n October,  1952 a n d t o o k  ordered  three  o u t o p t i o n s on seven  A t t h e same t i m e E a s t e r n A i r l i n e s b e g a n e x p r e s s i n g  interest i n the B r i t i s h other trunk c a r r i e r s  j e t and t h i s t h r e a t e n e d  to follow.  never m a t e r i a l i z e d although U.S. m a n u f a c t u r e r s .  Eastern's  to force  'phantom o r d e r '  i t had a n o t i c e a b l e e f f e c t on t h e  Each hastened  t h e i r d e s i g n e f f o r t s and  B o e i n g were prompted t o r e v e a l t h a t t h e i r d u a l - p u r p o s e  707  12 p r o t o t y p e was u n d e r c o n s t r u c t i o n . I n any e v e n t ,  the t r a g i c crashes  o f two Comet  air-  l i n e r s i n 1954 a n d t h e s u b s e q u e n t d i s c o v e r y o f d e f i c i e n c e s i n t h e i r design l e d t o the suspension o r d e r s f o r t h e Comet p e n d i n g and  design r e v i s i o n .  or c a n c e l l a t i o n ofa l l  a long process  T h i s sudden setback  of investigation o f the B r i t i s h en-  d e a v o u r was d e c i s i v e i n a l l o w i n g t h e e s t a b l i s h e d A m e r i c a n  manufacturers  to r e t a i n almost  mercial aircraft industry.  c o m p l e t e d o m i n a n c e o f t h e com-  By t h e t i m e de H a v a i l l a n d r e -  t u r n e d w i t h t h e m o d i f i e d Comet I V i n 1 9 5 8 , t h e e a r l y o r i g i n s o f t h e a i r c r a f t were b e g i n n i n g  to t e l l  a n d i t was  longer c o m p e t i t i v e w i t h the emerging American designs were b o t h  l a r g e r and  design no  which  faster.  The M a r k e t Emerges B o e i n g were f i r s t jet;  t o emerge w i t h a U.S.  commercial  t h e 707 t a n k e r - t r a n s p o r t h a d i t s m a i d e n f l i g h t i n J u l y ,  1954.  W i t h i n a year  t h e company h a d won o r d e r s  KC-135 m i l i t a r y v e r s i o n a n d i n J u l y , c l e a r a n c e by t h e A i r F o r c e the p r o t o t y p e aircraft. designs  f o r the  1955 t h e y w e r e  given  to b u i l d commercial v e r s i o n s of  concurrently w i t h production of the m i l i t a r y  The 70 7 b o r r o w e d h e a v i l y f r o m t h e a e r o d y n a m i c  o f t h e B-47 a n d B-52 bombers a n d was t o be f i t t e d  with  f o u r o f t h e 13,000 p o u n d t h r u s t J - 5 7 t u r b o j e t s u s e d o n t h e 13 B-52.  The a v a i l a b i l i t y  Whitney engines approximately  o f these h i g h e r t h r u s t P r a t t and  g a v e t h e new a i r c r a f t a c r u i s i n g s p e e d o f  585 m i l e s p e r h o u r , f a r g r e a t e r t h a n t h a t o f t h e  Comet, a n d i t s t a k e - o f f w e i g h t  o f 190,000 p o u n d s was  nearly  twice that of the B r i t i s h j e t . The r a p i d p r o g r e s s made by B o e i n g  f o r c e d Douglas t o  f i n a l i z e plans f o r t h e i r commercial j e t i n J u l y , being completely was r e m a r k a b l y  l e f t behind.  T h e i r DC-8  s i m i l a r t o the Boeing  1955 t o a v o i d  transport design  prototype, d i f f e r i n g  only  70 slightly  i n structural  u s e d f o u r J-57  d e s i g n and a e r o d y n a m i c  t u r b o j e t s b u t t h e DC-8  detail.  had s l i g h t l y l e s s  s w e e p b a c k and t h e r e f o r e h a d a s l i g h t l y l o w e r c r u s i n g but b e t t e r low-speed h a n d l i n g .  The D o u g l a s  was could  accommodate s i x a b r e a s t i n c o a c h c o n f i g u r a t i o n  while  the  B o e i n g d e s i g n c o u l d n o t . . I n a d d i t i o n D o u g l a s was  ing  a v e r s i o n o f t h e DC-8  P r a t t and W h i t n e y of  offer-  thrust,  J - 7 5 ' s , w h i c h p r o v i d e d an a i r c r a f t c a p a b l e  nonstop trans A t l a n t i c D o u g l a s won  American  with engines of greater  wing  speed  aircraft  somewhat l a r g e r t h a n t h e p r o t o t y p e 707, h o w e v e r , a n d easily  Both  operation.  the f i r s t  i n S e p t e m b e r , 1955.  o r d e r for> t h e new The  jets  from  Pan  a i r l i n e ordered twenty-five  DC-8's and s h o r t l y t h e r e a f t e r o r d e r e d t w e n t y B o e i n g ; 707's i n o r d e r t o e n s u r e t h a t t h e y w o u l d be f i r s t  t o p u t t h e new  c r a f t i n t o s e r v i c e no m a t t e r w h i c h d e s i g n a p p e a r e d Douglas  f i n a l i z e d their design later  airf  earlier.  t h a n B o e i n g and w e r e  a b l e t o make some m i n o r c h a n g e s s u g g e s t e d by U n i t e d A i r l i n e s . T h i s e n a b l e d them t o o b t a i n t h e f i r s t r i e r i n October,  1955.  Boeing i n i t i a l l y d e s i g n because  o r d e r from a trunk c a r -  r e f u s e d t o make c h a n g e s t o t h e i r  t h i s would have r e d u c e d i t s commonality  707  with  the  military  t a n k e r v e r s i o n , d e l a y i n g p r o d u c t i o n and  increas-  ing  costs.  H o w e v e r , when B o e i n g r e c e i v e d t h e s m a l l e r o r d e r  f r o m P a n A m e r i c a n a n d l o s t o u t t o D o u g l a s w i t h U n i t e d and l a t e r N a t i o n a l A i r l i n e s , t h e company became c o n c e r n e d this  s w i n g m i g h t be o v e r w h e l m i n g .  When A m e r i c a n  that  Airlines  71 demanded t h a t t h e 707 be made r o o m i e r t h a n t h e DC-8,  Boeing  14 was  f o r c e d t o c o m p l y by w i d e n i n g t h e f u s e l a g e .  t h a t the o u t s i d e dimensions  o f t h e KC-135 t a n k e r w o u l d  from.those of the commercial of American's  70 7 b u t r e s u l t e d i n t h e  order for t h i r t y  aircraft.  l o w e d w i t h an o r d e r f o r DC-8's b u t TWA, the  ' B i g F o u r ' , d i d n o t o r d e r any  cause  T h i s meant differ  receipt  E a s t e r n soon  fol-  t h e f i n a l member o f  j e t s u n t i l much l a t e r  be-  of the i n d e c i s i o n of t h e i r c o n t r o l l i n g shareholder, 15  Howard H u g h e s . The s i n c e i t was  t u r b o p r o p a i r l i n e r had n o t y e t been abandoned still  s e e n as an e c o n o m i c p e r f o r m e r .  In  Britain,  a n o t h e r l o n g - r a n g t u r b o p r o p , t h e B r i s t o l B r i t a n n i a was completed.  Though i t was  e x p e c t e d t o have low o p e r a t i n g  c o s t s , i t s h i g h e s t c r u i s i n g speed  (405 m i l e s p e r h o u r )  much l o w e r t h a n t h a t o f t h e A m e r i c a n  jets.  c e i v e d i n 194 7 t h e a i r c r a f t h a d e n c o u n t e r e d ficulties  and was  Although  w h i c h time most o f i t s p o t e n t i a l b u y e r s were w i l l i n g  The  Short-Haul  con-  1957,  by  to wait  Market success w i t h the  Vis-  c a r r i e r s r e t a i n e d a c o n t i n u i n g i n t e r e s t i n the  t u r b o p r o p f o r t h e i r s h o r t h a n d medium-haul o p e r a t i o n s . 1954,  American  range  t u r b o p r o p and managed t o i n t e r e s t L o c k h e e d  sal.  dif-  j e t transports.  I n s p i r e d by C a p i t a l A i r l i n e s ' c o u n t , U.S.  was  development  not introduced i n t o s e r v i c e u n t i l  f o r t h e B o e i n g and Douglas  being  In  A i r l i n e s h e l d a d e s i g n c o m p e t i t i o n f o r a medium-  T h e i r d e s i g n , t h e E l e c t r a , was  similar  i n the  propo-  to the V i s c o u n t  72 b u t was t o h a v e g r e a t e r c a p a c i t y a n d l o n g e r d e v e l o p m e n t was made p o s s i b l e . b y mercial version  Lockheed.  tunity  Its  t h e a p p e a r a n c e o f t h e com-  ( t h e A l l i s o n 501) o f a n o t h e r m i l i t a r y  w h i c h was t h e n b e i n g by  range.  produced f o r a m i l i t a r y  The E l e c t r a  to retain  engine  transport  p r o g r a m g a v e L o c k h e e d an  built  oppor-  a share o f the commercial market s i n c e i t  was b e c o m i n g o b v i o u s t h a t t h e m a r k e t f o r j e t t r a n s p o r t s was not  l a r g e e n o u g h t o s u p p o r t t h r e e U.S. m a n u f a c t u r e r s .  707  a n d DC-8 d e s i g n s  were a l r e a d y  L o c k h e e d was e f f e c t i v e l y  firmly  challenge  A l t h o u g h i t had a p p a r e n t l y j e t s w o u l d be r e q u i r e d o n l o n g - h a u l high  speed, most o f t h e t r u n k s short-haul  for  their  ed'  version of the Viscount  and  Braniff  ordered  p e r s i s t e d i n having order.  routes.  nothing  position  from Boeing.  been d e c i d e d routes  that  turbo-  because o f t h e i r  eventually ordered Continental ordered  turboprops a  while American, Eastern,  the Electra.  United A i r l i n e s  e s t a b l i s h e d so  d i s p l a c e d from i t s former  i n t h e market by t h e s t r o n g  The  'stretchNational,  A t t h e e n d o f 1955 TWA  b u t Lockheed p i s t o n t r a n s p o r t s on  r e t a i n e d some i n t e r e s t  i n the turbo-  prop and c o n s i d e r e d  making a purchase s e v e r a l times.  t u a l l y they decided  t h a t no m a n u f a c t u r e r o f f e r e d a t u r b i n e  e n g i n e t h a t was l a r g e enough t o f i t t h e i r United  l a t e r elected to order  requirements. ^  a short-haul  c r a f t a n d r e l i e d o n t h e i r DC-6B's u n t i l  Even-  i t entered  1  jet airservice i n  17 1960.  The a i r c r a f t p u r c h a s e d was t h e C a r a y e l l e , m a n u f a c -  t u r e d by S u d A v i a t i o n o f F r a n c e .  I t h a d a much l o w e r  gross  weight  (100,000 p o u n d s ) t h a n t h e l o n g - r a n g e U.S. j e t s a n d  was p o w e r e d by two e n g i n e s r a t h e r t h a n f o u r . time the engines  ( R o l l s - R o y c e Avons) were mounted a t t h e  back, on t h e f u s e l a g e , and n o t on t h e wings. s e v e r a l U.S. m a n u f a c t u r e r s ing to  For the f i r s t  a similar aircraft,  Although  had e x p r e s s e d i n t e r e s t i n produc-  Sud w e r e t h e f i r s t  t o be  committed  p r o d u c t i o n and they had t h e i r p r o t o t y p e f l y i n g by 1955. It  i s c o n v e n i e n t t o pause a t t h i s p o i n t t o a n a l y z e  the v a r i o u s a i r c r a f t t h a t were p l a y i n g a p a r t i n t h i s t i o n p e r i o d because a l t h o u g h a t r e n d towards emerging  t h e t u r b o p r o p was s t i l l  b e g i n n i n g o f 1956, i n f a c t ,  transi-  t u r b o j e t s was  an a c t i v e c o n t e n d e r .  At the  t h e r e w e r e more o r d e r s f o r E l e c -  t r a s t h a n f o r a n y o t h e r s i n g l e a i r c r a f t among t h e d o m e s t i c c a r r i e r s and t h e r e were s t i l l  many p i s t o n t r a n s p o r t s y e t t o  18 be d e l i v e r e d .  I n t h e second  p a r t o f t h i s c h a p t e r t h e com-  p a r a t i v e economics o f p i s t o n , t u r b o p r o p , and t u r b o j e t w i l l  be  investigated. PART I I : The  CHANGES I N TECHNICAL E F F I C I E N C Y AND COSTS  General  Trend  Immediately cheaper ports.  OPERATING  upon i n t r o d u c t i o n t h e j e t s p r o v e d  t o o p e r a t e t h a n even t h e most economic p i s t o n T h i s may n o t a p p e a r  totally  trans-  s u r p r i s i n g because  c r a f t p r o d u c t i v i t y was i n c r e a s e d t r e m e n d o u s l y near d o u b l i n g o f both speed  t o be  and c a p a c i t y .  air-  as a r e s u l t o f a  However, t h i s  was  74 not  a t o t a l l y e x p e c t e d r e s u l t when t h e a i r l i n e s  the American-made j e t s i n the remarked: were not  early f i f t i e s .  " A l l evidence points at a l l sure t h a t the  to the  first As  ordered  Caves  f a c t t h a t the c a r r i e r s  l a r g e t u r b o j e t c r a f t would  c h e a p e r t o o p e r a t e t h a n t h e m o s t modern p i s t o n - e n g i n e d  be  air-  19 planes." "the  Even so,  preference  other  was  f a u l t s i t had  s a i d an  official  o f TWA  in  1952:  for turbine a i r c r a f t regardless  of  ...  to i t s  a t r e m e n d o u s a t t r a c t i o n due  any  20 speed."  This  a s s e s s m e n t was  A m e r i c a n A i r l i n e s who  s t a t e d i n 1952  proved i t s market appeal, ics  "  e c h o e d by  i t has  not  that  the  president  "while  the  jet  i n i t i a l orders  l a r g e l y t o demand  y e t p r o v e d i t s econom-  for jets  can  t h u s be  ( i . e . passenger appeal)  attributed  considerations  r a t h e r than to considerations  r e l a t e d s p e c i f i c a l l y to  ing  j e t s had  costs.  E v e n i f t h e U.S.  than p i s t o n a i r c r a f t ,  g e r s w o u l d be w i l l i n g and  has  2 1  The  costs  of  t o pay  the  had  Comet had  higher  operat-  operating  p r o v e d t h a t passen^-  more f o r t h e a d d i t i o n a l s p e e d  comfort. T u r b o p r o p a i r c r a f t n e v e r became f i r m l y e s t a b l i s h e d  rivals haul was  to the  jets.  a i r c r a f t but  The  was  a successful  i t s long-range counterpart,  l a t e i n a p p e a r i n g and  o n l y U.S.  Viscount  b e s e t by  as  short-  the B r i t a n n i a ,  t e c h n i c a l problems.  The  t u r b o p r o p , t h e E l e c t r a , t h o u g h n e v e r c o n c e i v e d as  d i r e c t competitor more s e r i o u s  to the  long-haul  j e t s , encountered  even  t e c h n i c a l problems soon a f t e r i t s i n t r o d u c t i o n  a  75 when s e v e r a l c r a s h e s  occurred.  Subsequently the E l e c t r a  was  forced t o operate  a t reduced speed f o r s a f e t y reasons and  was  t h u s h a n d i c a p p e d i n e f f o r t s t o compete w i t h t h e j e t s .  H o w e v e r , e v e n t h o u g h t h e r e w e r e no e x a m p l e s o f a  turboprop  a i r c r a f t w h i c h c o u l d be t e r m e d r e p r e s e n t a t i v e o f w h a t technology it  might have a c h i e v e d  i s c l e a r that t h e turboprop  pectations i n respect  i n relation to jet aircraft, d i dnot l i v e  up t o i n i t i a l e x -  t o e i t h e r speed o r o p e r a t i n g  While proponents o f turboprop  this  costs.  p r o p u l s i o n had claimed  project-  e d c r u i s i n g s p e e d s o f o v e r 50 0 m i l e s p e r h o u r a n d c o s t s o n e h a l f those  of jets,  the turboprops  w h i c h h a d a p p e a r e d b y 1959  22 fell  f a r s h o r t on both counts.  were i n f e r i o r  I t was a p p a r e n t t h a t  to the j e t s i n passenger appeal  only competitive  i n operating  they  and a t b e s t  costs.  H i s t o r i c a l Cost Data i)  Seat-Mile  Costs  Average o p e r a t i n g c o s t s r e p o r t e d by t h e t r u n k t o t h e CAB f o r t h e 7 0 7 , DC-8, E l e c t r a , V i s c o u n t , presented  i n T a b l e 2.1 f o r t h e y e a r s  carriers  a n d DC-6B a r e  1959 t o 1 9 6 4 .  While i t  m u s t be e m p h a s i z e d o n c e more t h a t i n t e r p r e t a t i o n o f t h e s e r e s u l t s m u s t be made w i t h c a u t i o n b e c a u s e o f t h e e f f e c t s o f d i f fering operating conditions, i t i s clear that operating o f t h e j e t s were l o w e r  than had once been a n t i c i p a t e d .  the o u t s e t , s e a t - m i l e d i r e c t o p e r a t i n g c o s t s DC-8 a n d 707 w e r e l o w e r  costs  than those  From  (DOC) o f t h e  o f t h e DC-6B a n d b y 19.60,  TABLE .2.1  76  HISTORICAL OPERATING COST DATA FOR TRANSITION PERIOD  AIRCRAFT  1  SFAT-MILE EXPENSE (cents)  fear  Aircraft  Flying Person; nel  L959  DC-6B Viscount 707  .322 .381 ; .187  DC-6B Viscount Electra 707 DC-8  .351 ,385 ,348 .170 .1160 . .  1960  1961  :  DC-6B Viscount Electra 707 DC-8  .449 .450 .383 .194 . .185  DC-6B Viscount Electra 707 DC-8  .467 .446 .347 .186 .171  1963  DC-6B Viscount Electra 707 DC-8  .517 ,415 ,380 .192 ' ,156  1964  DC-6B Viscount Electra 707 DC-8  .513 ,550 ,385 .192 .183  1962  Fuel and Oil  Direct Maintenance  .488 .473 .452  ;  .502 .488 .348 .408 ..482 .514 .486 .361 .472 .474 .  :  Total Incl. 'Other'  .305 .505 .342  1.343 1.526 1.448  .359 .447 .766 .357 .331.  1.448 1.502 1.728 1.301 .1.145 . .  Depreciation : .229 .420 • .320 :  .278 .435 .535 .250 .386 .  • Total •Incl. Dep. 1.572 :1.946 ' 1.768 • 1.725 :1.937 2.263 1.551 1.531 .  .400 .477 .611 .298 .274  1.644 1.593 1.672 1.174 . 1.071 .  ;.515 .514 ;.515 .303 ;.241  1.738 1.602 1.464 1.059 1.003 .  .431 .363 .492 .240 .305 . .  .518 .451 .357 .365 .406 .  .462 .621 >570 .247 .256  1.619 1.677 1.474 .954 . :.923 . ..  .281 1.900 .393 2.070 .513 . 1.987 .282 1.236 .255 . . .1.178 . . .  .492 .454 .348 .382 .404  .605 :.527 .628 :.248 .269  1.825 1.734 1.533 .941 .964  .124 .345 .511 .280 .264 ."  .518 .453 .354 .397 .449  :  :  :  • .369 .453 .617 .294 .345  2.013 2.046 2.289 1.468 .1.416. 2.169 1.965 1.956 1.299 1.308  1.945 2.079 2.044 1.221 1.228  •^Based on Aggregate Trunkline Experience. Source:  R. M i l l e r and D. Sawers, The Technical Development o f Modern A v i a t i o n (London, 1968) pp.289-94.  t h e t o t a l DOC  of both j e t a i r c r a f t ,  including  depreciation,  w e r e l o w e r t h a n t h o s e o f t h e DC-6B w i t h d e p r e c i a t i o n e x c l u d e d . C o s t s o f t h e t u r b o p r o p a i r c r a f t w e r e f a r h i g h e r , due to the lower stage, l e n g t h s o p e r a t e d . the E l e c t r a were u n t i l  The  i n part  s e a t - m i l e DOC  of  196 2 h i g h e r t h a n t h o s e o f t h e V i s c o u n t  and n e v e r e x h i b i t e d a s i g n i f i c a n t i m p r o v e m e n t o v e r "the o l d e r and s m a l l e r t u r b o p r o p . An e x a m i n a t i o n o f t h e c o m p o n e n t s c o m p r i s i n g d i r e c t o p e r a t i n g c o s t s reveals the a) 707  I n 1960  and DC-8  (.170,  following:  t h e c r e w e x p e n s e p e r s e a t - m i l e (SM) <r/SM  t h a n h a l f w h a t i t was  and  .160  C/SM  f o r t h e DC-6B  expense f o r the E l e c t r a  respectively) (.351  (.34 8 f^/SM) was  f o r t h e DC-6B w h i l e t h e V i s c o u n t was This corresponds  total  C/SM)•  was.less Crew  a l m o s t t h e same a s  h i g h e r (.385  <?/SM) .  larger capacity  jets.  Crew e x -  p e n s e o f t h e DC-6B i n c r e a s e d o v e r t i m e as i t s a v e r a g e l e n g t h d e c r e a s e d a n d t h e medium-range E l e c t r a was 1961  greater  as e x p e c t e d f r o m i t s h i g h e r speed and  l e s s t h a n t h a t o f t h e DC-6B.  T h i s was  (kerosene)  g a s o l i n e as w i l l be d i s c u s s e d l a t e r . and  f a r cheaper somewhat  F u e l expense per s e a t - m i l e of a l l t u r b i n e  lower p r i c e of t u r b i n e f u e l  DC-8  stage  capacity. b)  was  the  to the expected e f f e c t s of the i n c r e a s e d  p r o d u c t i v i t y of the f a s t e r ,  after  of  aircraft  e n s u r e d by  relative  to  the  aviation  F u e l expenses of  the  707 w e r e a l m o s t i d e n t i c a l and i n t h e e a r l y y e a r s a l ^  78 m o s t t h e same a s f o r t h e DC-6B, i n s p i t e o f t h e f a c t t h a t t h e l a t t e r was o p e r a t e d o n f a r s h o r t e r s t a g e l e n g t h s . ing  t h e most i m p o r t a n t advantage  which  the j e t , lower f u e l consumption, Electra  Reflect-  the turboprop had over  e v e n t h e medium-range  h a d a s e a t - m i l e f u e l e x p e n s e w h i c h was a p p r e c i a b l y  lower than t h a t o f the long-range c r e a s e d f u e l expense  707 a n d DC-8.  The i n -  (on t h e o r d e r o f .100 C/SM) was m a r g i n a l  and was i n a n y e v e n t more t h a n c o m p e n s a t e d f o r b y t h e s a v i n g s in  crew expense  craft.  ( a p p r o x i m a t e l y .200 C/SMj o n t u r b o j e t  air-  The s m a l l e r V i s c o u n t , a s h o r t - h a u l t r a n s p o r t w i t h  l e s s e f f i c i e n t engines, had n o t i c e a b l y h i g h e r f u e l  expenses  per s e a t - m i l e than the E l e c t r a . c)  The j e t s a c h i e v e d s e a t - m i l e d i r e c t  maintenance  c o s t s a l m o s t a s l o w a s t h o s e o f t h e p r o v e n DC-6 p i s t o n p l a n e i n t h e i r f i r s t y e a r o f o p e r a t i o n and improved so t h a t b y 1964 d i r e c t m a i n t e n a n c e t h a n t w i c e a s much p e r s e a t - m i l e .  air-  over  time  o f t h e l a t t e r c o s t more Perhaps  s u r p r i s i n g l y , the  t u r b o p r o p a i r c r a f t w e r e much w o r s e i n t h i s r e s p e c t , w i t h t h e Electra  i n p a r t i c u l a r having consistently  high direct  mainten-  a n c e c o s t s , g e n e r a l l y more t h a n t w i c e t h o s e o f t h e j e t s . ii)  Aircraft-Mile  Costs  Trunk c a r r i e r d a t a f o r s e l e c t e d a i r c r a f t a r e p r e s e n t e d in  T a b l e 2.2 f o r t h e y e a r s 1959 a n d 1963 i n t e r m s o f c o s t s p e r  aircraft-mile. of  The d a t a r e v e a l t h a t t h e a i r c r a f t - m i l e c o s t s  j e ta i r c r a f t were.generally h i g h e r than those o f p i s t o n a i r -  TABLE  2.2  AIRPLANE-MILE COSTS OF TRANSITION PERIOD  AIRCRAFT  (1959, 1963)  Expense Per A i r c r a f t - M i l e Aircraft  Flying Operations  DC-6B DC-7B L-1049G Viscount Electra B-707  65.4 69.1 71.9 51.2 61.9 109.5  Direct Maintenance 18.6 26.5 32.2 23.3 23.7 31.1  Maintenance Burden 13.8 11.5 17.6 17.1 12.4 12.7  1959 (cents)  Expense per Seat-Mile(cents)  T o t a l Exclud. T o t a l Includ. Excluding Depreciation Depreciation Depreciation 101.3 107.1 121.7 85.9 102.8 153.3  . Including Depreciation  116.8 139.7 156.4 109.1 142.6 184.4  1.37 1.34 1.48 1.87 1.25 1.18  1.58 1.75 1.91 : 2.37 1.74 1.42  165.6 199.3 215.0 • 126.6 166.2 168.0 167.6 186.1  1.92 1.76 2.18 2.36 1.54 1.03 1.06 2.19  2.24 2.49 2.62 2.75 2.03 1.29 1.29 2.91  1963 DC-6B DC-7B L-1049G Viscount Electra B-707 DC-8 Caravelle Source:  81.0 77.0 97.3 56.4 61.8 82.4 83.5 70.7  34.0 37.0 53.8 27.9 45.9 29.6 32.1 35.3  26.2 25.4 37.0 23.6 17.4 •21.6 20.9 34.0  142.3 140.7 178.9 108.4 126.0 134.0 137.3 140.3  A v i a t i o n Week, (December 17, 1960), pp.58-61 (March 11, 1964), pp.60-63.  80 c r a f t but decreased over time w h i l e When c o n v e r t e d  t h a n p i s t o n t r a n s p o r t s by t h e DOC  latter  into equivalent seat-mile  70 7 w e r e m a r g i n a l l y b e t t e r i n 1959  ly,  the  1963.  and  increased.  c o s t s , t h e DC-8  fifty  percent  lower  I n f a c t , as s t a t e d  previous-  of p i s t o n a i r c r a f t e x c l u s i v e of d e p r e c i a t i o n  pense exceeded t h a t o f j e t a i r c r a f t w i t h d e p r e c i a t i o n ed,  l e a d i n g to the e x p e c t a t i o n of very  the o l d e r technology.  The  exception  m i g h t be  whose d e s i g n was  ex-  includ-  rapid retirement  of  t h e DC-6B  whose s e a t - m i l e c o s t s c o m p a r e d f a v o u r a b l y w i t h t h e and  and  more s u i t a b l e f o r s h o r t - h a u l  turboprops operations  t h a n t u r b o - c o m p o u n d p i s t o n a i r c r a f t s u c h as t h e DC-7  and  L-1049G. I n terms o f c o s t per  a i r c r a f t m i l e , t h e DC-6B  c h e a p e r t h a n t h e E l e c t r a i n 1959 d e p r e c i a t i o n , i n 196 3. t h e one  j e t t h a t was  I t had  operated  on  and lower  a l s o cheaper, operating  short hauls  i n both a i r c r a f t - a n d seat-mile, terms.  p l a i n s why  t h e DC-6B r e m a i n e d i n s e r v i c e on  It first  w i t h some t r u n k  costs  than  This  c a r r i e r s as l a t e as that  Sud  ex-  low-density  i s i n t e r e s t i n g to note from the data  short-haul  excluding  i n 196 3, t h e  Caravelle,  haul operations  was  short-  1968. the  j e t , the C a r a v e l l e , tended t o c o n f i r m  the  e a r l i e r p r e d i c t i o n t h a t t u r b o j e t a i r l i n e r s were s u i t a b l e o n l y for  long-haul  operations.  The  C a r a v e l l e c o s t more t o  oper-  ate per a i r c r a f t - m i l e than the f a r l a r g e r long-range j e t s its 707.  s e a t - m i l e DOC  was  more t h a n d o u b l e t h a t o f t h e DC-8  I t would thus appear t h a t turboprop  a i r c r a f t such  and  and as  81 t h e E l e c t r a s e r v e d w e l l as e c o n o m i c s h o r t and aircraft,  a t l e a s t f o r an  Changes i n T e c h n i c a l i)  medium-haul  interim period.  Efficiency  Capital High i n i t i a l  c o s t i s one  r e a s o n w h i c h may  help  e x p l a i n e a r l y f e a r s about the o p e r a t i n g expenses of aircraft. ple,  in  f a c t t h a t e a c h new  more t h a n t h r e e t i m e s  itself for  The  turbojet  j e t w o u l d c o s t , f o r exam-  as much as a DC-7  was  enough i n  t o make some a i r l i n e s h e s i t a n t i n m a k i n g c o m m i t m e n t s  t h e new static  aircraft.  terms-that  T a b l e 2.3.  The  The  comparative c a p i t a l  is, initial  o u t p u t of the  c o s t per  l a r g e r and  requirements  seat - i s given faster jets  however, f a r g r e a t e r t h a n t h a t o f p i s t o n a i r p l a n e s and shown i n T a b l e 2.4, DC-8  o r 707  Ironically to  was  equivalent to approximately  i t was  this great  for i n i t i a l  t h a t assuming equal  3.4  as  DC-6Bs.  i n t h e i n d u s t r y by  of hourly  seat-mile  daily utilization  per d o l l a r of i n i t i a l  investment.  are estimated  t o be  1959.  productiv-  c o s t i t i s found i n Table r a t e s the  The  inferior  o f t h i s measure o f c a p i t a l p r o d u c t i v i t y .  Viscount  2.4  j e t s were  a b o u t t h e same as p i s t o n a i r c r a f t i n t e r m s o f a n n u a l  turboprops  was,  increase i n productivity that led  f e a r s about s e r i o u s o v e r c a p a c i t y  w i t h the data  in  i n terms of s e a t - m i l e p r o d u c t i v i t y a  Combining the estimates ity  to  product  and E l e c t r a  t o t h e DC-6B i n t e r m s  82 TABLE 2.3 ORIGINAL COST PER SEAT FOR TRANSITION PERIOD AIRCRAFT (1956- 59)  I n i t i a l Cost ($U.S., m i l l i o n s )  Aircraft  Seating Capacity  I n i t i a l Cost Per Seat ($U.S., thousands)  DC-6B  1.23  67  18.4  Viscount-700  1.20  50  24.0  Electra  2.39  82  29.1  707-120  4.50  125  36.0  707-320  5.25  144  36.5  DC-8-10  4.70  125  37.6  DC-8-20  5.25  125  42.0  Source:  DC-6B, Viscount: Aaron J . Gellman, ' The E f f e c t o f Regulation on A i r c r a f t Choice, unpublished Ph.D. t h e s i s , M.I.T. 1968, pp.290-305. A l l other a i r c r a f t : Dero A. Saunders, "The A i r l i n e s ' F l i g h t From R e a l i t y " , Fortune (February 1956), pp.91-95.  83  TABLE  2.4  RELATIVE OUTPUT PER UNIT OF I N I T I A L INVESTMENT FOR TRANSITION PERIOD  AIRCRAFT  (1956-59)  Estimated Productivity ASM/hour  Productivity Relative to DC-6B  Annual Ouput P e r D o l l a r Investment (ASM)  DC-6B  17,600 .  1.0  36.6  Viscount  11,550  0.7  24.6  Electra  24,930  26.7  DC-8-10  62,270  1-4 3.4  707-120  62,270  3.4  35.4  Aircraft  1  'See Appendix B. 'See Appendix C.  Assumes equal annual u t i l i z a t i o n .  33.9  2  84 ii)  Flight  Personnel  The  reductions  i n f l i g h t personnel  expense brought  about by t h e j e t s have a l r e a d y been d i s c u s s e d . aggregate cost data other  include important  However,  wage r a t e e f f e c t s a n d  d i s t o r t i o n s w h i c h do n o t a l l o w a c o n s i s t e n t c o m p a r i s o n  o f crew p r o d u c t i v i t i e s .  F o l l o w i n g t h e same p r o c e d u r e a s i n 23  the p r e c e e d m g chapter,  the estimates  of seat-mile  t i v i t y were combined w i t h a crew complement i n d e x a measure o f f l i g h t nological  crew p r o d u c t i v i t y  produc-  to provide  based s o l e l y on t e c h -  characteristics of the a i r c r a f t .  The  r e s u l t s , w h i c h a p p e a r i n T a b l e 2.5, r e v e a l a  t r e m e n d o u s i n c r e a s e i n p r o d u c t i v i t y , w i t h t h e DC-8 a n d 70 7 p r o v i d i n g an e s t i m a t e d  20,4 84  available  seat-miles  (ASM) p e r  e q u i v a l e n t c r e w h o u r w h i l e t h e DC-6B p r o v i d e d  6 6 71 ASM p e r  e q u i v a l e n t crew h o u r .  the E l e c t r a ,  had  crew p r o d u c t i v i t y  t h e DC-6B w h i l e  The l a r g e r  i n c r e a s e d by about o n e - h a l f  f o rthe Viscount  These e s t i m a t e s  compared t o  t h e r e was a s l i g h t  decrease.  o f average p r o d u c t i v i t y were used t o  predict r e l a t i v e f l y i n g personnel Using  turboprop,  expenses o f these  t h e DC-6B a s t h e b a s e a i r c r a f t ,  aircraft.  predictions of seat-  m i l e crew expense r a t i o s were compared w i t h average t r u n k c a r r i e r r e s u l t s f o r the years repeated first  1959 t o 1 9 6 3 .  The c o m p a r i s o n was  u s i n g t h e E l e c t r a as t h e base a i r c r a f t .  comparison, h i s t o r i c a l cost data  productivity  In the  agree w e l l w i t h the  c a l c u l a t i o n i n the case o f t h e V i s c o u n t  both j e t a i r c r a f t and t h e E l e c t r a t h e r e l a t i v e f l i g h t  while fo person-  85 TABLE ACTUAL AND PREDICTED  2.5  RELATIVE SEAT-MILE F L Y I N G  PERSONNEL EXPENSES TRANSITION PERIOD  OF  AIRCRAFT  ASM/Equivalent Crew Hour  P r e d i c t e d Seat-Mile Expense R e l a t i v e t o DC-6B  DC-6B  6,671  1.0  -  Viscount  5,958  1.12  1.58  Electra  9,442  0.71  1.0  707  20,484  0.33  0.46  DC-8  20,484  0.33  0.46  Aircraft  P r e d i c t e d Seat-Mile Expense R e l a t i v e t o Electra  Aircraft  A c t u a l Expense R e l a t i v e t o DC-6B 1959 1960 1961 1962 1963  Viscount  1.18  1.10  1.00  0.96  0.80  1.11  1.17  1.29  1.09  -  0.99  0.85  0.74  0.74  -  -  -  -  707  0.58  0.48  0.43  0.40  0.37  0.49  0.51  0.54  0.51  DC-8  -  0.46  0.41  0.37  0.31  0.46  0.48  0.49  0.41  Electra  Source:  Table 2.1 and Appendix B.  A c t u a l Expense R e l a t i v e t o Electra 1960 1961 1962 1963  86 n e l e x p e n s e p e r s e a t - m i l e was' h i g h e r i s b e t t e r agreement i n l a t e r y e a r s misleading  than expected.  s u c h a s 1963 b u t . t h i s i s  b e c a u s e i t may be due p r i m a r i l y t o t h e i n c r e a s e  i n DC-6B c o s t s a s i t became r e l e g a t e d t o s e c o n d a r y , haul  There  short-  routes. The  comparison h i g h l i g h t s t h e d i s t o r t i o n s imbedded i n  aggregate data which r e s t r i c t  their usefulness  the impact o f t e c h n o l o g i c a l change. tivity  i n assessing  E r r o r s ;,in t h e p r o d u c -  c a l c u l a t i o n c o u l d n o t account f o r a d i f f e r e n c e between 25  a c t u a l and p r e d i c t e d c o s t o f f i f t y  per cent.  The d i s p a r i t y  c a n be a t t r i b u t e d t o t h e e f f e c t o f d i f f e r i n g wage r a t e s . Airline introduction,  f l i g h t crews r e a l i z e d , w e l l i n advance o f t h e i r  the p r o d u c t i v i t y increases which j e t a i r c r a f t  would accomplish.  T h i s prompted t h e i r unions t o take a c t i o n .  I t was r e c o g n i z e d ,  f o r example, t h a t t h e h i g h speed o f t h e  DC-8 a n d 70 7 meant t h a t e a c h c r e w w o u l d h a v e t o make p e r h a p s t w i c e a s many f l i g h t s  to f u l f i l l  t h e i r monthly f l i g h t  q u o t a as had been r e q u i r e d w i t h p i s t o n a i r c r a f t . t h e r e f o r e taken  t o reduce monthly f l i g h t  In addi-  i t was g e n e r a l l y t h e s e n i o r c r e w s o f e a c h a i r l i n e  were a s s i g n e d iority  S t e p s were  time and i n c r e a s e  h o u r l y wage r a t e s when t h e j e t s w e r e i n t r o d u c e d . tion,  hour  that  t o t h e new e q u i p m e n t w h i l e t h o s e w i t h l e s s s e n -  (and lower  ton t r a n s p o r t s . f l y i n g personnel  r a t e s o f pay) t o o k o v e r t h e o b s o l e s c e n t This  pis-  i n c r e a s e d t h e r e l a t i v e wage r a t e o f  on j e t a i r c r a f t and d i l u t e d t h e o b s e r v e d  i n g s i n d i r e c t o p e r a t i n g c o s t s below what might have been  sav-  87 e x p e c t e d based on a t e c h n i c a l c a l c u l a t i o n o f p r o d u c t i v i t y . P r o d u c t i v i t y i n c r e a s e s h a d , i n a s e n s e , spawned c o r r e s p o n d i n g wage r a t e i n c r e a s e s .  The phenomenon h a s now b e e n  a l i z e d due t o t h e i n c l u s i o n i n u n i o n c o n t r a c t s o f a crew pay f o r m u l a which t a k e s i n t o account a i r c r a f t  institutionflight speed and  gross weight. iii)  Maintenance Maintenance  an e x p e n s e  c a n n o t be m e a s u r e d d i r e c t l y o t h e r t h a n as  i t e m w h i c h means t h a t p r i c e e f f e c t s c a n n o t be i s o -  l a t e d from t e c h n o l o g i c a l l y — d e t e r m i n e d i n p u t r e q u i r e m e n t s . I t i s a t t h e same t i m e i m p o s s i b l e t o d e f i n e a c o n s i s t e n t o f measurement o f i n p u t s s i n c e maintenance liar  combination of labour, c a p i t a l ,  unit  e f f o r t i s a pecu-  and e x p e r t i s e t h a t has  i t s e l f been changing over t i m e . Maintenance  i s a l s o t h e expense  w h i c h c a n be p r e d i c t e d  w i t h t h e l e a s t d e g r e e o f c e r t a i n t y when new t e c h n o l o g y i s being developed.  T h i s was n e v e r more t r u e t h a n i n t h e t r a n -  s i t i o n to turbine-powered a i r c r a f t . f o r example, cylinder,  engine,  was a s i m p l e r m e c h a n i c a l d e v i c e t h a n t h e e i g h t e e n  supercharged, turbo-compounded p i s t o n engine  p o w e r e d t h e DC-7. age  The t u r b o j e t  that  However, i t o p e r a t e d a t f a r h i g h e r a v e r -  i n t e r n a l t e m p e r a t u r e s and even a f t e r c o n s i d e r a b l e m i l i t a r y  s e r v i c e the t u r b o j e t s remained  l a r g e l y a n unknown q u a n t i t y  when f i r s t d e l i v e r e d t o t h e a i r l i n e s .  Turboprops  added c o m p l e x i t y o f p r o p e l l o r and gearbox  had t h e  u n i t s and i t remain-  88 e d t o be s e e n w h a t e f f e c t t h i s w o u l d h a v e o n t h e i r and maintenance  requirements.  C a p i t a l A i r l i n e s had for  reliability  r e d u c i n g maintenance  shown t h e t u r b i n e ' s  potential  costs with t h e i r experience with  V i s c o u n t i n the m i d - f i f t i e s .  The V i s c o u n t ' s R o l l s - R o y c e  D a r t p o w e r p l a n t s had a h i g h e r t i m e - b e t w e e n - o v e r h a u l the  a i r l i n e ' s . W r i g h t p i s t o n e n g i n e s used on t h e  a n d i n a d d i t i o n i t was  the  (TBO)  than  Constellation  a s i m p l e r task to overhaul the Dart.  The  t u r b i n e s r e q u i r e d o n l y 0.24  man-hours i n o v e r h a u l p e r  ing  h o u r c o m p a r e d t o 0.4 6 man-hours p e r f l y i n g h o u r  fly-  required  26 by t h e p i s t o n e n g i n e s .  The  r e l i a b l e powerplant i n a i r l i n e  t u r b o p r o p was  a l s o a more  s e r v i c e and C a p i t a l f o u n d  that  w h i l e f i f t y - s e v e n per cent of the mechanical delays encountere d on t h e C o n s t e l l a t i o n w e r e e n g i n e - r e l a t e d , o n l y n i n e t e e n p e r 27 c e n t o f V i s c o u n t d e l a y s c o u l d be t r a c e d t o t h e e n g i n e s . The V i s c o u n t ' s D a r t e n g i n e was, p o w e r p l a n t e v e n b e f o r e i t was the  P r a t t and W h i t n e y  first  however, a  u s e d i n t h e U.S.  t u r b o j e t s u s e d on t h e 707  b e e n p r e v i o u s l y u s e d o n l y by t h e m i l i t a r y .  were d e s i g n e d and i n o r d e r t o a c h i e v e t h i s  High  under  TBO  of the f i r s t  8 00 h o u r s w h i l e e v e n  DC-6B h a d a TBO  o f 1800  turbojets  hours.  e n g i n e s o n t h e D C T 8 and  and t h e e n g i n e s u s e d o n The  oper-  short-life  the turbo-compound p i s t o n  h a d a 130 0 h o u r o v e r h a u l l i f e  had  engine  the t u r b i n e s  a t e d a t h i g h t e m p e r a t u r e s and w e r e l o o k e d upon as The  while  and DC^-8  t h r u s t h a d b e e n t h e p r i m a r y o b j e c t i v e when t h e s e  units.  proven  707  was  engines the  j e t s were e x p e c t e d t o  89 improve c o n s i d e r a b l y once t h e i r r e l i a b i l i t y o p e r a t i o n a l use,  h o w e v e r , and  was  b e t t e r m a t e r i a l s and  refinements  were e x p e c t e d t o e x t e n d the l i f e  parts.  1966  and  By  t h e TBO  to  t h a n p i s t o n e n g i n e s c o u l d e v e r have been e x p e c t e d  and  systems maintenance i s admin-  a flight-time-related basis, increased  p r o d u c t i v i t y o f a i r c r a f t w o u l d be p a r t o f d i r e c t o p e r a t i n g c o s t on 707,  DC-8  and  hourly  expected to reduce  t h a n p i s t o n a i r c r a f t and  The  was  the t r e n d toward i n c r e a s e d  w h i c h i m p r o v e d s a f e t y and i n c r e a s e maintenance In order  reliability  more  this i n itself  expected to reduce maintenance requirements. this.however  this  a seat-mile basis.  E l e c t r a a i r f r a m e s were a l s o o f c o u r s e  modern d e s i g n s  to  of  achieve.  i s t e r e d on  ing  hot-section  attained a far greater level  S i n c e most a i r f r a m e  be  of  design  o f some t u r b o j e t s e x c e e d e d 8000 h o u r s  t h e t u r b i n e e n g i n e had  reliability  proven i n  but  would  Counteractcomplexity  inevitably  tended  requirements.  to separate  the e f f e c t s of i n c r e a s e d  seat-  m i l e p r o d u c t i v i t y from i n c r e a s e d h o u r l y maintenance r e q u i r e m e n t d i n t h e i r c o m b i n e d e f f e c t on estimates  direct operating  costs,  w e r e made o f r e p r e s e n t a t i v e b l o c k h o u r m a i n t e n a n c e  28 expenses  of v a r i o u s a i r c r a f t .  experience  o f the  t r u n k s d u r i n g 1967  i n t o a corresponding cal  and  1968,were  the  converted  e x p e n s e p e r a i r b o r n e h o u r b a s e d on  trunk c a r r i e r experience.  the previous  T h e s e d a t a , b a s e d on  estimates  Combining these  typi-  estimates  for a i r c r a f t seat-mile productivity  with  90 provides  an i n d i c a t i o n o f t h e c h a r a c t e r i s t i c s o f t h e  i n u n i t maintenance expenses t h a t took p l a c e i n the t i o n to t u r b i n e technology. 2.6;  The  changes transi-  r e s u l t s are given i n  Table  average t r u n k l i n e c o s t data are i n c l u d e d f o r general  comparison only. The these  m o s t s i g n i f i c a n t f a c t w h i c h comes t o l i g h t  c a l c u l a t i o n s i s that the  as c h e a p t o m a i n t a i n p e r 707  from  l a r g e j e t s are c e r t a i n l y  not  a i r b o r n e h o u r as p i s t o n a i r c r a f t  d i r e c t maintenance expense per hour i s almost t w i c e  o f t h e DC-6B) b u t  (the  that  t h e i r high seat-mile p r o d u c t i v i t y allowed  f o r a reduction i n seat-mile cost of almost f i f t y per D i r e c t m a i n t e n a n c e e x p e n s e s o f t h e DC-8 e n t l y somewhat l o w e r  than  those  of the  cent.  a i r f r a m e were appar707.  The  Electra  on  t h e o t h e r h a n d c o s t a l m o s t t w i c e as much t o m a i n t a i n p e r as t h e DC-8  and  i t s lower p r o d u c t i v i t y r e s u l t e d i n a  e x p e n s e more t h a n  twice t h a t of the  jet.  the cheapest a i r c r a f t to m a i n t a i n per  The  seat-mile  Viscount  f l i g h t hour but  iv)  was  i t s small  c a p a c i t y r e s u l t e d i n s e a t - m i l e c o s t s t h a t were between o f t h e DC-6B and  hour  those  Electra.  Fuel Table  2.7  g i v e s t h e d a t a , s u c h as c a n be  of f u e l consumption per m i l e at s e v e r a l stage  collected,  lengths  eral  a i r c r a f t t h a t were i n s e r v i c e w i t h t h e t r u n k s  1958  and  1961.  "  In Table  2.8  these  for  sev-  between  d a t a have been  converted  91 TABLE  2.6  DIRECT MAINTENANCE EXPENSES TRANSITION PERIOD  OF  AIRCRAFT  (1967-68)  D i r e c t Mtce P r e d i c t e d Ex- Average ExExpense/Air- Engine Hourly pense/ASM pense/ASM borne Hour Per Cent Seat-Mile 1967-1968 1962-1963 (dollars) o f T o t a l P r o d u c t i v i t y Aircraft (cents) (cents)  1  DC-6B  91.60  49%  Viscount  53.83  17,600  .520  .489  17%  11,560  .466  .568  24,930  .554  .543  62,270  .281  .275  62,270  .242  .249  Electra  138.08 .:  •45%  B-707  174.93  ; 46%  DC-8  150.76  55%  Source:  :  •  CAB, A i r c r a f t Operating Cost and Performance Report, V o l . I l l , (August 1969) and Appendix B.  TABLE  2.7  FUEL CONSUMPTION PER AIRCRAFT-MILE TRANSITION PERIOD  FOR  AIRCRAFT  U.S. g a l l o n s per a i r c r a f t - m i l e Average Stage Length (miles) Aircraft  200  400  600  800  1000  1200  1400  1600  DC-6B Viscount Electra Britannia 707-120 DC-8-20/30  2.06 2.16 2.83 -  1.97 1.76 2.10 -  1.75  1.72 1.65 2.11 5.35 5.75  1.60 1.95  1.57 1.95 4.80  1.55  1.8 2.30 6.0 6.4  1.66 -• 1.65 2.02 4.95 5.15  Source:  —  —  -  -  -  4.80  -  1.95 -  F l i g h t planning charts f o r DC-6B, E l e c t r a and B r i t a n n i a except a t 200 m i l e s ; a l l other data from curves constructed from data i n : C i v i l Aeronautics Board, A i r c r a f t Operating Cost and Performance Report, V o l s . I I I - V I (1967-72).  TABLE  2.8  AVERAGE FUEL PRODUCTIVITY OF TRANSITION PERIOD  AIRCRAFT  ASM per U.S g a l l o n Average Stage Length Aircraft  200  400  600  800  1000  1200  1400  1600  DC-6B Viscount Electra Britannia 707-120 DC-8-20/30  36.9 21.3 29.0  38.6 35.2 39.0  43.4  44.2  45.8  47.5  48.4  49.0  45.6 43.5 21.7 20.3  49.7 47.4 24.3 22.6  49.7 49.5 26.3 25.2  51.4  51.4  : 51.4  27.1  27.1  Source:  -  -  -  -  -  -  -  - • -  -' -  Based on Table 2.7 data and the f o l l o w i n g c a p a c i t i e s : DC-6B, 76; Viscount, 46; E l e c t r a , 82; B r i t a n n i a , 100; 707 and DC-8, 130.  -  -  —  93 into seat-miles per gallon using t y p i c a l capacities. f o r the B r i t a n n i a long-range  Data  a r e a l s o i n c l u d e d t o a l l o w comparison  of a  t u r b o p r o p w i t h t h e DC-6B a n d t h e two  long-range  very h i g h r a t e s o f f u e l consumption  o f t h e DC-8  turbojets. The and  707 a r e o b v i o u s ; t h e y consume more t h a n t h r e e t i m e s a s  much f u e l p e r m i l e . a s t h e DC-6B a t a 600 m i l e a v e r a g e length.  What i s more r e l e v a n t ,  t h e y consume a p p r o x i m a t e l y  t w i c e a s much f u e l p e r s e a t - m i l e a s t h e p i s t o n F u e l consumption  stage  o f t h e j e t s appears  to f a l l  transport.  more r a p i d l y  w i t h i n c r e a s i n g s t a g e l e n g t h t h a n i t does f o r t h e p i s t o n o r t u r b o p r o p a i r c r a f t , b u t e v e n a t an a v e r a g e 1400  stage length of  m i l e s t h e y consume a b o u t s e v e n t y p e r c e n t more f u e l p e r  s e a t - m i l e t h a n t h e DC-6B. W h i l e d a t a a r e n o t a v a i l a b l e t o make a t o t a l l y f a c t o r y comparison, consumption accordance  t h e V i s c o u n t appears  satis-  t o have h i g h e r  p e r s e a t - m i l e than the E l e c t r a .  fuel  This i s i n  w i t h e x p e c t a t i o n s due t o t h e s m a l l e r c a p a c i t y o f  the V i s c o u n t and t h e l e s s e f f i c i e n t c e n t r i f u g a l - d e s i g n engines.  The E l e c t r a a p p e a r e d  t o be s l i g h t l y  superior to the  DC-6B i n t e r m s o f s e a t - m i l e s p e r g a l l o n a l t h o u g h i t u s e d bine fuel  ( g e n e r a l l y kerosene)  l i n e used by p i s t o n a i r c r a f t .  r a t h e r than t h e a v i a t i o n  turgaso-  The B r i t a n n i a was e q u a l l y e f -  f i c i e n t i n t h e u s e o f f u e l and p r o d u c e d  a l m o s t t w i c e a s many  s e a t - m i l e s p e r g a l l o n o f f u e l consumed a s t h e j e t a i r c r a f t . This i s the f i r s t c l e a r evidence  i n t h e development o f  commercial a i r c r a f t o f a 'biased'  change i n f a c t o r p r o p o r t i o n s .  The  t u r b o j e t , i n e f f e c t i n g savings  and  maintenance a l s o brought about a s i g n i f i c a n t i n c r e a s e i n  f u e l consumption. cal efficiency  i n f l i g h t crew,  capital,  I n o t h e r w o r d s , an i m p r o v e m e n t i n t e c h n i -  f o r three  f a c t o r s was a c c o m p l i s h e d o n l y w i t h a  halving of technical efficiency  i n the use o f f u e l .  T h r e e r e a s o n s e x p l a i n why t h i s i n c r e a s e i n f u e l s u m p t i o n was n o t c o n s i d e r e d of a l l ,  t h e new t e c h n o l o g y  a c r u c i a l disadvantage.  of a i r travel that the a i r l i n e s  some i n c r e a s e i n o p e r a t i n g  The  s p e e d a n d c o m f o r t o f t h e j e t s c o u l d command  air  f a r e s and operators  hard  pressed  expenses! increased  o f p i s t o n equipment would have been  t o compete by o f f e r i n g l o w e r  fares.  I n any  case the j e t s brought about s i g n i f i c a n t r e d u c t i o n s non-fuel  First  brought w i t h i t such a g r e a t im-  provement i n passenger appeal would have a c c e p t e d  con-  i nthe  components o f d i r e c t o p e r a t i n g expenses and a t t h e  energy p r i c e s t h a t then p r e v a i l e d these  savings  compensated  f o r the i n c r e a s e i n f u e l consumption.  Thus, j e t s had  lower  o p e r a t i n g c o s t s o v e r a l l and i t w o u l d n o t have been p o s s i b l e to o f f e r lower  f a r e s on p i s t o n a i r c r a f t .  m u s t n o t be o v e r l o o k e d used a lower  lower on  i s the fact that turbine  powerplants  grade f u e l than t h e a v i a t i o n g a s o l i n e used i n  p i s t o n engines. turboprop  I n a d d i t i o n , what  Kerosene i s g e n e r a l l y used t o f u e l  a i r c r a f t a n d w h i l e i t s h e a t i n g v a l u e was  slightly  t h a n t h a t o f g a s o l i n e , i t was a l s o c o n s i d e r a b l y  a volume b a s i s .  j e t and  cheaper  95 I n B r i t a i n , i n 1 9 5 4 , t h e p r i c e o f k e r o s e n e was than t w o - t h i r d s that o f a v i a t i o n g a s o l i n e .  less  The p r i c e o f  b o t h f u e l s was l o w i n t h e U.S. i n 1959 when t h e j e t s w e r e b e i n g 29 i n t r o d u c e d ; M i l l e r and Sawers ation gasoline  report  that  of a v i -  This provided  a favourable r e l a t i v e price  turbine  r a t i o o f 0.57:1  tended t o o f f s e t the higher f u e l consumption o f the j e t s .  These p r i c e s  changed v e r y l i t t l e  price of turbine and  the price  was 16. OC p e r U.S. g a l l o n w h i l e t h e p r i c e o f  t u r b i n e , f u e l was 9.125C p e r g a l l o n . a i r c r a f t with  that  f o r many y e a r s ; i n 1967 t h e  f u e l r e p o r t e d b y t h e t r u n k s was b e t w e e n 9.5  10.0<r p e r U.S. g a l l o n w h i l e t h e p r i c e o f a v i a t i o n  gaso-  l i n e was b e t w e e n 15.1 a n d 16.0C p e r g a l l o n . I t i s i n t e r e s t i n g t o note what r e s u l t s from of  the favourable f u e l price  craft.  r a t i o e n j o y e d by t u r b i n e  air-  F o r e x a m p l e , i f t h e p r i c e o f f u e l f o r t h e 707 a n d  DC-8 i n t h e i r f i r s t y e a r o f s e r v i c e of  removal  the a v i a t i o n gasoline,  h a d b e e n t h e same a s  t h e i r average s e a t - m i l e f u e l ex-  pense w o u l d have r i s e n t o a p p r o x i m a t e l y these costs  .794$ a n d • .-84.6£ r e s -  pectively.  Substituting  costs  t h e i r t o t a l DOC p e r s e a t m i l e t o 2.100C a n d  raises  that  f o r their actual  fuel  1.895*- f o r t h e 707 a n d DC-8 i n 1959 a n d 1960 r e s p e c t i v e l y . T h i s r e p r e s e n t s an i n c r e a s e per  i n d i r e c t o p e r a t i n g c o s t o f 20-25  c e n t , s u f f i c i e n t t o make t h e s e a i r c r a f t more e x p e n s i v e t o  o p e r a t e t h a n t h e DC-6B.  96 Summary i)  Technical  Efficiency  The i n d i c e s o f t e c h n i c a l e f f i c i e n c y f o r t h e DC-6B c r a f t and s e l e c t e d T a b l e 2.9 r e v e a l  air-  t u r b o j e t a n d t u r b o p r o p a i r c r a f t shown i n  that:  a) The s u c c e s s f u l  a i r c r a f t of the period,  brought about g r e a t  increases  both f l y i n g personnel labour  the turbojets,  i n the productivity of and maintenance  effort.  The p r o d u c t i v i t y o f c a p i t a l was l e f t v i r t u a l l y u n c h a n g e d c o m p a r e d t o t h e DC-6B b u t t e c h n i c a l  effici-  e n c y i n t h e u s e o f e n e r g y f e l l by more t h a n f o r t y per  cent.  b) The u n s u c c e s s f u l  a i r c r a f t o f t h e p e r i o d , .the t u r b o -  p r o p s , h a d (as r e p r e s e n t e d b y E l e c t r a ) h i g h e r  labour  p r o d u c t i v i t y c o m p a r e d t o t h e DC-6B b u t l o w e r p r o d u c tivity  f o r c a p i t a l and m a i n t e n a n c e .  Energy produc-  t i v i t y was a b o u t t h e same as t h a t o f p i s t o n but of ii)  t h i s could  aircraft,  n o t compensate f o r o t h e r d e f i c i e n c i e s  t h e a i r c r a f t compared t o t u r b o j e t s .  Cost/Quality a) The f i r s t  Trade-offs ' j e t , t h e Comet, was i n i t i a l l y  successful  because o f i t s passenger appeal, i n s p i t e o f i t s high  operating  costs.  self  i n Britain,  Once t h e Comet h a d p r o v e n i t -  t h e A m e r i c a n c a r r i e r s were  willing  97  TABLE 2.9 RELATIVE AVERAGE FACTOR PRODUCTIVITIES OF TRANSITION PERIOD AIRCRAFT ( I n d e x e d t o DC-6B)  A IRC DC-6B  . . FACTOR Flying ^ Personnel Capital Energy  2  .  'Based on Table  1.42  i  3.07  3.07  1 .00  0.88  .;.  0.83  :  0.94  0. 94  0.91  !  1.01  -•  ; ;  1.09  ;  0.57  1.12  ' :  0.94  '. :  1.85  3  4 .00* 1 .00  -  2.5.  Based on Table 2.8,  2.6.  2.4).  400 m i l e s average stage length.  m i l e average stage length.  'Based on Table  DC-8  i  'Assumes Constant U t i l i z a t i o n (Table  1,000  I.B-707  0.89  ;1 .oo  •. 5 Maintenance  . Electra  1 .00  1 ;  Viscount  RA F T  i  o. 55  • ; 2.15  98 t o o r d e r U.S.  j e t s l a r g e l y on t h e b a s i s o f  'quality'  c o n s i d e r a t i o n s b u t t h e r e was c o n s i d e r a b l e u n c e r t a i n ty over  t h e i r expected  b) I n t h e e v e n t , proved and  operating costs.  t h e t u r b o j e t s were a b l e t o o f f e r im-  'quality'  (higher speed, l e s s c a b i n  noise  v i b r a t i o n , escape from t h e e f f e c t s o f weather)  as w e l l as l o w e r  u n i t c o s t s because o f f a v o u r a b l e  factor price relationships. c) The a l t e r n a t i v e  technology,  known t o o f f e r l o w e r  the turboprops,  'quality'  (lower  were  speeds,  g r e a t e r v i b r a t i o n ) and were c o n s i d e r e d o n l y t h e i r o p e r a t i n g c o s t s were e x p e c t e d  t o be  because  lower.  Because o f the h i g h p r i c e o f l a b o u r r e l a t i v e t o t h a t of f u e l ,  the operating costs o f the turboprops d i d  n o t compare f a v o u r a b l y w i t h t h o s e t h e y became iii)  o f t u r b o j e t s and  obsolescent.  Exogenous E f f e c t s a) The U.S.  trunk  c a r r i e r s d i d not generate  transition internally. the commercial success  Rather,  the j e t  i t was p r o m p t e d b y  o f t h e B r i t i s h Comet,  l a t e r a l e f f o r t s of the Boeing  uni-  Co. i n d e v e l o p i n g t h e  707 t a n k e r / t r a n s p o r t , a n d t h e i n i t i a t i v e o f P a n American A i r l i n e s .  The d o m e s t i c t r u n k s  t o be r e l u c t a n t i n n o v a t o r s .  appeared  99 b) The m i l i t a r y ing  i n f l u e n c e was  the time of the t u r b i n e  the a i r c r a f t used c) The  overwhelming transition  i n determinsince a l l  'off-the-shelf military  l a c k o f s u c c e s s o f t h e t u r b o p r o p must  attributed i n part  engines. be  to the absence of m i l i t a r y  velopment a c t i v i t y i n t h i s  area.  de-  CHAPTER I I I THE RECENT PERIOD  INTRODUCTION After  t h e i n t r o d u c t i o n o f t h e 707 a n d DC-8, t h e r e  a t e n year period of technological s t a b i l i t y  during  a i r c r a f t development c o n s i s t e d o f i n c r e m e n t a l the  decade w i t h generation  More s i g n i f i c a n t  which  improvement and  i n t r o d u c t i o n o f designs adapted t o s p e c i f i c  quirements.  change o c c u r r e d  operating r e a t t h e end o f t h e  t h e i n t r o d u c t i o n o f wide-body t r a n s p o r t s o f j e t engines.  was  a n d a new  The c i r c u m s t a n c e s s u r r o u n d i n g  the  development o f s e l e c t e d a i r c r a f t i n t h i s p e r i o d a r e d e s c r i b e d i n P a r t I . o f t h i s Chapter while basis of operating  PART I : The  and r e l a t i v e  EVENTS SURROUNDING VARIOUS AIRCRAFT  technical  efficiency.  THE INTRODUCTION OF  F i r s t Refinements The  can,  f i r s t order  f o r t h e American j e t s , from Pan Ameri-  was f o r a l o n g r a n g e v e r s i o n o f t h e DC-8 w h i c h u s e d t h e  higher  t h r u s t P r a t t and Whitney t u r b o j e t , t h e JT4A  designation on  costs  P a r t I I c o m p a r e s them o n t h e  J75) r a t h e r  t h a n t h e JT3C  the domestic v e r s i o n .  were soon o f f e r i n g  ( J 5 7 ) w h i c h was  Boeing followed  the Intercontinental  t o t h e d o m e s t i c 707-^120.  1  (military standard  D o u g l a s ' l e a d and  (707-320) i n a d d i t i o n  The 707-120 a n d a l l i n i t i a l v e r 10.0  101 s i o n s o f t h e DC-8  had  c a p a c i t i e s o f a b o u t 135  t y p i c a l c o n f i g u r a t i o n w h i l e the l o n g e r f u s e l a g e , had The operated Pan  707-320, w h i c h had  a t y p i c a l c a p a c i t y o f 145  The  w i t h D e l t a and  DC-8  first  entered  this  time  The jet  T h i s new similar  Lockheed's E l e c t r a ,  from  J e t s were f i r s t 1959  entered  used  when A m e r i c a n sole  s e r v i c e but  by  medium-range j e t a i r c r a f t  to displacei t .  first  developed  lease  I n t h e same month t h e  t h e r e Were a l r e a d y new  being designed  on  a 70 7  s e r v i c e i n September,  United A i r l i n e s .  A i r l i n e s began u s i n g 707's. turboprop,  passengers.  i n O c t o b e r , 1958  the t r a n s c o n t i n e n t a l market i n January,  U.S.  a somewhat  j e t t o e n t e r d o m e s t i c s e r v i c e was  by N a t i o n a l A i r l i n e s  American.  1959 on  first  passengers i n  t o a p p e a r was  an e n t i r e l y  new  four-engined  by a l a t e e n t r a n t i n t h e c o m m e r c i a l j e t m a r k e t .  t r a n s p o r t was  the Convair  to t h a t of the Boeing  and  8 80 whose d e s i g n was Douglas a i r c r a f t  very  except  2 t h a t i t used General  E l e c t r i c engines  having  narrower fuselage.  a s h o r t e r and  and was  smaller  D e s i g n e d i n 1955  a short-to-medium range j e t , the a i r c r a f t g r a d u a l l y into its  virtually a direct p a y l o a d was  p r o b l e m s and  smaller.  Convair  entered  medium-range t r a n s p o r t w h i c h had  and  evolved  DC-8  i n a dispute with As  t h e p r o g r a m was service just  707  as  although  encountered e a r l y t e c h n i c a l  t h e p r o g r a m , TWA.  c o s t s i n c r e a s e d and 880  to the  l a t e r became e m b r o i l e d  m a j o r c u s t o m e r on  t h a t the  competitor  overall,  a result  delayed  two  their  production  t o s u c h an  months a h e a d o f a  been d e v e l o p e d  by  extent rival  Boeing.  102 T h i s s e c o n d a i r c r a f t was t h e B o e i n g  720, a s m a l l e r  v e r s i o n o f t h e 70 7 t h a t was e i g h t f e e t s h o r t e r e b u t i d e n t i c a l i n e x t e r n a l appearance. completely and  otherwise  The 720 w a s , i n f a c t , a  d i f f e r e n t design with respect to a i r c r a f t  s t r u c t u r a l s t r e n g t h a n d was o p t i m i z e d  l a n d i n g and t a k e - o f f c y c l e s and lower t h e same e n g i n e s The  f i r s t order  and  i t entered  f o r more  fuel loads.  weight  frequent I t used  t h a t w e r e i n s t a l l e d on.the 707 a n d DC-8. f o r t h e 720 came f r o m U n i t e d A i r l i n e s  service with this carrier  i n 1957  i n J u l y , 1960.  T h e r e was r a p i d l y g r o w i n g demand f o r j e t s e r v i c e i n a l l h i g h e r - d e n s i t y m a r k e t s i n t h e U.S., many o f w h i c h w e r e o f medium stage  l e n g t h , a n d a s a r e s u l t t h e 720 s o l d w e l l a n d p r o v e d  profitable  f o r the manufacturer.  of the trunks:  I t was p u r c h a s e d b y s e v e n  American, Eastern, B r a n i f f , C o n t i n e n t a l ,  N o r t h w e s t and Western as w e l l . a s U n i t e d . 720  doomed t h e c o m m e r c i a l p r o s p e c t s  of the Convair  t h e CV-880 was s o l d t o o n l y t h r e e c a r r i e r s Northeast)  and C o n v a i r  The s u c c e s s  of the  program;  (TWA, D e l t a , a n d  s u s t a i n e d huge l o s s e s on i t s d e v e l o p -  ment. Engine  Improvements The  first  s i g n i f i c a n t improvement i n t h e t e c h n o l o g y  t h e new j e t a i r c r a f t came w i t h t h e d e v e l o p m e n t b y  of  Rolls-Royce  4 o f t h e Conway b y p a s s j e t e n g i n e o r t u r b o f a n had  a fan i n s t a l l e d forward  .  The new e n g i n e  o f compressor s e c t i o n which  f o r c e d a n a i r mass f l o w a r o u n d t h e c o r e o f t h e e n g i n e a bypass duct.  through  T h i s i n c r e a s e d t o t a l a i r mass f l o w a n d d e -  103 creased  t h e v e l o c i t y o f t h e j e t e x h a u s t and had t h e e f f e c t o f  reducing  engine s p e c i f i c  sive efficiency.  f u e l c o n s u m p t i o n by i m p r o v i n g  In addition the turbofan provided  propulgreater  t a k e - o f f t h r u s t t h a n a t u r b o j e t e n g i n e o f s i m i l a r s i z e and had a lower  noise  level.  B o t h B o e i n g and D o u g l a s o f f e r e d t h e Conway o n series,  t h e 707-400 and DC-8-40 r e s p e c t i v e l y .  o f t h e U.S.  turbofan,  appar-  t h e a r r i v a l o f a P r a t t and Whitney The  many c o m p o n e n t s w i t h t h e J T 3 C t u r b o j e t t h a t  already being  u s e d by m o s t o f t h e t r u n k s  r e a s o n a more a t t r a c t i v e a l t e r n a t i v e .  was  and was f o r t h i s In addition the P r a t t  W h i t n e y t u r b o f a n h a d a h i g h e r b y p a s s r a t i o t h a n t h e Con-  way a n d p r o m i s e d t o be more e f f i c i e n t . i n 1961 on t h e S e r i e s - 5 0 Boeing j e t s ,  DC-8  The JT3D a p p e a r e d  and on new m o d e l s o f a l l t h e  t h e 707-120B a n d -320B and t h e 720B.  j e t versions continued  i n production  s u p e r s e d e d by t h e t u r b o f a n  cent  The  turbo-  f o r a time b u t were soon  aircraft.  F u e l c o n s u m p t i o n o f t h e JT3D was a b o u t per  they  t h e J T 3 D , w h i c h became a v a i l a b l e i n 1 9 6 0 .  JT3D s h a r e d  and  However, none  t r u n k s p u r c h a s e d Conway-powered j e t s ;  e n t l y p r e f e r r e d to await  new  l e s s than t h a t o f t h e JT3C.  twenty-five  This, of course,  proved the range-payload performance o f the a i r c r a f t .  imRunway  l e n g t h r e q u i r e m e n t s w e r e r e d u c e d s i g n i f i c a n t l y by t h e i n c r e a s e i n t a k e - o f f t h r u s t a n d an i n c r e a s e i n a v a i l a b l e c r u i s e t h r u s t allowed  f o r a s m a l l i n c r e a s e i n c r u i s i n g speed compared t o t h e  ,. earlier  . 5 versions.  104 It i s interesting to  to note t h e . r e a c t i o n of the  the a v a i l a b i l i t y of t h i s  sense p a r a l l e l e d  i n c r e a s e i n speed f o r i t i n a  the e a r l i e r  situation  compound-powered p i s t o n a i r c r a f t . ^ t u r b o f a n must h a v e g i v e n one  i n v o l v i n g the  The  carrier,  U n i t e d , mixed  originally  craft  o f t h e s p e e d r i v a l r y w h i c h had  ly  i n v e s t m e n t and  t h a t w o u l d be 8  long route, Chicago-Hawaii.  other  engine.  j e t s were f o r the t u r b o f a n  u s e d on  a  A l l their  into  s e r v i c e i n M a r c h , 1961  higher  the  entire  subsequent orders  v e r s i o n s and  i n the  fall  of  for 1960  to the manufacturer f o r  American introduced but  on  their  r e f i t t i n g w i t h JT3D e n g i n e s a t a c o s t o f a b o u t one per plane.  turbo-  particular-  American A i r l i n e s ,  A m e r i c a n began r e t u r n i n g a i r c r a f t  lars  charac-  planned to f i t  hand, undertook a major program t o e q u i p  f l e e t w i t h t h e new  been  , United, b e l i e v e d t h a t the  not a worthwhile  only to a i r c r a f t  feelings  .  t e r i s t i c o f t h e p i s t o n era..  turbofans  the  welcomed the a r r i v a l o f j e t a i r -  7  f a n e n g i n e was  turbo-  appearance of  b e c a u s e they had as t h e e n d  airlines  the turbofan  million  dol-  aircraft  seemed more i m p r e s s e d w i t h  s p e e d o f f e r e d r a t h e r t h a n w i t h any  of the o t h e r  the  advan-  tages. In fact, high  s i n c e 1958  Convair  had  been d e v e l o p i n g  speed t r a n s p o r t equipped w i t h turbofans  for American A i r l i n e s ' the Convair General  990,  Electric  requirements.  an e n l a r g e d turbofans  s h o c k bodies","'"^ was  The  new  new  specifically aircraft  was  v e r s i o n o f t h e CV-880 w h i c h ,  and wing-mounted " a e r o d y n a m i c  designed  a  to obtain higher  speeds  with anti-  than  105 o t h e r j e t s used i n domestic  service.  However, t h e d e s i g n  f e a t u r e s w e r e n o t as e f f e c t i v e as h a d b e e n a n t i c i p a t e d ; a i r c r a f t was  n o t as f a s t as had b e e n h o p e d and p r o v e d  u n e c o n o m i c , i n p a r t b e c a u s e o f i t s s m a l l (106 capacity. purchase  American  t o be  passenger)  A i r l i n e s w e r e t h e o n l y U.S.  carrier  t h e CV-990 a n d p r o d u c t i o n e n d e d as s o o n a s t h e  o r d e r s were The  to initial  filled. setbacks which Convair s u f f e r e d i n t h e i r  to  c a r v e out a share of the commercial  ly  f o r c e d t h e company t o a b a n d o n t h e c o m m e r c i a l  ufacturing industry completely. m i s f o r t u n e and b a d C o n v a i r won  the  j e t market  attempts  subsequent-  a i r c r a f t man-  Through a c o m b i n a t i o n o f  j u d g e m e n t i n t h e CV-8 80 a n d CV-990 p r o g r a m s  the dubious  d i s t i n c t i o n o f l o s i n g more money o n  s i n g l e v e n t u r e t h a n any o t h e r company i n U.S.  history. ''" 1  a Con-  v a i r " s d e p a r t u r e l e f t t h e m a n u f a c t u r i n g i n d u s t r y i n the hands of  j u s t two  f i r m s , B o e i n g and D o u g l a s .  I t was  t h u s e v e n more  h i g h l y c o n c e n t r a t e d than i t had been i n t h e p i s t o n e r a . Short-Haul  Jets  W h i l e most o f the t r u n k s were o p e r a t i n g s h o r t - h a u l s e r v i c e s w i t h turboprop equipment i n the e a r l y was  sixties, i t  becoming c l e a r t h a t j e t a i r c r a f t had g r e a t e r p a s s e n g e r  appeal.  I n E u r o p e t h e F r e n c h C a r a v e l l e was  proving that  c o u l d be o p e r a t e d s u c c e s s f u l l y o v e r s h o r t s t a g e l e n g t h s . T h e r e was  t h u s a g r o w i n g i n t e r e s t i n new  c o u l d serve s h o r t - h a u l markets  transports  where medium-range  e n g i n e d j e t s s u c h as t h e B o e i n g 720 w o u l d  be  which  four-  uneconomic.  jets  106 Boeing  i n i t i a t e d a d e s i g n s t u d y f o r s u c h an  aircraft  i n 1956 a n d D o u g l a s b e g a n a s t u d y o f a s m a l l e r d e s i g n ,  simi-  12 lar  to the Caravelle.  The m a n u f a c t u r e r s  were  reluctant  to proceed,however, because the c h o i c e o f engines a b l e t h r u s t r a n g e was l i m i t e d . lines  n e e d e d an a i r c r a f t  in a  Nevertheless, United  to replace their 13  s i n c e they had n o t ordered a turboprop manufacturer  brought  dered twenty  C a r a v e l l e s i n 1960.  piston  suitAir-  aircraft  a n d when no U.S.  forward a f i r m design p r o p o s a l they o r -  whom o p e r a t e d t h e E l e c t r a  The o t h e r t r u n k s , m o s t o f  t u r b o p r o p , were n o t c o m p e l l e d t o  o r d e r t h e C a r a v e l l e ( h a v i n g t u r b o j e t e n g i n e s , i t was a l r e a d y becoming o b s o l e s c e n t ) and were c o n t e n t t o a w a i t t h e d e v e l o p . . . 14 ment o f a new g e n e r a t i o n o f s h o r t - r a n g e  airliners.  F i r s t t o a p p e a r was t h e de H a v a i l l a n d T r i d e n t w h i c h had b e e n u n d e r c o n s t r u c t i o n i n B r i t a i n  s i n c e 1959.  dent, designed t o f i tthe requirements  of a short-haul car-  rier, 1962.  B r i t i s h European A i r l i n e s , The i n i t i a l  o f f weight  Tri-  had i t s maiden f l i g h t i n  v e r s i o n h a d a p p r o x i m a t e l y t h e same t a k e -  as t h e s e r i e s V I C a r a v e l l e p u t i n t o s e r v i c e by  U n i t e d i n 1961.  I t stypical  a b o u t t h e same, s e v e n t y - s e v e n . three engines  passenger  c a p a c i t y was  also  The T r i d e n t , h o w e v e r , h a d  r a t h e r t h a n two a n d t h e s e w e r e R o l l s R o y c e Spey  t u r b o f a n s r a t h e r than t u r b o j e t s as on t h e F r e n c h In  The  t h e U.S., B o e i n g a g a i n f o u n d  o p p o r t u n i t y t o s t e p ahead o f t h e i r  airplane.  themselves  European r i v a l s  with the i n the  107 s h o r t - h a u l m a r k e t j u s t as e a r l i e r Comet.  t h e y had  Once a g a i n  i t was  prove the d e c i s i v e f a c t o r a l t h o u g h n o t have t o r e l y research. new  turbofan engine, The  1  Boeing to design capacity.  707  The  and  to  of  completely  f o r Boeing's  t h r u s t of t h i s engine  ( 9 , 8 5 0 1 b t ) u s e d on  military  new  (14,0001bt)  the T r i d e n t  enabled  a somewhat l a r g e r a i r c r a f t w i t h g r e a t e r  r e t a i n e d the  larger  the  t h i s t i m e t h e company d i d  Whitney agreed to develop a  higher  T r i d e n t had  American four-engined 727,  against  t h e e n g i n e t h a t was  the JT8D, s p e c i f i c a l l y  c o m p a r e d t o t h e Spey  and  707  f o r t h e i r a d v a n t a g e on a p r o d u c t  P r a t t and  aircraft. ^  w i t h the  j e t s but  a narrower fuselage t h e new  same u p p e r f u s e l a g e  720.  In other  to the T r i d e n t ; i t s g e n e r a l  than  the  Boeing t r a n s p o r t ,  the  s t r u c t u r e u s e d on  respects  range  the  727  c o n f i g u r a t i o n was  was  the  similar  patterned  after  16 this British The ly  t r i j e t w h i c h had 727  was  - like  preceeded i t .  the T r i d e n t - designed  f o r short-to-medium range o p e r a t i o n s  and  specifical-  d i d not  t r a n s c o n t i n e n t a l c a p a b i l i t y a t maximum p a y l o a d . its  capacity i n t y p i c a l mixed-class  However,  c o n f i g u r a t i o n was  s i x p a s s e n g e r s , a l m o s t as g r e a t as t h a t o f t h e g e r s ) and  have  appreciably greater than.that  720  ninety-  (112  of the T r i d e n t ,  passena  f a c t t h a t made i t s e x p e c t e d s e a t - m i l e o p e r a t i n g c o s t s  look  promising.  techni-  The  727  a l s o i n c o r p o r a t e d some i m p o r t a n t  c a l improvements o v e r the engine,  f o r example, had  turbofans  and  first-generation jets; a higher bypass-ratio  i t s f u e l c o n s u m p t i o n was  i t s JT8D  than  earlier  therefore lower.  In  108 a d d i t i o n , B o e i n g h a d d e s i g n e d a new w i n g f o r t h e a i r c r a f t w h i c h i n c o r p o r a t e d a r a t h e r complex  system o f h i g h - l i f t de-  v i c e s t h a t improved a i r f i e l d performance  a n d e n a b l e d t h e 727  t o be o p e r a t e d f r o m many s m a l l e r c i t i e s whose a i r p o r t s n o t c a p a b l e o f accommodating t h e e a r l i e r The  were  jets.  a i r c r a f t was a w e l l t h o u g h t - o u t d e s i g n , i d e a l l y  s u i t e d f o r t h e r e q u i r e m e n t s o f many a i r l i n e s , a n d t h i s i n a d d i t i o n t o t h e g r o w i n g r e p u t a t i o n o f i t s m a n u f a c t u r e r made the  727 a n i m m e d i a t e  commercial s u c c e s s , a t t h e expense o f 17  de H a v a i l l a n d ' s T r i d e n t p r o g r a m . their  development  When B o e i n g  revealed  p l a n s i n December, 1960 t h e y w e r e a b l e t o  announce t h a t E a s t e r n and U n i t e d h a d each o r d e r e d f o r t y craft. five  Two m o n t h s l a t e r A m e r i c a n A i r l i n e s  a n d TWA f o l l o w e d s o o n a f t e r .  v i c e i n 1964 i t became t h e f i r s t  air-  ordered twenty-  When t h e 727 e n t e r e d s e r aircraft  t o be u s e d i n q u a n -  t i t y by. a l l t h e ' B i g F o u r ' t r u n k s s i n c e t h e DC-4. S m a l l e r , t w i n - e n g i n e d a i r c r a f t were a l s o during this  second round o f j e t a i r c r a f t  B r i t i s h were ahead o f t h e A m e r i c a n s .  developed  d e s i g n and a g a i n t h e  The B r i t i s h  Aircraft  C o r p o r a t i o n BAC-111 t w i n j e t made i t s m a i d e n f l i g h t i n A u g u s t , 1963,  j u s t s i x months a f t e r t h e B o e i n g 727 t r i j e t .  a capacity of sixty-six  I t had  passengers and w i t h i t s f l i g h t  crew  r e q u i r e m e n t r e d u c e d t o two w i t h t h e e l i m i n a t i o n o f t h e f l i g h t e n g i n e e r i t a p p e a r e d t o be i d e a l l y of  economic  suited f o rthe provision  s e r v i c e on l o w - d e n s i t y s h o r t - h a u l r o u t e s .  The  a i r c r a f t won e a r l y o r d e r s . i n t h e U.S. e v e n b e f o r e i t f l e w ,  1  • 109  f r o m B r a n i f f i n 1961 carrier,  i n 1962.  the c o m p e t i t i o n  and  n  year.  largest local-service  American A i r l i n e s , they would face  t h e i r routes, ordered lowing  Mohawk, t h e  i n part responding  from the  l a t t e r on  to  some o f  a n o t h e r v e r s i o n o f t h e BAC-111 t h e f o l -  18  In the  same y e a r a d i r e c t l y c o m p e t i t i v e  design  emerged  as D o u g l a s - r e v i v i n g an o l d p r o j e c t - b e g a n f a b r i c a t i o n o f a n o t h e r t w i n j e t , t h e DC-9. a fate similar  The  BAC-111 was  destined  t o t h a t o f t h e T r i d e n t s i n c e t h e U.S.  though i d e n t i c a l  i n c o n f i g u r a t i o n , was  superior engines,  (JT8Ds r a t h e r t h a n RR  t h e more f a m i l i a r D o u g l a s name. of approximately  slightly  1,200  miles  The  and  share  design,  larger,  S p e y s ) and  DC-9,  to  had  carried  w i t h a normal range  typical seating capacity  of  a b o u t s i x t y - e i g h t p a s s e n g e r s , complemented t h e medium-range and  o f f e r e d the advantage of engine commonality w i t h  . Boeing 0  727  the  ... 19 aircraft. W i t h i n w e e k s o f t h e a n n o u n c e m e n t o f t h e p r o j e c t Doug-  l a s r e c e i v e d an o r d e r  f r o m D e l t a and  i t s maiden f l i g h t  i n 1965,  W o r l d and  had  Eastern  p r o j e c t had. i n i t i a l l y s i m i l a r i t y o f t h e DC-9 of the Douglas design  two  signed  by  of the  the  t i m e t h e DC-9  made  'Big Four' trunks,  Trans  for large orders.  been l o o k e d  20  the  u p o n as r i s k y b e c a u s e o f  t o t h e BAC-111, t h e combined w i t h  superior  setbacks  i n the  ment o f t h e B r i t i s h a i r c r a f t s o o n p r o v e d i t t o be one.  Though  a  the  qualities developsuccessful  110 The  'Stetching'  Process  D u r i n g t h e m i d - s i x t i e s , when m o s t o f t h e t r u n k s p u t t i n g i n t o s e r v i c e l a r g e numbers o f new became a p p a r e n t t h a t p a r t o f t h e a c i t y c o u l d be met  was  i n t h e f u t u r e by  the  development of  s h o r t - h a u l use.  Airport  b e c o m i n g a c o n c e r n i n some o f t h e b u s i e r  t e r s i n t h e U.S. creased  jet aircraft, i t  demand f o r a d d i t i o n a l c a p -  l a r g e r a i r c r a f t f o r b o t h l o n g - and congestion  were  departure  and  cen-  i n a d d i t i o n the b e n e f i t s of o f f e r i n g i n -  frequencies  w i t h e x i s t i n g s i z e a i r c r a f t were  becoming l e s s s i g n i f i c a n t s i n c e most major m a r k e t s were 21 served  adequately i n t h i s respect.  several j e t a i r c r a f t designs  I t was  c o u l d be  known t h a t  lengthened to  increase  t h e i r c a p a c i t y w i t h only minor s t r u c t u r a l m o d i f i c a t i o n s the  i n s t a l l a t i o n of higher  fans.  This  a i r l i n e s , who  thrust versions of e x i s t i n g  ' s t r e t c h i n g ' p r o c e s s was would r e c e i v e  thus a t t r a c t i v e  lower seat-mile  costs i n  a i r c r a f t without As extend the ed  the  the  r i s k s of high-cost  previously discussed, fuselage  of the  707-320 w h i c h was 22  t h e d o m e s t i c 707-120. DC-8  p r o g r a m i n 1955,  aircraft, had  been the  l o n g - r a n g e j e t s when t h e y  kept t h e i r promise w i t h the  an  first  to  introduc-  eight feet longer  than the  ver-  identical airframe. five  the  first  promised that a l l projected  s i o n s o f t h e a i r c r a f t w o u l d use  in  could produce  Douglas however, i n announcing had  the  development programs.  B o e i n g had  approximately  turboto  w h i c h w e r e n o t much d i f f e r e n t f r o m t h o s e t h e y a l r e a d y s e r v i c e , as w e l l as t h e m a n u f a c t u r e r s , who  and  s e r i e s o f DC-8's  They but  Ill in  1965  announced a d e p a r t u r e  that three  f r o m t h i s p o l i c y by  advanced, Series-60  revealing  v e r s i o n s o f t h e DC-8  were under  development. F i r s t of these the  t o a p p e a r was  same w i n g as t h e DC-8-50 and  t h e JT3D t u r b o f a n b u t longer. cent,  C a p a c i t y was  t o 195  a more p o w e r f u l  a fuselage  i n c r e a s e d by  I t used version  d e v e l o p e d was  almost f o r t y - f i v e  the u l t r a - l o n g - r a n g e  i n c r e a s e d w i n g s p a n and  of  almost t h i r t y - s e v e n f e e t  passengers i n t y p i c a l c o n f i g u r a t i o n .  v e r s i o n t o be I t had  had  t h e DC-8-61.  per  The  second  DC-8-62.  i m p r o v e d e n g i n e pods b u t i t s 23  f u s e l a g e was The  only s l i g h t l y  u l t i m a t e v e r s i o n was  f u s e l a g e o f t h e -61 -62. was  Although  longer  than the standard  t h e DC-8-63 w h i c h c o m b i n e d t h e  b o t h B r a n i f f and  lowest  two  versions  and  -63  the  t i m e o f t h e i r i n t r o d u c t i o n i n 1967-68.  w e r e p u r c h a s e d o n l y by all  t h a t was The  s e a t - m i l e c o s t s o f any  aircraft However,  v e r s i o n o f the  tional capacity. forty-two  707  They c o n s i d e r e d  lengthening  f e e t t o p r o d u c e an a i r c r a f t  would have had  the  at  United,  e a r l i e r v e r s i o n s o f the  t o a i r l i n e s w h i c h c o u l d use  a  they  DC-8.  Boeing r e a l i z e d the economic a t t r a c t i o n s of a ed'  i t  DC-8-61  D e l t a , E a s t e r n , N a t i o n a l , and  o f whom a l r e a d y o p e r a t e d  the  U n i t e d p u r c h a s e d the -62,  p a r t i c u l a r a t t r a c t i o n to the domestic t r u n k s . the  long  w i t h the aerodynamic improvements of  the l a r g e c a p a c i t y of the other  had  DC-8-50.  the  'stretchaddi-  707-320  ( t h e 707-820) w h i c h  even g r e a t e r c a p a c i t y than the  DC-8-61/63's.  However, b e c a u s e o f t h e g r e a t e r sweepback o f the  707 s wing ?  by  112 ( w h i c h demanded g r e a t e r  r o t a t i o n on  c o n f i g u r a t i o n of the a i r c r a f t , ficient tail  clearance  on  take-off)  Boeing could  and  not  the  general  obtain  suf-  a stretched version without  redesign-  24 ing  the  landing  modifications  gear.  The  extensive  structural  design  r e q u i r e d w o u l d h a v e demanded a s a l e s p r i c e  for  25 the  stretched  707  higher  t h a n t h a t o f t h e DC-8-61.  c a s e , B o e i n g f o u n d t h a t t h e r e was j e c t because the a i r l i n e s and  to  d i d not want such a l a r g e  the  time,  pro-  aircraft  long-range  B o e i n g were o c c u p i e d w i t h  s u c c e s s f u l 7 27 p r o g r a m and were g o i n g ahead w i t h of t h i s a i r c r a f t . intended  trans-  and  the  carriers'  new  to enlarge  c o m b i n a t i o n had  inevitable desire The  i n i t i a l . 727  incorporated  727 The  new  the  considerable  727-200 was the  thrust.  higher,  due  to the  l o g i c a l i n view of  o f f e r e d t h e a i r l i n e s an  increases  the air-  twenty f e e t longer  than  727-100) b u t  otherwise  and  engines first  l e s s range than  i n p a y l o a d and  about the  the  empty w e i g h t .  t y p i c a l c a p a c i t y o f 135  a i r c r a f t with  not  in  h o w e v e r , so i t had  727-200, w i t h  version  initial  T a k e - o f f . w e i g h t of the  increase  they  growth poten-  only minor s t r u c t u r a l m o d i f i c a t i o n s  no  that  apparently 26  727,  for incremental  (since designated  of s l i g h t l y higher 727-200 was  the  p r o j e c t seemed o n l y  craft capacity.  highly  a n n o u n c e d i n A u g u s t , 1965  A l t h o u g h t h e company h a d  airframe  their  the development of a s t r e t c h e d  from the o u t s e t  e n g i n e and  standard  any  Douglas. At  the  i n t e r e s t i n the  they abandoned t h e market f o r s t r e t c h e d  ports  tial  little  In  passengers,  same c a p a c i t y  113 as  t h a t o f t h e 70 7,  capable  o f o p e r a t i n g on medium  stage  l e n g t h s w i t h s e a t - m i l e c o s t s t h a t . w e r e n o t much h i g h e r what t h e e a r l i e r The  j e t s could achieve  a i r c r a f t entered  on l o n g - h a u l  service i n late  flights.  1967 a n d s o o n  achieved  overwhelming p o p u l a r i t y w i t h the domestic t r u n k s . Delta f i n a l l y placed  The  When  i t i n s e r v i c e i n 1972 i t f o r m e d a m a j o r  p a r t o f the f l e e t o f every i n a few y e a r s  than  trunk a i r l i n e  i n t h e U.S..  t h e 727 h a d o u t s o l d a l l o t h e r  smaller, t w i n - j e t designs  With-  jet transports.  were a l s o  enlarged.  I n f a c t , D o u g l a s h a d t h e ' s t r e t c h e d ' DC-9-30 f l y i n g  just  e i g h t months a f t e r t h e s t a n d a r d  service  i n November, 1965. initial  lift  I t was f i f t e e n  v e r s i o n and had i t s t y p i c a l  to approximately higher  DC-9-10 h a d e n t e r e d  increased  The a i r c r a f t h a d  i n c r e a s e d w i n g s p a n , a n d new h i g h -  s i m i l a r t o those  E a s t e r n A i r l i n e s was f i r s t  than the  seating capacity  n i n e t y - s i x passengers.  t h r u s t JT8D e n g i n e s ,  devices  feet longer  u s e d on t h e B o e i n g 727.  to place  t h e DC-9-30 i n s e r v i c e  i n M a r c h , 196 7 a n d i t was e v e n t u a l l y o p e r a t e d t r u n k c a r r i e r s , . D e l t a and N o r t h e a s t .  by two o t h e r  Another v e r s i o n  having  e v e n g r e a t e r c a p a c i t y , t h e DC-9-40, became a v a i l a b l e i n 196 8 b u t was n o t p u r c h a s e d b y a n y o f t h e U.S.  trunks.  A r a t h e r l a t e e n t r y i n t o t h e s h o r t - h a u l m a r k e t was made b y B o e i n g w i t h y e t a n o t h e r a i r c r a f t h a v i n g , t h e upper f u s e l a g e  design  a s t h e 707-720-727 f a m i l y .  p o r t was t h e 737 w h i c h was d e s i g n e d  same This  trans-  t o u t i l i z e many o f t h e  c o m p o n e n t s o f t h e l a r g e r 727; i t u s e d t h e same JT8D e n g i n e s  114 and  i t s w i n g d e s i g n was  adapted  directly  A s i d e from the p o s i t i o n o f i t s engines m o u n t e d - and 737 was petitive was  v e r y s i m i l a r t o t h e DC-9.  were  727.  wing-  f u s e l a g e , the  They w e r e d i r e c t l y  i n b o t h p e r f o r m a n c e and e c o n o m i c s .  the f i r s t  t h a t of the  - which  i t s somewhat s h o r t e r and w i d e r  The  com-  Boeing  737  a i r c r a f t t o be o f f e r e d f r o m t h e e a r l y s t a g e s i n  b o t h s t a n d a r d and was  from  soon devoted  'stretched' versions although entirely  to the l a t t e r .  t i m e , s p o n s o r s h i p o f t h e new came, n o t f r o m one  p r o j e c t and  o f t h e U.S.  production  A l s o f o r the the i n i t i a l  c a r r i e r s , but from a  first  order foreign  a i r l i n e , L u f t h a n s a o f Germany. The marketplace  comparative  apathy  which  Boeing  upon i n t r o d u c t i o n o f t h e 737  p r i s i n g because most o f t h e a i r l i n e s  faced i n the  was  t h a t had  not unduly  U.S. sur-  need f o r such 27  an a i r c r a f t w e r e a l r e a d y c o m m i t t e d t o : t h e D o u g l a s However, U n i t e d A i r l i n e s had n o t p u r c h a s e d ed f o r t y  737-200's t o c o m p l e m e n t t h e i r  DC-9.  t h e DC-9  and  far larger fleet  orderof 28  727's s o o n a f t e r L u f t h a n s a ' s U n i t e d ' s o r d e r was  o r d e r f o r 'the s t a n d a r d m o d e l .  subsequently  i n c r e a s e d to s e v e n t y - f i v e but  the only other trunk to purchase  t h e 737 was  Western  Airlines  although t h e . a i r c r a f t sold w e l l to l o c a l - s e r v i c e c a r r i e r s to  many o p e r a t o r s o u t s i d e t h e  Reductions An  i n the F l i g h t  and  U.S..  Crew  i n t e r e s t i n g c o n f l i c t which  t i o n b e t w e e n t e c h n o l o g i c a l c h a n g e and s u r f a c e d soon a f t e r U n i t e d had  h i g h l i g h t s the institutional  signed i t s I n i t i a l  interacforces  order f o r  115 the  737.  Boeing had designed  a two-man f l i g h t engineer's the  t h e a i r c r a f t f o r o p e r a t i o n by  c r e w , t h e same a s t h e DC-9, w i t h t h e f l i g h t  station eliminated.  large fuselage  Unfortunately  d i a m e t e r o f t h e 737 g a v e t h e a i r c r a f t a  r o o m i e r c o c k p i t t h a n t h e DC-9 a n d t h e u n i o n carrier's  f o r United,  representing the  f l i g h t crews, the A i r ; L i n e P i l o t s A s s o c i a t i o n  became d e t e r m i n e d t o p l a c e a t h i r d man o n t h e f l i g h t The  i s s u e was a p p a r e n t l y  (ALPA),  deck.  n o t o v e r any t e c h n i c a l r e -  q u i r e m e n t s i n c e i t was n o t a t a l l c l e a r w h a t t h e t h i r d  crew  member w o u l d d o , a s i d e f r o m o b s e r v e t h e a c t i o n s o f t h e o t h e r two  from a p o s i t i o n w e l l behind  c o c k p i t windows.  29  . The u n i o n ,  the f l i g h t  instruments  . h o w e v e r , was r e s o l u t e i n i t s  p o s i t i o n a n d u l t i m a t e l y was s u c c e s s f u l i n n e g o t i a t i o n s the a i r l i n e . the  As a r e s u l t U n i t e d ' s  737 a r e a p p r o x i m a t e l y  and  with  crew expenses p e r hour on  t h e same a s o n t h e i r  727's a n d t h e  seat-mile operating costs o f the a i r c r a f t s u f f e r i n comparison w i t h t h o s e  o f DC-9's o p e r a t e d  by o t h e r  trunks. ^ 3  A r e l a t e d i s s u e w h i c h was s e t t l e d more with respect  satisfactorily  t o e c o n o m i c e f f i c i e n c y was t h e r e d u c t i o n i n  f l i g h t c r e w r e q u i r e m e n t s on l o n g - r a n g e a i r c r a f t b r o u g h t a b o u t by  the i n t r o d u c t i o n o f i n e r t i a l n a v i g a t i o n equipment.  innovation allowed  the a i r c r a f t navigator  This  t o be r e p l a c e d by  e l e c t r o n i c e q u i p m e n t w h i c h p e r f o r m e d h i s t a s k more a c c u r a t e l y and  a t lower  tic carrier  cost. to order  A m e r i c a n A i r l i n e s were t h e f i r s t inertial  domes-  n a v i g a t i o n systems i n 1966.  They h a v e s i n c e become s t a n d a r d  equipment on long-range - a i r -  116 c r a f t , allowing the standard  crew complement on such  aircraft  t o be r e d u c e d f r o m f o u r t o t h r e e w i t h a c o r r e s p o n d i n g t i o n i n f l i g h t personnel  reduc-  expenses.  Wide-Body T e c h n o l o g y One o f t h e c l e a r e s t c a s e s i n w h i c h p o t e n t i a l s a v i n g s i n s e a t - m i l e c o s t s p r o v e d t o be an i n a d e q u a t e p r e d i c t o r o f t h e demand f o r a new a i r c r a f t was t h e f a i l u r e DC-8's t o p e n e t r a t e ment.  the trunk  of the stretched  c a r r i e r s ' m a r k e t f o r new  equip-  T e c h n i c a l l y t h e DC-8-61/6 3 a i r c r a f t w e r e s u p e r i o r t o  a l l other  long-range t r a n s p o r t s because t h e i r p r o d u c t i v i t y  was a l m o s t f o r t y - f i v e p e r c e n t h i g h e r t h a n t h a t o f t h e s t a n dard  DC-8 w h i l e  t h e i r t o t a l o p e r a t i n g c o s t s were o n l y  some  31 ten per cent higher.  The new j e t s c o u l d t h e r e f o r e  s i g n i f i c a n t cost savings  on h i g h - d e n s i t y  offer  r o u t e s , a n d i t was  first  e x p e c t e d t h a t f a r e s w o u l d be r e d u c e d when t h e y e n t e r e d 32 . . . service. Although the fare reduction never m a t e r i a l i z e d , this  served  o n l y t o make t h e s t r e t c h DC-8's more p r o f i t a b l e  for t h e i r operators.  The DC-8-61 met w i t h some r e s i s t a n c e ,  however, p a r t l y because i t s h i g h n o i s e bar i t from o p e r a t i o n s carriers  levels threatened  i n t o New Y o r k , a n d p a r t l y b e c a u s e  those  t h a t u s e d B o e i n g 707's may n o t h a v e r e a l i z e d any  appreciable  savings  due t o t h e h i g h i n i t i a l  i n g an e n t i r e l y new a i r c r a f t t o t h e i r  costs of introduc-  fleets.  New d e v e l o p m e n t s i n c o m m e r c i a l a i r c r a f t had  to  technology  a f a r more p r o f o u n d i m p a c t o n t h e D o u g l a s s a l e s c a m p a i g n  f o r t h e DC-8-61/63 s e r i e s .  Once a g a i n  t h e U.S. m i l i t a r y  were  117 to  e x e r t , i n d i r e c t l y , a m a j o r i n f l u e n c e on e v e n t s  c r a f t manufacturing by  the A i r Force  industry.  i n the  A competition held i n  1964  f o r the design of a large t r a n s p o r t w i t h  large-diameter fuselage capable  fan  engines  and L o c k h e e d .  In a d d i t i o n ,  truly significant  since the l a t e  1 9 5 0 ' s ; t h e y had  over  s e r i e s and p r o m i s e d  turbo-  These  advance i n engine almost  engines  design  twice the t h r u s t of  twenty p e r c e n t compared t o the e a r l i e r  turbofans.  E l e c t r i c w e r e s e l e c t e d as  c o n t r a c t o r s i n t h e c o m p e t i t i o n a n d w e n t on military  to produce  t r a n s p o r t , the l a r g e s t a i r c r a f t i n the  Thus, i n the f a l l  o f 1965,  by  r e d u c t i o n s i n f u e l consumption of  L o c k h e e d and G e n e r a l  C-5A  de-  l a r g e new  E l e c t r i c and P r a t t and W h i t n e y .  were the f i r s t  t h e JT3  had  w i t h h i g h e r b y p a s s - r a t i o s had b e e n d e v e l o p e d  both General  B o e i n g was  left  major the  world.  free to press  ahead  w i t h d e s i g n s t u d i e s o f a c o m m e r c i a l v e r s i o n o f t h e i r C-5 posal. ly  Their design, designated  from the m i l i t a r y  an e n g i n e  study  immediately.  a  of h a n d l i n g o u t s i z e cargo  r e s u l t e d i n e x t e n s i v e r e s e a r c h and p r e l i m i n a r y a i r f r a m e s i g n s by B o e i n g  air-  t h e 747,  came a l m o s t  t h o u g h t h e company d i d n o t  Both  Rolls-Royce  and P r a t t  prodirect-  select  and  33 Whitney were c o n t e n d e r s  but the engine  e v e n t u a l l y was  the l a t t e r manufacturer's  g i n e w h i c h had  been developed  engine  r e s e a r c h had When t h e  i c a n was  at f i r s t  747  after  been purchased p r o j e c t was  w h i c h was  chosen  JT9D d e s i g n , an  the r i g h t s from the  to t h e i r 34  C-5  military.  d i s c u s s e d i n 1966,  the only a i r l i n e to express  en-  any  Pan  Amer-  interest;  118 most o t h e r for  the  airlines  traffic  f e l t t h a t t h e a i r c r a f t w o u l d be  t h a t was  too  large  a n t i c i p a t e d f o r 1969-70 when t h e  74 7  35 w o u l d become a v a i l a b l e f o r s c h e d u l e d s e r v i c e . f e l t t h a t they needed the a i r c r a f t t o counter  Pan the  American  competition  they would face  from c a r r i e r s o p e r a t i n g  although  becoming c l e a r t h a t t h e a i r l i n e s w h i c h had  i t was  c h a s e d t h e l a t t e r a i r c r a f t w e r e no fares.  longer  196 6  placed  (simultaneously an o r d e r  s i z e o f t h e new C-5A, 747  with  the  a i r c r a f t was  test flight  to Boeing's f i r s t c r a f t was  t o be  on  i t was  the order  American  revealed  that  of t h a t of passengers.  month e a r l i e r .  j e t t r a n s p o r t , the  it  speed the  optimum c r u i s e a l t i t u d e w h i c h w o u l d  to accomplish  gross  74 7  c r u i s i n g speed than f i r s t - g e n e r a t i o n  t o f l y a b o v e t h e c r o w d e d a i r w a y s u s e d by  In order  air-  l a r g e i n terms of  r i v a l r y o f the p i s t o n e r a , B o e i n g were a l s o d e s i g n i n g  a higher  had  Compared  I n what r e s e m b l e d a r e n e w a l o f the  t o have a s l i g h t l y h i g h e r  The  7 0 7 - 1 2 0 , t h e new  t i m e s as  the  the  l a r g e as t h e DC-8-61 w h i c h  j u s t one  almost three  take-off weight.  j e t s and  major  announced i n  news t h a t Pan  for twenty-five)  t h u s a l m o s t t w i c e as  made i t s f i r s t  beAm-  for their  were f i n a l l y  p r o v i d i n g a maximum c a p a c i t y o f 490 was  747  routes.  When d e t a i l s o f t h e d e s i g n April,  aircraft  pur-  reduce  a n t i c i p a t e d b e c a u s e o f Pan  erican's desire for a high-capacity international  DC-8  intending to  During the n e g o t i a t i o n s which f o l l o w e d the  came e v e n l a r g e r t h a n f i r s t  had  t h e s e r i e s -60  t h i s the  747  had  the  707  and  allow DC-8.  t h i n n e r , more h i g h l y  119 s w e p t w i n g s , a s t r o n g e r f u s e l a g e s k i n and more p r e s s u r i z a t i o n e q u i p m e n t ; i t s empty w e i g h t was otherwise  therefore higher  than  would  have been r e q u i r e d .  I t was  p r i m a r i l y the passenger appeal  of the  747's  wide-body f u s e l a g e t h a t e v e n t u a l l y f o r c e d most c a r r i e r s f o l l o w i n g Pan  A m e r i c a n ' s l e a d and  o r d e r t h e new  e a r l i e r than they would have p r e f e r r e d . even b e f o r e  t h e p r o j e c t had  were doubts e x p r e s s e d  aircraft  For t h i s  been o f f i c i a l l y  to  reason,  announced  there  about the market l o n g e v i t y of the  b o d y DC-8's w h i c h some a i r l i n e o f f i c i a l s c o n s i d e r e d  long-  the  "Pot-  36 e n t i a l DC-7's o f t h e m a j o r U.S. 747  and  j e t age."  Trans World, the  i n t e r n a t i o n a l c a r r i e r , were second t o o r d e r  i n the f a m i l i a r  u s e d i n b o t h d o m e s t i c and  W i t h i n a y e a r o f Pan i n January  1970,  r u a r y , 19 70,  and A m e r i c a n A i r l i n e s  p l a c e d t h e new  ideally  Due  to the  The lines'  747's a l t h o u g h  suited for their short-haul  the route  on.par  DC-8-61's.  f i r s t y e a r o f 747  apprehension  with  competitive  s y s t e m and w o u l d h a v e s e a t - m i l e o p e r a t i n g c o s t s o n l y w i t h the c a r r i e r ' s  trans-  f o l l o w e d a week l a t e r  p r e s s u r e , even E a s t e r n A i r l i n e s o r d e r e d not  operations  began t r a n s c o n t i n e n t a l s e r v i c e i n Feb-  a i r c r a f t l e a s e d f r o m Pan A m e r i c a n .  a i r c r a f t was  aircraft  A m e r i c a n ' s i n a u g u r a t i o n o f 747  TWA  the  international service.  n i n e t r u n k c a r r i e r s had  port i n service.  the  'domino' p a t t e r n t h i s meant t h a t  o t h e r d o m e s t i c t r u n k s w o u l d f o l l o w s i n c e t h e TWA w e r e t o be  other  o v e r Pan  operations confirmed Am's  the  air-  f o r c i n g premature i n t r o d u c -  120 tion  o f t h e huge a i r c r a f t .  f a c t o r on  During  the average l o a d  74 7 o p e r a t i o n s i n t r u n k l i n e s e r v i c e was  cent even though, w i t h - t h e and  19 70,  39.1  i n s t a l l a t i o n of on-board  stand-up b a r s , the t y p i c a l  per  lounges  s e a t i n g c a p a c i t y had  been 37  reduced  t o 341 p a s s e n g e r s  Nevertheless  and  two  years, l a t e r  b e e n u n d e r way  body t r a n s p o r t s even b e f o r e B o e i n g w i t h the f i r s t  f l i g h t of the  D o u g l a s was  747  erican Airlines  e r e d b u i l d i n g an a i r c r a f t  ushered  The  specification  The  but  a somewhat l a r g e r a i r c r a f t engine  than  h i g h b y p a s s - r a t i o t u r b o f a n t h a t was  this, with  s e l e c t e d was  engine  the  a commercial  w h i c h powered  de-  the  transport. airlines  continued, Lockheed r e t u r n e d to the commercial a i r c r a f t  Both  three CF-6,  A t about t h i s time, w h i l e d i s c u s s i o n s w i t h the  after  in  DCr'10 g r a d u a l l y  another  military  Am-  once c o n s i d 38  o f t h e 747  r a t h e r than  C-5A  designated  reverted to a smaller,  medium-range d e s i g n .  of the General E l e c t r i c  era  1969.  engines  rivative  i n t h e new  company h a d  near the s i z e  The  wide-  t h a t h a d b e e n i s s u e d by  1966.  two.  well  for other  a t w o r k on a d e s i g n s t u d y ,  in April,  t h e l i g h t o f t h e new  had  i n early  t h e DC-10, t o meet a r e q u i r e m e n t  evolved into  317..  t h e p a s s e n g e r a p p e a l o f t h e w i d e - b o d y was  r e c o g n i z e d ; d e s i g n s t u d i e s had  twin-engined,  to  market  a t e n year absence w i t h a competing d e s i g n p r o p o s a l . 39 designs  followed a similar  time d e s i g n s were f i n a l i z e d most i d e n t i c a l ,  differing  evolutionary path  i n 196 8 t h e two  and by  the  a i r c r a f t were a l -  o n l y i n aerodynamic d e t a i l  and  in  121 the f a c t t h a t the Lockheed  proposal included Rolls-Royce  turbofans. After  l o n g n e g o t i a t i o n s o v e r s a l e s p r i c e s and  d e s i g n r e v i s i o n s , Douglas  won  the f i r s t  order from  several  American  Airlines  i n F e b r u a r y , 196 8.  E a s t e r n and TWA  purchase  Lockheed's a i r c r a f t ,  the L.1011, f o r c i n g Douglas  reduce  t h e p r i c e o f t h e DC-10  order. its  to to  i n order to obtain United's  A l t h o u g h t h e L . 1 0 1 1 was  a t one  d e v e l o p m e n t t h a n t h e DC-10, L o c k h e e d  difficulties  elected  c a u s e d i n p a r t by  s t a g e f u r t h e r ahead i n encountered  t e c h n i c a l and  lems a t R o l l s - R o y c e , e n a b l i n g Douglas 40  financial  financial  prob-  to offer e a r l i e r  deliv-  .  eries.  D e l t a A i r l i n e s gave t h e i r major  order to  Lockheed  b u t t o o k d e l i v e r y o f some DC-10's b e f o r e t h e y o b t a i n e d t h e L.1011.  Most o f the o t h e r t r u n k s purchased  the Douglas  air-  craft. The  DC-10  and Los A n g e l e s ) 74 7 h a d  entered commercial i n August,  1971,  (between  both wide-body t r i j e t s  mately  270  747.  T h e i r d e s i g n range  Chicago  e i g h t e e n months a f t e r  f i r s t been o p e r a t e d i n s c h e d u l e d s e r v i c e and  months a h e a d o f t h e a p p e a r a n c e of  service  of the L.1011.  The  eight capacity  i n typical configuration i s approxi-  passengers, about  100  passengers  a t maximum p a y l o a d  fewer than  off  weight, about  for  the f i r s t  the  (2,100-2,600  m i l e s ) i s much l e s s t h a n t h a t o f t h e B o e i n g t r a n s p o r t m i l e s ) so t h e DC-10  the  (6,000  and L . 1 0 1 1 h a v e a much l o w e r g r o s s t a k e 430,000 p o u n d s c o m p a r e d t o 713,000 p o u n d s  747's.  T h e i r c r u i s i n g s p e e d s and c r u i s e  alti-  122 tudes are m a r g i n a l l y  PART I I : The  lower than those o f the l a r g e r  CHANGES I N TECHNICAL E F F I C I E N C Y AND OPERATING COSTS  General Trend The  changes i n t r a n s p o r t  w h i c h have t a k e n p l a c e s i n c e 59  aircraft.  a i r c r a f t and t h e i r t e c h n o l o g y  t h e i n t r o d u c t i o n o f j e t s i n 1958-  have been o f an e v o l u t i o n a r y  nature, a t least u n t i l the  i n t r o d u c t i o n o f wide-body a i r c r a f t i n 1970. year period  This  sixteen  o f d e v e l o p m e n t t h u s h a d some o f t h e c h a r a c t e r i s -  t i c s o f t h e postwar t e c h n o l o g i c a l  plateau  i n the p i s t o n e r a .  T h e r e w e r e d i f f e r e n c e s , h o w e v e r , i n t h e manner i n w h i c h  state  of  Unlike  the  t h e a r t t e c h n o l o g y was a p p l i e d l a t t e r period  to a i r c r a f t design.  i n w h i c h t h e r e was a s e r i e s o f i n c r e m e n t a l  c h a n g e s t o l o n g - h a u l e q u i p m e n t , t h e 1960's saw t h e d e v e l o p m e n t o f a d v a n c e d medium-;<and s h o r t - r a n g e a i r c r a f t w h i l e  the long-  range d e s i g n s remained e s s e n t i a l l y unchanged. Fuselage increasing  ' s t r e t c h i n g ' became t h e s t a n d a r d , p r a c t i c e f o r  a i r c r a f t capacity  j u s t as i t h a d i n t h e p i s t o n e r a .  T h e r e was a l s o a s i m i l a r p a t t e r n the  i n engine development between  two p e r i o d s b e c a u s e o n c e a g a i n many o f t h e s u c c e s s f u l  air-  c r a f t s h a r e d t h e same p o w e r p l a n t ; t h e P r a t t & W h i t n e y T w i n Wasp a n d W r i g h t C y c l o n e s e r i e s o f p i s t o n e n g i n e s w e r e by the  t h e J T 3 C / J T 4 A a n d JT8D s e r i e s o f j e t e n g i n e s . end o f t h i s t r e n d w i t h  signs  19 70  replaced marked  t h e i n t r o d u c t i o n o f new e n g i n e d e -  from three m a n u f a c t u r e r s .  123 The i s not  t r e n d i n o p e r a t i n g c o s t s over the  so e a s i l y s u m m a r i z e d .  representative aircraft, r a t h e r confused does l i t t l e  Examination of cost data shown i n F i g u r e  For  changes  example, the Boeing  and  acquisi-  727-100,  i n l a r g e numbers by m o s t o f t h e t r u n k s h a d  operating costs s i g n i f i c a n t l y higher The  for  results i n a  to e x p l a i n the p a t t e r n of trunk c a r r i e r  operated  designs.  3.1,  p i c t u r e of the e f f e c t s of d e s i g n  t i o n s over the p e r i o d . w h i c h was  as  1968-1972 p e r i o d  DC-8-61, w h i c h was  than those  of  other  not a g r e a t commercial  suc-  41 cess  i n t h e U.S.,  had  very  low  seat-mile costs.  s e a t - m i l e o p e r a t i n g expenses alone the r e l a t i v e Two be  success  or f a i l u r e of a design  during this  d i r e c t r e l a t i o n to the  versatility. former but  e r a t i o n s o f r o u t e d e n s i t y and T h e i r e f f e c t s were i g n o r e d c r a f t technology the h i g h - d e n s i t y ,  Both of these  i n v o l v e the  bear  long-haul  of  operations  of the  ' B i g F o u r ' dom-  of innovation.  T h i s was  c r u i s i n g s p e e d o f f e r e d by  short-haul a i r c r a f t disappeared.  Boeing,  b u i l t a v a r i e t y of a i r c r a f t a l l of which shared seating layout.  air-  c l e a r t h a t i n the e a r l y p e r i o d  t r u e i n the j e t era s i n c e the d i f f e r e n c e s i n the  o f p a s s e n g e r c o m f o r t and  a  length.  i n the e a r l i e r examination  b e c a u s e i t was  are  further consid-  v a r i a t i o n of stage  i n a t e d the e v o l u t i o n a r y process  i n t e r i o r and  period.  i n an e v a l u a t i o n o f e c o n o m i c c h a r a c t e r i s t i c s  a i r c r a f t - m i l e c o s t s and  and  are a poor p r e d i c t o r of  f a c t o r s i n a d d i t i o n o f s e a t - m i l e c o s t s w h i c h must  considered  longer  Obviously  C r u i s i n g speed  no level  long-haul  f o r example, t h e same c a b i n characteristics  124  Figure 3.1 Seat-Mile Cost Range o f Selected J e t A i r c r a f t , 1967-'  S o u r c e : C i v i l Aeronautics Board, A i r c r a f t Operating Cost and Performance R e p o r t , V o l . I l l (July 1971);Vol.VI (July 1973).  (August 1969);Vol.V  125  of a l l j e t a i r c r a f t was  were v e r y  p r i m a r i l y d e p e n d e n t on  s i d e r a t i o n s s u c h as s t a g e f a c e d as i m p o r t a n t that versatility  stage  and  s h o r t - h a u l DC-9 stances  length.  l e n g t h and  Operational  choice.  s u c h as t h e  727,  l o n g - h a u l DC-8,  can  T h i s meant  DC-9  on s h o r t - h a u l o p e r a t i o n s and  higher than  DC-8  ( e s p e c i a l l y t h e DC-8-61) on  comparison d e p i c t e d i n Figure  3.2  higher than  the  727  may  those of  i n the  still  be  economic o v e r a l l .  This i s because the c o s t s of the  main c l o s e t o those  o f t h e two  s p e c i a l i z e d designs  enable  length.  an a i r l i n e t o o p e r a t e  v a r i e t y of routes which would otherwise both ing  t h e DC-9 total  and  of  the  the cost more  72 7 r e -  over  a  l e n g t h s even though i t i s c o n s i s t e n t l y sec-  ond-best at&any p a r t i c u l a r stage may  the  seat-mile  those  l o n g - h a u l s , but  of  circum-  The  be  727  im-  whose c a p a c i t y  i n these  c o s t s o f t h e medium-range j e t may  the  sur-  expenses.  become t h e most a t t r a c t i v e d e s i g n .  v a r i e t y of stage  con-  route d e n s i t y thus  c o s t s m i g h t be midway b e t w e e n t h o s e  and  speed  a i r c r a f t - m i l e c o s t s became j u s t as  Compromise a i r c r a f t aircraft-mile  so t h a t a v e r a g e  factors i n aircraft  p o r t a n t as s e a t - m i l e  and  similar  DC^-8.  versatility  a s i n g l e type over r e q u i r e t h e use  T h i s opens p o s s i b i l i t i e s  c a p i t a l investment,  s i m p l i f y i n g s c h e d u l i n g and  The  for  a  of reduc-  increasing utilization rates,  reducing maintenance  of  expenses.  126 SfcAT K I L E COST  DC-3-30  727-I0O 0C-8-6I  STAGE  LBM&Trt  F i g u r e 3.2 Cost S t r u c t u r e o f V e r s a t i l e and S p e c i a l i z e d A i r c r a f t - The DC-9-30, w i t h l o w e r f u e l c o n s u m p t i o n , c r e w c o s t s , and c a p i t a l expenses, i s cheaper t o operate on s h o r t h a u l s t h a n t h e 727-100. The DC-8-61 i s c h e a p e r t o o p e r a t e t h a n t h e 72 7 o n l o n g h a u l s b u t n o t o n s h o r t h a u l s where i t s f u e l c o n s u m p t i o n a n d g r o u n d s e r v i c i n g expenses are h i g h e r . However, t h e 72 7, t h o u g h i t h a s h i g h e r c o s t s t h a n e i t h e r t h e DC-9 o r DC-8 a t a n y p a r t i c u l a r s t a g e l e n g t h , may b e more e c o n o m i c o v e r a l l when a r a n g e o f d i f f e r e n t s t a g e l e n g t h s must be o p e r a t e d . On s h o r t h a u l s i t s c o s t s a r e n o t much h i g h e r t h a n t h o s e o f t h e DC-9, a n d i t i s c o m p e t i t i v e w i t h t h e DC-8 o n l o n g h a u l s w h e r e t h e DC-9 s u f f e r s f r o m a r a n g e l i m i t a t i o n .  127 The the  747.  seat-mile  same s i t u a t i o n a r i s e s i n c o m p a r i n g t h e DC-10 The l a t t e r  with  a i r c r a f t c o u l d be e x p e c t e d t o h a v e  c o s t s on l o n g - h a u l  routes  such as those  lower  i n the  t r a n s c o n t i n e n t a l m a r k e t , b u t t h e s m a l l e r DC-10 i s more a d a p t 43 a b l e t o o p e r a t i o n o n s h o r t - a n d medium-rhauls t h a n t h e 747. The  interdependent  ture frequency  considerations of route  may f a v o u r  d e n s i t y and depar-  t h e s m a l l e r a i r c r a f t s u c h as t h e  DC-10 i n s p i t e o f t h e f a c t t h a t i t s s e a t - m i l e c o s t s may be somewhat h i g h e r . This dard a i r l i n e  c a n e a s i l y be i l l u s t r a t e d by r e f e r e n c e  to a stan44  i n d u s t r y concept, break-even load f a c t o r .  If .  t h e b r e a k - e v e n l o a d f a c t o r w e r e t h e same, s a y 45 p e r c e n t , a given route  on  f o r b o t h t h e DC-10 a n d 747, t h e a i r l i n e w o u l d r e ^  q u i r e a n a v e r a g e o f 122 p a s s e n g e r s p e r f l i g h t o n t h e f o r m e r and  16 8 p a s s e n g e r s o n t h e l a t t e r i n o r d e r  incurring sonably  losses.  to operate  without  I f a t t h e same t i m e t h e c a r r i e r c o u l d  rea-  e x p e c t s a y 360 p a s s e n g e r s p e r day i n t h e m a r k e t , t h e  demand w o u l d w a r r a n t t h r e e w i t h t h e 747. industry,  flights  d a i l y w i t h t h e DC-10 o r two  Given the c h a r a c t e r i s t i c s o f the trunk  carrier  t h e r e w o u l d be a n a t u r a l t e n d e n c y t o u s e t h e s m a l l e r  128 a i r c r a f t s i n c e s e r v i c e f r e q u e n c y i s an p e t i t i o n between the  airlines.  i s d e s i r a b l e b e c a u s e i t may g e r s and  allow  the  i n the market.  carrier  The  An  i m p o r t a n t b a s i s o f com-  additional daily  flight  a t t r a c t a l a r g e r number o f  passen-  t o become more f i r m l y e s t a b l i s h e d . .  importance of such c o n s i d e r a t i o n s  t r a c t s from the usefulness  of seat-mile  costs  de-  as a u n i q u e  p a r a m e t e r by w h i c h t o r a n k t e c h n o l o g i c a l q u a l i t y . C o m p a r i s o n o f P r e d i c t e d and  Actual  Relative^ Costs  i) F l y i n g Personnel F l y i n g personnel expenses per factors unrelated  seat-mile  to technological c h a r a c t e r i s t i c s .  to allow a c o n s i s t e n t comparison of various the  The  of expected seat-mile  jet transports,  727-100 a r e  II  r e s u l t s a p p e a r i n T a b l e 3.1  i n terms  c o s t r e l a t i o n s h i p s where the  707/DC-8  u s e d as b a s e a i r c r a f t f o r l o n g - r a n g e and  range d e s i g n s r e s p e c t i v e l y . t o have a f l i g h t crew o f t h r e e ant  Thus,  same p r o d u c t i v i t y c a l c u l a t i o n u s e d i n C h a p t e r s I and  i s applied here.  and  r e f l e c t many  Long-range a i r c r a f t are and  f o r every t h i r t y passengers.  g e n e r a l l y one Since  no  cabin  short-  assumed attend-  account i s taken  of s l i g h t d i f f e r e n c e s i n c r u i s i n g speeds, d i f f e r e n c e s i n arise  s o l e l y from the d i l u t i o n o f f l i g h t crew expenses  capacity  is The  expenses per standard  cost  as  increased. DC-8-61 i s p r e d i c t e d seat mile  DC-8/707.  to have f l y i n g  twenty-two per  The  high  personnel  cent below those of  the  c a p a c i t y wide—body a i r c r a f t  are  129  TABLE PREDICTED  3.1  RELATIVE  SEAT-MILE  F L Y I N G PERSONNEL EXPENSE FOR J E T AIRCRAFT -  Aircraft  Relative Crew Requirement  2  Capacity  Base A i r c r a f t : 707-100) DC-8-50) 707-300 DC-8-61  DC-10 A-ion 747 720 727-100 727-200  135  1 1.07 1.13 1.26 1.46 0.93 0.93 1.00  147 195 270 374 115 98 135  Base A i r c r a f t : 727-200 DC-9-10 DC-9-30 737-2001  1.07 0.75 0.82 1.00  Assumes Three Man F l i g h t Crew See Appendix B  135 68 92 95  Relative Capacity  Predicted Relative Seat-Mile Expense  707/DC-8  1 1.09 1.44 2.00 2.77 0.85 0.73 1.0  1.0 0.99 0.78 0.63 0.53 1.09 1.27 1.0  727-100 1.38 0.74 0.94 . 0.97  0.78 1.01 0.87 1.03  p r e d i c t e d t o have c o s t s r e d u c e d by g r e a t e r amounts; by t h i r t y seven p e r cent per  f o r t h e DC-10 a n d L.1011 and b y  c e n t f o r t h e 747.  Operating  forty-seven  o v e r t h e same r o u t e , t h e  727-200 w o u l d be e x p e c t e d t o h a v e t h e same c r e w e x p e n s e s a s the o r i g i n a l be  four-engined  j e t s w h i l e t h e 727-100 c o s t s  about twenty-seven p e r cent higher per seat m i l e .  ing the savings engineer,  achieved  Reflect-  by t h e e l i m i n a t i o n o f t h e f l i g h t  t h e DC-9-30 a n d 737-200 a r e p r e d i c t e d t o h a v e c r e w  costs t h i r t e e n to f i f t e e n per cent The  would  smaller versions o f these  lower  t h a n t h e 727-100.  a i r c r a f t w o u l d h a v e t h e same  e x p e n s e s p e r s e a t m i l e a s t h e 727-100 w h i l e t h e 737-200 o p e r a t e d w i t h a t h i r d c r e w member w o u l d b e more T a b l e 3.2 c o m p a r e s t h e s e  p r e d i c t i o n s with the a c t u a l  cost r e l a t i o n s h i p s f o r a i r c r a f t operated Even w i t h d a t a  expensive.  by t h e ' B i g F o u r ' .  a v e r a g e d o v e r t h e p e r i o d 1967-72, t h e r e r e -  mains c o n s i d e r a b l e v a r i a t i o n i n t h e r e l a t i v e c o s t r e l a t i o n s h i p s o f p a r t i c u l a r a i r c r a f t among d i f f e r e n t c a r r i e r s . productivity calculation provided cases,  results  i n most  t h e r e l a t i v e h o u r l y e x p e n s e s o f wide^-body a i r c r a f t w e r e  overestimated. low  acceptable  Although the  T h i s c a n be p a r t i a l l y e x p l a i n e d b y t h e v e r y  s e a t i n g d e n s i t i e s o f these  which r e s u l t e d i n lower The  aircraft i n trunkline service  than p r e d i c t e d c a b i n crew expenses.  above c o m p a r i s o n i s on t h e b a s i s o f c o s t p e r s e a t -  h o u r a n d i s v a l i d o n l y when a v e r a g e s p e e d s a r e e q u a l . a more r e a l i s t i c  For  assessment o f u n i t c o s t r e l a t i o n s h i p s under  a c t u a l o p e r a t i n g c o n d i t i o n s , the e f f e c t o f stage  l e n g t h on  131 TABLE  3.2  COMPARISON OF ACTUAL AND  PREDICTED  RELATIVE HOURLY F L Y I N G PERSONNEL EXPENSE OF JET  Long Haul Aircraft DC-8-61 720/720B 727-100 DC-10/L.1011 747 Short-Medium Haul Aircraft 727-200 DC-9-10 DC-9-3D 737-2003 DC-10 A. 1011  Predicted Expensel Relative to DC-8/707  AIRCRAFT  2 of R e l a t i v e Average Hourly Expense American Eastern Trans World I  1.13 0.93 0.93 1.26 1.46  0.99 0.95 1.07 1.30  1.19 0.91 0.90 1.02 —  _.  - •'  0.89 1.25 1.36  United 1.05 1.02 0.92 1.20 1.41  P r e d i c t e d Expense R e l a t i v e t o 727-100 1.07 0.75 0.82 1.00 1.35  0.95  -  0.88 0.74 0.91  1.16  1.25  -  -  0.97 0.86  -  . 1.41  1.02  —  1.00 1.33  "Based on Table 3.1, R e l a t i v e Crew Requirement 'Based on Simple Average o f Hourly Expense Ratios f o r those years i n which a i r c r a f t was operated between 1967 and 1972 ^Assumes three man f l i g h t crew  132 average block in Figure  3.3,  s p e e d s m u s t be  stage  i n t o account.  s e a t - m i l e costs are  l e n g t h as w e l l as a i r c r a f t T a b l e 3.3  gives h i s t o r i c a l cost data  o f t h e DC-8  o f n i n e p e r c e n t was  p r e d i c t e d on  Operating  on  long-range j e t s while  for and  per  f o r an  aircraft  costs s i g n i f i c a n t l y higher uctivity calculation  707  representaseat-mile stage  twenty-five  whereas a d i f f e r e n c e  the b a s i s of equal l e n g t h s , the  cent higher  block  727-100  than those  t h e p r e d i c t i o n b a s e d on  e r a t i n g c o n d i t i o n s was Short-haul  and  s h o r t e r stage  seat-mile costs f i f t y - s i x  cent.  thus dependent  720B w e r e a l m o s t  p e r c e n t above t h o s e  speeds.  distance.  R e f l e c t i n g the e f f e c t of a s h o r t e r average  l e n g t h , seat-mile c o s t s of the  shown  type.  t i v e a i r c r a f t i n block hour, a i r c r a f t - m i l e , terms.  As  average speed i n c r e a s e s w i t h route  A i r c r a f t p r o d u c t i v i t y and on  taken  of  the  identical  op-  increase of twenty-seven  (737  and  than the  DC-9)  had.  i n t u r n had  727-100 a l t h o u g h  per unit  the  prod-  i n d i c a t e d t h a t t h e i r c o s t s w o u l d be  low-  er . ii)  Capital Average a i r b o r n e  speed a t a g i v e n stage  length w i l l  a l m o s t t h e same f o r a l l j e t a i r c r a f t so i t i s p o s s i b l e t o amine t e c h n i c a l e f f i c i e n c y i n t h e use relating original  of c a p i t a l simply  cost to seating capacity.  ex-  by  T a b l e 3.4  provides  t h e r e l e v a n t d a t a b a s e d on m i x e d - c l a s s  configurations.^  r e c o g n i t i o n of the i n f l u e n c e of design  stage  l e n g t h on  be  the  In  (miues P E R HOUR)  Figure  5t>0  3.3  Average  Speed Versus Stage  Length  400  3oo  ZOO  Source:  500  IOOO  Average schedule time f o r selected nonstop f l i g h t s , O f f i c i a l A i r l i n e Guide, North American E d i t i o n , (January 1972).  I50O  Eooo NONSTOP  PISTANCC  (.ntt.es)  134  TABLE 3.3 F L Y I N G PERSONNEL EXPENSES OF JET AIRCRAFT P E R HOUR, A I R C R A F T - M I L E , AND SEAT-MILE  Aircraft  Carrier  707-100B  American  DC-8-50  United  720B  American  720  United  727-100  American  727-100  United  DC-9-10  Trans World"  737-200  United  Year  Average Stage Length (miles)  Crew Expense Per Block Hour (dollars)  Crew Expense Block Per A i r speed c r a f t M i l e (mph) (cents)  rl970  1,045  188  420  44.8  0.33  1971  961  193  416  46.4  0.34  rl970  1,592  190  455  41.7  0.31  ^1971  1,416  204  438  46.6  0.35  rl970  861  185  410  45.1  0.39  1971  888  195  412  47.3  0.41  rl970  1,027  188  413  45.5  0.40  1971  1,008  206  413  49.9  0.43  rl970  559  172  356  48.3  0.49  1971  528  184  358  51.4  0.52  rl970  621  173  382  45.3  0.46  1971  710  192  395  48.6  0.50  rl970  339  140  303  46.2  0.68  1971  358  167  326  51.2  0.75  rl970  240  183  268  68.3  0.72  1971  291  212  290  73.1  0.77  1  1  l  1  l  l  l  * Based on standard c a p a c i t i e s given i n Table 3 . 1 Source:  Crew Expense Per SeatMile* (cents)  C i v i l Aeronautics Board, A i r c r a f t Operating Cost and Performance Report, V o l . 6 (July 1 9 7 2 ) .  135 TABLE  3.4  ORIGINAL COST PER SEAT FOR J E T A I R C R A F T  1  (1968-74) 196 8  LONG HAUL AIRCRAFT Aircraft  Original Cost/ S e a t ($U.S.)  Capacity  707-320B 720B DC-8-61 DC-8-63  147 115 195 195  52,380 57,390 42,560 44,870  •  SHORT-MEDIUM HAUL AIRCRAFT . Original Cost/ Aircraft Capacity S e a t ($U.S.) 727-100 727-200 737-100 737-200 1969  98 135 72 95  LONG HAUL: Aircraft DC-8-63 747  56,120 . 45,200 51,390 43,160  WIDE-BODY AND CONVENTIONAL O r i g i n a l Cost/ Capacity S e a t ($U.S.) 195. 394  45,000 52,140  LONG HAUL AIRCRAFT Aircraft 707-320B DC-10 L.1011 747  Capacity  Original Cost/ S e a t ($U.S.)  147 270 270 374  72,450 74,070 74,070 69,520  SHORT-MEDIUM HAUL AIRCRAFT Original Cost/ Aircraft Capacity S e a t ($U.S.) 727-200 DC-9-30 737-200 ^Current Dollars, Source:  135 92 95 No a l l o w a n c e  59,260-62,220 56,520 57,900-63,160 f o r spares.  " A i r l i n e r P r i c e Index", F l i g h t I n t e r n a t i o n a l , ( J a n u a r y 3, 1974) p . 7 ; ( J u n e 1 4 , 1973) p.917 a n d s e l e c t ed data from Aviation.Week.  136 n a t u r e o f t h e c o m p r o m i s e s made i n p r o d u c i n g an a i r c r a f t  design,  however, comparison s h o u l d  short-  haul  and  long-haul The  'stretched' per  aircraft.  aircraft.  data i n part DC-8-61 had  cent higher  not. be made d i r e c t l y b e t w e e n  (a) o f t h e t a b l e r e v e a l t h a t  average c a p i t a l p r o d u c t i v i t y twenty  than t h a t of the  The  standard  medium-range 720B had  seat, apparently  b e c a u s e i t had  t i o n and  e q u i p m e n t as t h e  707  the  reduction  i n a savings  in  i n the  The  to both of the  same p e r  'stretched'  of the  to achieve greater  737.  above.  This  configuraSurprising-  s e a t as  the  not r e f l e c t e d  727-200 was,  how-  B o t h 727's w e r e  lower  terms o f t e c h n i c a l e f f i c i e n c y f o r c a p i t a l  ing versions  original  same  number o f e n g i n e s was  in capital.  superior  the  long-range  less capacity.  727-100 t r i j e t c o s t a b o u t t h e  72OB; t h e  ever,  but  707-320B  the highest  cost per  ly,  the  reveals.a  than  correspond-  trade-off  v e r s a t i l i t y {((i .e . a c c e p t a b l e  necessary  short  and  medium r a n g e p e r f o r m a n c e ) . Fuselage  'stretching' provided  c a p i t a l p r o d u c t i v i t y of nineteen 727  and  7 37 r e s p e c t i v e l y .  and  an  increase  f i f t e e n per  In both cases the  cent f o r  larger  v e r s i o n used the  same w i n g , e n g i n e s , a v i o n i c s , and  s t r u c t u r e as  standard  the  m o d e l so  the  n e a r l y p r o p o r t i o n a l t o the  A l t h o u g h ' t h e r e was  some v a r i a t i o n i n t h e p u b l i s h e d  another superior  'stretched'  capacity  fuselage  capacity  i n terms of c a p i t a l  increase.  sales price,  t r a n s p o r t , t h e DC-8-6 3, a p p e a r e d t o  t o t h e wide-rbody 747  the  improvement i n t e c h n i -  c a l e f f i c i e n c y was 5  i n average  be  requirements  per  seat.  the  747  DC-8  The  comparison i s perhaps u n f a i r , however, because  i s c o n s i d e r a b l y more s p a c i o u s  than the  narrow-bodied  a t t h e assumed c a p a c i t i e s . Of  a l l the  t i o n i n 19 74  the  l o n g - r a n g e t r a n s p o r t s t h a t were i n p r o d u c -  74 7 was  lowest  i n terms of i n i t i a l  s e a t b a s e d on t y p i c a l c a p a c i t i e s .  The  body t r i j e t s w e r e s l i g h t l y h i g h e r equal  twenty per  74 7 and  The  and  spaciousness  I t i s evident  o f the w i d e body a i r c r a f t  not accomplished without  I t m u s t be  about almost  requirements  L.1011 w i t h w h i c h i t i s c o m p e t i t i v e  medium l e n g t h s o f h a u l .  per  wide-  727-200 was  cent cheaper i n terms of u n i t c a p i t a l  t h a n t h e DC-10  i t y ' ) was  more v e r s a t i l e  than the  t o t h e n a r r o w - b o d i e d 70 7-32OB,.  cost  that the  for  increased  (an a s p e c t  of  'qual-  cost.  noted t h a t these  data  c a n n o t be i n t e r p r e t e d  as a d i r e c t r e f l e c t i o n o f t e c h n o l o g i c a l c h a r a c t e r i s t i c s . f a c t t h a t the cost per  707-320B was  higher  s e a t , f o r e x a m p l e , may  than the  o f DC-8  latitude in fixing  e n d e d i n 1972,  still  q u i r i n g long range but not Similarly, DC-10 727  and  i t i s no  i n production  L.1011 a r e i d e n t i c a l l y p r i c e d .  long production  and  any  the  no  The  re-  alternative. competitive  p r i c e of  factors alone.  run of t h i s a i r c r a f t ,  only  airline  t h a t the d i r e c t l y  as w e l l d o e s n o t r e f l e c t d e s i g n  of the  considerable  I t was  l a r g e c a p a c i t y had  coincidence  dis-  This i s because  allowing Boeing  t h e p r i c e o f t h e 707.  a i r c r a f t of i t s type  in original  be more a r e f l e c t i o n o f  c r i m i n a t o r y p r i c i n g than of technology. production  747  The  the  Because  i t s manufacture  138 ing  c o s t s w o u l d be e x p e c t e d  aircraft ble  t o have dropped r e l a t i v e  to other  a s a r e s u l t o f l e a r n i n g - c u r v e phenomenon a n d p o s s i -  s c a l e economies.  I t i s likely,  h o w e v e r , t h a t t h e 72 7  s a l e s p r i c e has been d e t e r m i n e d i n r e l a t i o n  to the c a p i t a l i z e d  v a l u e o f t h e d i f f e r e n c e between i t s n o n c a p i t a l o p e r a t i n g and  those  iii)  o f t h e c o m p e t i t i v e wide-body  trijets.  Maintenance Maintenance c o s t s p e r b l o c k hour f o r a given  vary considerably both year-to-year riers  i n any p a r t i c u l a r y e a r .  differences i n aircraft ing  costs  aircraft  a n d among d i f f e r e n t  car-  Several factors explain this:  age, m o d i f i c a t i o n s t a t e , and o p e r a t -  c o n d i t i o n s , a n d d i f f e r e n c e s i n wage r a t e s a n d management  e f f i c i e n c y a r e some o f t h e more o b v i o u s  ones.  There i s a l s o  a s t r o n g d y n a m i c component s i n c e e n g i n e m a i n t e n a n c e r e q u i r e ments u s u a l l y d e c r e a s e o v e r  time as o v e r h a u l  intervals are i n -  creased w h i l e airframe maintenance requirements e x t e n t on a i r f r a m e age.  D i r e c t maintenance expense data f o r  a i r c r a f t of United A i r l i n e s i n A p p e n d i x C.  d e p e n d t o an  e x h i b i t t h i s phenomenon a s shown  Although,there  was c o n s i d e r a b l e y e a r  f l u c t u a t i o n s b a s e d on two t h r e e - y e a r  to year  a v e r a g e s , (1967-69 a n d  1970-72), a i r f r a m e maintenance expense p e r b l o c k hour i n c r e a s ed  for ten aircraft  ance d e c r e a s e d  out o f eleven while engine mainten-  f o r nine types over  In o r d e r United A i r l i n e s  types  t h e same p e r i o d .  to a l l o w a comparison o f v a r i o u s ;data were c o n v e r t e d  aircraft,  i n t o an e x p e n s e p e r a v a i l -  able seat p e r b l o c k hour u s i n g t h e c a p a c i t i e s Data f o r a i r c r a f t not operated other  ' B i g Four'  trunks.  from Table  by U n i t e d were t a k e n  3.1.  from  The r e s u l t s , g i v e n i n T a b l e  3.5,  show.that even on t h e b a s i s o f t h r e e - y e a r a v e r a g e s t h e r e r e mains c o n s i d e r a b l e u n e x p l a i n e d  v a r i a t i o n which r e s t r i c t s the  usefulness o f the data f o r general observations. A c o n s i s t e n t f e a t u r e o f the data i s t h e lower  mainten-  ance expense p e r s e a t o f ' s t r e t c h e d ' a i r c r a f t r e l a t i v e t o s t a n d a r d v e r s i o n s o f t h e same t y p e . .  D a t a f o r t h e DC-8, 7 2 7 ,  and DC-9 r e v e a l t h a t t h e r e w e r e no s i g n i f i c a n t i n c r e a s e s i n maintenance requirements  i n a b s o l u t e terms a s s o c i a t e d w i t h  the i n c r e a s e i n c a p a c i t y . versions of the early  I t i s also evident that turbofan  four-engined  j e t s w e r e t h e same i n a i r -  frame m a i n t e n a n c e as t h e t u r b o j e t v e r s i o n s b u t were g e n e r a l l y lower  i n engine  maintenance c o s t s .  The t h r e e a i r c r a f t  that  d i d n o t a t t a i n g r e a t p o p u l a r i t y w i t h t h e t r u n k s , t h e CV-990, BAC-111, a n d C a r a v e l l e h a d h i g h e r m a i n t e n a n c e c o s t s t h a n a n y other a i r c r a f t .  Although  i t i s not possible to  determine  whether t h i s a s s o c i a t i o n r e f l e c t s c a u s a l i t y , a l l t h r e e were r e - s o l d o r r e t i r e d from s e r v i c e d u r i n g t h e p e r i o d c o v e r e d by the  data. D i f f e r e n c e s i n t h e c o n d i t i o n s u n d e r w h i c h the. v a r i o u s .  a i r c r a f t were o p e r a t e d  have v e r y i m p o r t a n t  ance c o s t s p e r s e a t m i l e .  e f f e c t s on m a i n t e n -  N o t a l l maintenance i s d i r e c t l y de-  p e n d e n t o n f l i g h t t i m e a l o n e ; some e x p e n s e s a r e  a f f e c t e d by  t h e number o f l a n d i n g a n d t a k e - o f f c y c l e s p e r f o r m e d w i t h t h e  TABLE 3.5 140 DIRECT MAINTENANCE PER SEAT-HOUR  COSTS FOR  JET AIRCRAFT (1967-72) A i r Frame Maintenance . Engine Maintenance Avg. Avg. Avg. Avg. 1970-72 1967-69 1967-69 1970-72  Aircraft  Carrier  DC-8-10  United  41.1  DC-8-20  United  39.1  45.0  42.9  28.4  DC-8-30  United  38.0  44.8  40.5  28.4  DC-8-50  United  39.1  45.3  32.4  20.9  DC-8-61  United  26.0  31.1  19.3  14.5  707-100B  American  41.6  37.6  26.1  28.9  720  United  58.7  43.3  48.6  26.0  72 OB  American  54.8  61.7  31.1  39.5  CV990  American  113.8  -  727-100  United  47.4  American  -  -  32.2  182.0  -  53.2  51.7  34.4  47.8  53.4  50.9  39.9  United  32.7  37.5  31.8  23.9  American  24.7  33.6  13.0  29.4  BAC-111  American  95.1  86.6  64.5  53.7  DC-9-10  Trans World  71.7  72.3  38.0  50.0  Eastern  50.3  51.3  43.7  49.3  DC-9-30  Eastern  38.4  45.5  25.6  35.4  737  United  42.6  49.5  26.8  22.5  Caravelle  United  84.6  97.0  51.3  62.4  747  United  -  32.0  34.6  American  -  41.0  -  -  52.4  17.8  38.0  76.3  727-200  DC-10  United American  L.1011  Eastern Trans World  Source:  34.3 29.0  -  39.2 29.2 10.0  C i v i l Aeronautics Board, A i r c r a f t Operating Cost and Performance Report, V o l . I I I . (August 1969); V o l . V (August 1971) and V o l . V I I (July 1973) .  141 a i r c r a f t and t h u s m a i n t e n a n c e r e q u i r e m e n t s short-haul operations.  The more o b v i o u s  a r e g r e a t e r on e f f e c t of stage  l e n g t h d e r i v e s from t h e d i r e c t i n f l u e n c e on b l o c k speed cussed i n t h e e x a m i n a t i o n o f crew c o s t s .  Table  3.6  dis-  shows  t h a t s m a l l d i f f e r e n c e s i n maintenance c o s t s per seat-hour a r e t r a n s f o r m e d by v a r i a t i o n s i n a v e r a g e  b l o c k speed  to a  d i f f e r e n c e of almost s e v e n t y - f i v e per cent i n the seat m i l e expense o f t h e s h o r t - h a u l and l o n g - h a u l j e t s o p e r a t e d by U n i t ed iii)  Airlines. F u e l Consumption Table  3.7 g i v e s d a t a f o r f u e l c o n s u m p t i o n  c r a f t - m i l e o v e r a range 3.8 t h e s e d a t a  o f average  stage lengths.  In Table  ( e x t r a c t e d from curves c o n s t r u c t e d from  age p e r f o r m a n c e  aver-  r e p o r t e d each y e a r by a l l t h e t r u n k s ) have  b e e n c o n v e r t e d i n t o s e a t - m i l e s p e r U.S. are r e a l i s t i c  per ,air-  gallon.  The  results  i n t h a t they r e f l e c t the e f f e c t s o f a i r p o r t  g e s t i o n and non-optimum c r u i s e p r o c e d u r e s o p e r a t i n g environment.  con-  t y p i c a l of the t r u e  However, s i n c e t h e f u e l  consumption-  s t a g e l e n g t h c u r v e i s n o n l i n e a r , i t m u s t be e m p h a s i z e d t h a t the data r e p r e s e n t average  performance  when an a i r c r a f t i s  operated over a v a r i e t y of r o u t e s having the average  stage  length given i n the t a b u l a t i o n . Turbofan DC-8  engines  reduced  the f u e l consumption  of the  a n d 70 7 b y a p p r o x i m a t e l y 1.0-1.2 g a l l o n s p e r m i l e on  medium h a u l s a n d by 0.7-0.8 g a l l o n s p e r m i l e o n l o n g h a u l s  142 TABLE 3.6 SEAT-MILE MAINTENANCE EXPENSES OF UNITED A I R L I N E S J E T AIRCRAFT (1971-72)  Aircraft  Maintenance Expense Per SeatHour {<?)  DC-8-50  66.2  446  0.148  720  69.7  413  .0.169  727-100  87.6  390  0.224  737-200  72.0  280  0.257  Source:  Average Block Speed (mph)  Maintenance Expense /ASM «Q  C i v i l Aeronautics Board, A i r c r a f t Operating Cost and Performance Report, V o l . V I I (July 1973).  TABLE 3.7 FUEL CONSUMPTION PER MILE FOR JET AIRCRAFT (U.S. g a l l o n s / s t a t u t e m i l e ) Source: C i v i l Aeronautics Board, A i r c r a f t Operating Cost & Performance Report, V o l . I l l Average Stage Length (miles) (Aug.1969), V o l . V (Aug.1971) & Vol.VII (July 1973). Aircraft Caravelle .DC-9-10 DC-9-30 737-200 727-100 727-200  727-100 727-200 720 720B 707-100 707-100B DC-8-20/30 DC-8-50. DC-8-61 DC-10 L.1011 747 707-300 707-300B DC-8-61 747  200  3.48 3.93 3.40  —  300 3.80 2.82 3.08 2.92 ;• 4 .34 4.70  400 3.54 2.67 2 .80 2 .45 3.90 4 .15  600  700  800  3.41 3.66 5.44 4.37 6.00 5.00 6.35 5.00 5.60  3.65 3.58 5.08 4.15 5.87 4.83 6 .10 4.73 5 .40  3.50 3.47 4.76 3.98 5.32 4.58 5.74 4.52 5.23  1800 5.39  -  7.65  2000 5.20 4 .22  -  7.50  -  2200 5.10 4.10 4 .55 7.40  500  — —  2.26 3.62 3.87 900. ." 3.38 —  4 .54 3.86 5.12 4 .37 5.50 4.27 5.12  -  2400 5.04 4.08 4.39 7.23  1000  1100  120 0  1400  3.25  3.15  3.10  3.05  4.39 3.80 4 .94 4.20 5 .15 4 .12 4.98 5.20 6 .20  3.77 4.80 4 .05 4.88 4 .05 4.94 5.10 5.95  —  -  2600  _  4.32 7.18  —  _  -  _  1600  _  3.75 4 .70 3.95 4 .80 4.06 4 .91 5.00 5 .70  -  3.65 _  3.80 4.80 4 .05 4.85 4.76 5.30  -  3.55 _  4.80 4 .00 4.77 _  5.00 8.20  TABLE  3.8  AVERAGE FUEL PRODUCTIVITY OF JET AIRCRAFT (Available seat miles/U.S. gallon) Source:  Aircraft Caravelle DC-9-10 DC-9-30 737-200 727-100 727-200 727-100 727-200 720 720B 707-100 707-100B DC-8-20/30 DC-8-50 DC-8-61 DC-10 L.1011 747 707-300 707-300B DC-8-61 747  200  300  400  19.5 23.4  24 .1 29 .9 22.6 28.7  25 .5 32.9 38.8 25.1 32 .5  27.1 34.9  600  700  800  900  28.7 36.9 21.1 26.3 22.5 27.0 21.3 27.0 34.8  30.2 37.7 22.6 27.7 23.0 28 .0 22.1 28.5 36.1  31.1 38.9 24 .2 28.9 25.4 29.5 23.5 29.9 37.3  -  500  -  1100  —  —  -  -  —  25.3 29.8 26 .4 30.9 24.5 31.6 38.1  -  2000  2200  2400  27.3  28.3 34 .8  48.9  49.9  28.8 35.9 .42.9 50.5  29 .2 36 .0 44.4 51.7  -  1000  —  1800  -  Fuel data from Table 3.8 and c a p a c i t i e s from Table 3.7.  26.2 30.3 27.3 32.1 26.2 32 .8 39.2 51.9 43.5  -  2600  -  45 .1 52.1  -  30.5 28.1 33.3 27.7 33.2 39.5 52 .9 45.4  -  1200  -  30.7 28.7 34.2 28.1 33.3 39.7 54.0 47.4  -  1400  1600  —  31.5 .  32.4  35.5 28.1 33.4 40.2  28.1 33.8 40.9  -  -  50.9  -  -. -  -  45.6  145 compared t o the t u r b o j e t v e r s i o n s o f t h e s e a i r c r a f t .  This  r e p r e s e n t s an i m p r o v e m e n t i n s e a t m i l e t e r m s o f 19-25 c e n t , d e p e n d i n g on  stage l e n g t h .  o f t h e DC-8-61 was  0.6-0.8 g a l l o n s h i g h e r t h a n  s t a n d a r d DC-8-50 b u t turbojet-powered  still  F u e l consumption per  somewhat l o w e r  DC-8-20.  With  than the  mile  that of  the  than t h a t o f  the  t h e c a p a c i t y o f t h e DC-8-61  45 p e r c e n t h i g h e r , i t s f u e l c o n s u m p t i o n p e r a b o u t 20 p e r c e n t l o w e r  per  t h a n t h e -50  and  seat mile  50 p e r c e n t  was  lower  -20. Over the stage  l e n g t h s o f 2,000-2,400 m i l e s ,  typical  o f t r a n s c o n t i n e n t a l r o u t e s , t h e s t a n d a r d 707-320B t u r b o f a n had  20 p e r c e n t l o w e r  turbojet.  The  f u e l consumption than  ' s t r e t c h e d ' DC-8-61 was  the  707-320  i n t u r n 20 p e r  cent  l o w e r p e r s e a t m i l e t h a n t h e 707-300B w h i l e t h e w i d e b o d y showed a f u r t h e r 16-20  per c e n t improvement over  This reveals quite c l e a r l y c a l e f f i c i e n c y i n t h e use  the steady  747  t h e DC-8-61.  improvement i n t e c h n i -  o f e n e r g y t h a t has  taken  place  s i n c e the t r a n s i t i o n p e r i o d . O v e r medium s t a g e  lengths averaging  1,000  four-engined t u r b o j e t s are the worst performers, ASM/U.S. g a l l o n w h i l e t h e n a r r o w - b o d i e d  miles, giving  The  e x c e p t i o n was  The  t r i j e t s had  consumption per seat m i l e  f o r no o b v i o u s  reason  fuel  the former  variation  t h e DC-8-61  w h i c h g a v e 39 A S M / g a l l o n . the lowest  DC-10  26-27  turbofan transports  w e r e somewhat b e t t e r a t 30-33 A S M / g a l l o n w i t h l i t t l e between d i f f e r e n t d e s i g n s .  the  and L . 1 0 1 1 w i d e - b o d y  a p p e a r e d t o be  although  a noticeably  146 b e t t e r performer than the data  t h e r e was  latter.  On  the b a s i s of  DC-10  a r e d u c t i o n i n f u e l consumption of about  t h i r d compared t o the b e s t n a r r o w - b o d i e d t r a n s p o r t , DC-8-61.  The  DC-10  thus provided  e f f i c i e n c y of seventy per jet, the  the  7 2 7 - 1 0 0 , and  an  hundred per  f i r s t .medium-range j e t , t h e  the  improvement i n t e c h n i c a l  c e n t compared t o t h e  o v e r one  one-  f i r s t U.S.  tri-  c e n t compared  to  720.  At average stage lengths  b e l o w 600-700 m i i e s ,  c o n s u m p t i o n v a r i e s g r e a t l y d e p e n d i n g on  fuel  the operating  environ-  46 ment.  C o m p a r i s o n o f d i f f e r e n t a i r c r a f t must be made w i t h  c a u t i o n b e c a u s e t h e d a t a may  be  d i f f e r e n c e s i n the experiences ating particular aircraft. e n g i n e d 727 than the  ( e s p e c i a l l y the  four-engined  approximately 100  but  the  t o d i s t o r t i o n due  of the various  The  data  carriers  l a r g e r 727-200) i s more The  'stretched  1  than the  r e v e a l s the r e d u c t i o n  727-200.  The  three-  efficient  s h o r t - b o d y DC-9-10  obtains  as t h e  t w i n j e t s , t h e DC-9-30 and  to  oper-  r e v e a l t h a t the  t h e same f u e l c o n s u m p t i o n p e r ASM  more e f f i c i e n t  reduction  720B.  subject  727-  737-200,  are  737-200 i n p a r t i c u l a r  i n f u e l consumption achieved  by  the  i n empty w e i g h t o f t h e s p e c i a l i z e d s h o r t - h a u l  p o r t s c o m p a r e d t o t h e more v e r s a t i l e m e d i u m / s h o r t r a n g e  trans727.  Summary i)  Technical E f f i c i e n c y T a b l e 3.9  gives  the i n d i c e s developed f o r s e l e c t e d  c r a f t to i n d i c a t e r e l a t i v e  technical efficiency  f o r the  air-  four  147 TABLE 3.9 RELATIVE AVERAGE FACTOR PRODUCTIVITIES OF J E T AIRCRAFT (INDEXED TO DC-8-2 0)  AIRCRAFT 707727- 727720B 320B DC-8-50 DC-8-6 100 200  747  1.00  0.91 1.02  1.00  1.27  0.78 1.00  1.90  1.00  0.90 1.00  0.88  1.23  0.93 1.16 (1.03)  1.00  1.23 -  1.27  1.59  1.32 1.66  .1.00  1.09 (1.2)  1.19  1.41  1.00  0.73 n/a  1.11  1.61  FACTOR  DC-8-20  Flying Personnel  Capital  DC-10/ L.1011  1  2  Energy^  Maintenance 6  -  -'  1.53  0.84 1.20 (1.00)  1.59  3  (0.96)  (1.80)  (1.02)  (Estimates) ''"Based on Table 3.1 2 Based on Table 3.4 3 Based on comparison w i t h DC-8-63 m 1968 and p o s i t i o n o f DC-8-63 v s . 707-320B i n 1968 4 Table 3.8 a t 800 miles and 1,200 miles average stage length 5 Average o f both a i r c r a f t g  Based on Table 3.5 (1970-72), t o t a l d i r e c t maintenance f o r airframe and engines  5  148 factor inputs.  The f o l l o w i n g o b s e r v a t i o n s c a n be made r e -  garding the d i r e c t i o n of innovation  i n the period:  a) The p r o d u c t i v i t y o f f l y i n g p e r s o n n e l i n c r e a s e d , became s o l e l y a f u n c t i o n o f c a p a c i t y constrained  by a t e c h n o l o g i c a l  Because o f b o t h s m a l l e r  since  boundary  capacity  but  c r u i s i n g s p e e d was  (the sound b a r r i e r ) .  and t h e lower average speeds  a c h i e v e d i n s e r v i c e , i t was l o w e r o n s h o r t - r a n g e T h e r e w e r e two s i g n i f i c a n t e v e n t s :  aircraft.  the 'stretching' of  e a r l i e r d e s i g n s and t h e development o f l a r g e , wide-body  trans-  ports . b) E n e r g y p r o d u c t i v i t y steadily with ed'  the introduction o f turbofan engines,  fuselages,  turbofans.  (at a given stage length)  a e r o d y n a m i c r e f i n e m e n t s and h i g h  The r a t e o f i m p r o v e m e n t  improved  'stretch-r-  bypass-ratio  i n technical efficiency  i n t h e u s e o f e n e r g y was o f t h e same o r d e r a s t h a t o f f l y i n g p e r s o n n e l , r e l a t i v e t o t h e 707/DC-8  turbojets.  c) C a p i t a l p r o d u c t i v i t y p e a k e d w i t h the  DC-6-81 a n d d e c l i n e d  the introduction of  upon t h e i n t r o d u c t i o n o f w i d e - b o d y  transports. d) T h e r e w e r e s l i g h t i m p r o v e m e n t s f o r maintenance e f f o r t .  Data e x h i b i t e d  ponent and were h i g h l y v a r i a b l e w i t h different carriers.  i n technical efficiency a strong  stage length  dynamic  com-  a n d among  149 ii)  Cost/Quality a)  Trade-Offs  There were e f f o r t s  to i n c r e a s e c r u i s i n g speed i n  r e c e n t p e r i o d as a m e t h o d o f d i f f e r e n t i a t i n g was  c l e a r t h a t o p e r a t i n g c o s t s w o u l d be  those  of contemporary designs.  v i r t u a l l y no b)  The  s e r v i c e where i t  a t l e a s t as g r e a t  U n l i k e the p i s t o n e r a ,  e f f o r t s r e s u l t e d only i n higher costs  as these  ( e . g . i n t h e CV-990)  and  i n c r e a s e i n speed. i n t r o d u c t i o n o f wide-body t r a n s p o r t s i n the  period, l i k e  the  the i n i t i a l  brought about because of  t r a n s i t i o n of j e t a i r c r a f t , 'quality'  - r a t h e r than cost  recent  was consid-  erations . iii)  Exogenous  Influence  a) T h e r e w e r e t h r e e  significant  from e f f o r t s almost t o t a l l y military:  turbofan engines,  f a m i l y o f s h o r t - and b)  The  innovations  that resulted  independent o f the government airframe  medium^haul  ' s t r e t c h i n g ' , and  and  the  aircraft.  i n t r o d u c t i o n o f wide-body a i r c r a f t can  directly  to a m i l i t a r y development program.  novation  had  probably  have been d e v e l o p e d i n d e p e n d e n t l y  be  traced  However, the i n -  s i g n i f i c a n t b e n e f i t s f o r the a i r l i n e s  and  at a later  would date.  CHAPTER I V AN  EXAMINATION OF  INNOVATIVE BEHAVIOUR  INTRODUCTION An  Outline  of Market Behaviour  In order to e s t a b l i s h the d i r e c t i o n of i n n o v a t i o n  i n the  e x t e n t to which the  a i r transport  b e e n d e p e n d e n t upon f a c t o r p r i c e i n c e n t i v e s , t o have a g e n e r a l u n d e r s t a n d i n g o f air be  c a r r i e r s to p o t e n t i a l reductions a c h i e v e d by  briefly  b e h a v i o u r of the The essentially within The  the  U.S.  t o be  approval. industry  i t i s necessary  i n unit costs.  of  This  market  domestic t r u n k a i r c a r r i e r s comprise what i s  l a r g e l y as  f i l e d with  the  Fare l e v e l s are  P r i c e i s accepted  a regulator-imposed  (CAB)  f i x e s p r i c e by  parameter.  requiring a l l  Board f o r p r i o r i n s p e c t i o n c o n t r o l l e d by  p r o f i t s to a predetermined R e g u l a t i o n on  regulating  and overall  'adequate' r a t e of  t h i s basis  i s a rather  return crude  i n s t r u m e n t f o r c o n t r o l l i n g e i t h e r f a r e s o r p r o f i t s A i n any t i c u l a r market.  However, the  CAB  granting  or  threatening 150  par-  i s a b l e t o a c h i e v e more  d i r e c t c o n t r o l over i n d i v i d u a l c a r r i e r s or k e t s by  can  industry.  industry  1  and  have  t y p i c a l response  a price-restrained cartel.  investment.  industry  o u t l i n i n g a d e s c r i p t i o n of the  C i v i l Aeronautics Board  fares  on  the  rate  t o g r a n t new  i n p a r t i c u l a r marroute  authority  151 t o a d d i t i o n a l c a r r i e r s a s a means o f i n c r e a s i n g c a p a c i t y a n d reducing  f a r e s and p r o f i t s . W h i l e t h e Board has d i r e c t c o n t r o l o v e r f i r m s i z e t h r o u g h  the  r e g u l a t i o n of route  a u t h o r i t y , and p r a c t i s e s d i r e c t o r i n -  d i r e c t c o n t r o l over p r i c e , there  i s no r e g u l a t o r y  c o n t r o l over  e i t h e r q u a l i t y o f s e r v i c e , schedule frequency o r t o t a l city.  capa-  O p e r a t i n g under these c o n s t r a i n t s , t h e trunk c a r r i e r s  r e s o r t to 'competition' haviour  i n nonprice,  q u a l i t y dimensions i n be^  c h a r a c t e r i z e d as m a r k e t - s h a r e  rivalry.  One o f t h e more o b v i o u s ways i n w h i c h t h i s r i v a l r y mani^fests i t s e l f  i s through competition  schedule frequency.  on t h e b a s i s o f c a p a c i t y o r  I t i s known t h a t , s u b j e c t  to diminishing  2 r e t u r n s , market share f o l l o w s c a p a c i t y kets  served  scheduling  by s e v e r a l c a r r i e r s ,  share;  thus,  capacity w i l l  i n mar-  be a d d e d (by  more f l i g h t d e p a r t u r e s ) u n t i l , a z e r o - r e n t  market 3  equilibrium i s established, a t a c e r t a i n load factor. e q u i l i b r i u m l o a d f a c t o r d e p e n d s upon t h e r e g u l a t o r ' s a p r i c e parameter; a r e l a t i v e l y high low  l o a d f a c t o r s and h i g h  far levels).  of return are regulated,  high  other  about  because t h e c a r r i e r s '  rates  schedule  such t h a t the p r o f i t r a t e i s n o t  enough t o a t t r a c t a t t e n t i o n o f t h e B o a r d . The  of  ( v i c e - v e r s a f o r low  i t i s t o be e x p e c t e d t h a t  f r e q u e n c y w o u l d be a d j u s t e d  choice  fare level brings  frequency s e r v i c e  On m o n o p o l y r o u t e s ,  The  avenue o f t r u n k  area of product d i f f e r e n t i a t i o n .  4  carrier rivalry  i s i n the  C a r r i e r s may a t t e m p t t o i n -  c r e a s e t h e i r m a r k e t s h a r e by i n c r e a s i n g t h e q u a l i t y o f s e r v i c e  152 above t h a t o f t h e i r c o m p e t i t o r s , a t t h e common f a r e l e v e l . recognize  thus enjoying  increased  demand  I n p r a c t i c e , however, t h e c a r r i e r s  s u c h e f f o r t s t o be l a r g e l y s e l f - d e f e a t i n g b e c a u s e  they simply  prompt a response from c o m p e t i t o r s ,  new e q u i l i b r i u m w i t h market shares.  increased  costs  resulting i n a  f o r a l l and unchanged  The t r u n k l i n e i n d u s t r y c a n be c h a r a c t e r i z e d  as a s t a b l e o r ' m a t u r e ' c a r t e l b e c a u s e t h e p a r t i c i p a n t s i n t h e market recognize  t h i s mutual dependence.  E x p e c t e d Response t o  Innovation  Given that a l l c a r r i e r s o f f e r t h e i r product a t regulat o r - i m p o s e d p r i c e s , and t h a t o v e r a l l r a t e s o f r e t u r n a r e subject to regulatory  c o n t r o l , i t i s t o be e x p e c t e d t h a t t h e i n -  centives  f a c i n g the i n d u s t r y t o e i t h e r i n i t i a t e o r adopt  reducing  innovations  p o l i s t i c o r purely  a r e l e s s t h a n t h e y w o u l d be i n a mono-  competitive  market.  This  observation  r i v e s from t h e f a c t t h a t i n t h e a i r l i n e s i n d u s t r y , a in  average costs  leads  to increased  to reduced fares i n order is  n o t exceeded.  there  de-  reduction  p r o f i t s which i n turn  that the acceptable  lead  rate of return  I n monopoly m a r k e t s , on t h e o t h e r  hand,  r e m a i n s a n a t t r a c t i o n p o s e d by t h e p r o s p e c t o f h i g h e r  profits. reducing will  cost-  In competitive innovations  markets, firms w i l l  the market a f t e r a p r i o r i n n o v a t i o n i n price.  cost-  i n an a t t e m p t t o e a r n e x c e s s p r o f i t s , o r  be f o r c e d t o a d o p t them q u i c k l y i n o r d e r  a reduction  initiate  by o t h e r  t o remain i n f i r m s has l e d t o  153 Another f a c t o r reducing the trunk  carriers derives  authorities. diminished ed  the innovative incentive facing  from r e g u l a t o r y c o n t r o l over  The p o t e n t i a l r e w a r d s o f c o s t r e d u c t i o n a r e  i n absolute  terms because t h e i n n o v a t o r  f r o m e n t e r i n g new m a r k e t s .  i s prevent-  He c a n r e a p t h e b e n e f i t s o f  o n l y an i n c r e a s e d market s h a r e and n o t a l a r g e r market An a i r l i n e has l i t t l e reducing  innovations  incentive i n introduce  i n e i t h e r monopoly o r c o m p e t i t i v e  c a r r i e r s adopt such i n n o v a t i o n s  i n i t i a t i v e has been taken  overall.  cost-  because o f r e g u l a t o r y c o n t r o l over r a t e o f r e t u r n . or not other  route  routes  Whether  r a p i d l y once t h e  by a n o t h e r c a r r i e r d e p e n d s i n p a r t  u p o n t h e CAB's r e a c t i o n t o t h e r e d u c t i o n i n a v e r a g e c o s t s . Due t o t h e p r o f i t c o n s t r a i n t , i t i s n o t u n l i k e l y t h a t a u n i l a r t e r a l reduction i n costs w i l l  lead the i n i t i a t o r  p o t e n t i a l p r o f i t s by r e d u c i n g  load factors i n order  a forced reduction i n fare levels. an i n c r e a s e i n s c h e d u l e defensive  frequency  to avoid  This would simply  require  w h i c h may, h o w e v e r , p r o m p t a  r e s p o n s e by n o n ^ i n n o v a t i n g  market shares.  t o 'bury' t h e  firms to protect  their  I t i s obvious that i n t h i s s i t u a t i o n the i n -  c e n t i v e t o e i t h e r i n i t i a t e o r adopt innovations  i s diminished  by b o t h r e g u l a t o r y c o n t r o l and o l i g o p o l i s t i c m a r k e t s t r u c t u r e . Since it  i s likely  p r i c e i s regulated while product t h a t those  i s not,  i n n o v a t i o n s which improve q u a l i t y  r e c e i v e more a t t e n t i o n t h a n c o s t - r e d u c i n g novation  quality  ones.  will  That i s , i n -  i n t h e i n d u s t r y may be e x p e c t e d t o be more q u a l i t y -  o r i e n t e d than c o s t - o r i e n t e d .  A f i r m h a s an i n c e n t i v e t o  154 i m p r o v e s e r v i c e q u a l i t y e i t h e r t o i n c r e a s e o v e r a l l demand i n t h e i n d u s t r y , o r t o i n c r e a s e i t s own m a r k e t s h a r e product  differentiation.  through  Because o f t h e absence o f r e g u l a -  t o r y c o n t r o l o v e r q u a l i t y t h e r e i s no i n s t i t u t i o n a l to  discourage  innovations which a f f e c t only q u a l i t y .  c e n t i v e to introduce such innovations o l o g o p o l i s t i c interdependence. to  barrier The i n -  i s , h o w e v e r , r e d u c e d by  T h e r e may r e m a i n an i n c e n t i v e  i m p r o v e q u a l i t y i n m o d e r a t e ways w h i c h w o u l d n o t p r o m p t  immediate r e a c t i o n s from t h e competitors, s u c h i n c e n t i v e s c a n be a n a l y z e d  but the extent of  o n l y i n t e r m s o f 'game  5  theory'. Summary It  i s p r e d i c t e d t h a t t h e a i r l i n e s w i l l have l e s s i n c e n -  t i v e t o innovate industries.  than unregulated,  competitive  Because p r i c e and p r o f i t s a r e r e g u l a t e d w h i l e  vice quality i s not, i ti s l i k e l y  interdependence i n the o l o g o p o l i s t i c that carriers are l i k e l y  Mutual r e c o g n i t i o n o f trunkline industry implies  t o be d e f e n s i v e  r a t h e r than  T h i s c o u l d be r e f l e c t e d i n l o n g d e l a y s  t e c h n o l o g i c a l d i s c o v e r i e s and t h e i n t r o d u c t i o n o f innovations  ally  aggressive between'  corresponding  t o the i n d u s t r y , r e g a r d l e s s o f whether the innova-  tions affect costs or service q u a l i t y . novations  ser-  t h a t i n n o v a t i o n w i l l become  q u a l i t y - r a t h e r than c o s t - o r i e n t e d .  innovators.  or monopolistic  The r a t e a t w h i c h i n -  become d i f f u s e d t h r o u g h o u t t h e i n d u s t r y s h o u l d  be r a p i d w h e r e q u a l i t y o f s e r v i c e i s i m p r o v e d , a n d  generslower  155 where c o s t s r e d u c t i o n s  a r e c o n c e r n e d , a l t h o u g h t h i s may be  a f f e c t e d by t h e a c t i o n s o f t h e r e g u l a t o r . The  r e m a i n i n g s e c t i o n s o f t h i s c h a p t e r c o n s i s t o f two  parts which analyze,  i n turn, the rate of innovation  direction of innovation t e r s 1-3.  during  Part I discusses  and t h e  the period discussed  the extent  of the influence of  f a c t o r p r i c e s on t h e r a t e o f i n n o v a t i o n . h i s t o r i c a l events i n the context  i n Chap-  I t analyzes  the  o f t h e a b o v e o u t l i n e o f mar-  k e t b e h a v i o u r and examines t h e i n f l u e n c e o f t h e market s t r u c t u r e o f t h e a i r c r a f t m a n u f a c t u r i n g i n d u s t r y and exogenous n o l o g i c a l development. relative  tech-  P a r t I I examines t h e i n f l u e n c e o f  f a c t o r p r i c e s on t h e d i r e c t i o n o f i n n o v a t i o n by t e s t -  i n g whether o r n o t c a u s a l i t y i s apparent i n those events i n w h i c h t h e d i r e c t i o n o f i n n o v a t i o n was c o n s i s t e n t w i t h price  factor  incentives.  PART I :  THE RATE OF TECHNOLOGICAL CHANGE  The' I n f l u e n c e  of the A i r c r a f t  Airlines  Manufacturers  c a r r y o u t v i r t u a l l y no t e c h n o l o g i c a l  t h e m s e l v e s ; i n s t e a d t h e y r e l y upon t h e a i r c r a f t  research  manufacturers.  The  two g r o u p s f o r m d i s t i n c t i n d u s t r i e s :  the manufacturers  are  t h e o r i g i n a t o r s and p r o d u c e r s o f t e c h n o l o g i c a l  innovations  f o r t h e a i r l i n e s who a r e i n t u r n p r o d u c e r s o f a i r t r a n s p o r t a tion. directly  I t follows that a i r c r a f t manufacturers w i l l  respond i n -  t o t h e f a c t o r p r i c e s f a c i n g t h e a i r l i n e s because o f  the  d i r e c t e f f e c t s u c h p r i c e s h a v e upon t h e e c o n o m i c a t t r a c -  tiveness of p a r t i c u l a r innovations.  I f i t can  be  shown,  however, t h a t t h e r a t e a t w h i c h m a n u f a c t u r e r s have d e v e l o p e d new  technology  i s r e l a t e d to the market s t r u c t u r e of t h e i r  industry  ( i . e . to circumstances  airlines  industry)  tor p r i c e trends  which are  t h i s weakens the  have u n i q u e l y  exogenous t o  own  the  argument t h a t a i r l i n e  determined the r a t e of  fac-  innova-  tion. There i s c o n s i d e r a b l e  evidence which suggests that  r a t e o f i n n o v a t i o n i n a i r t r a n s p o r t has competitive  situation  e x a m p l e , D o u g l a s and the  b e e n a f f e c t e d by  postwar p e r i o d , w i t h Convair  and  as  aircraft early i n  Martin holding  p o s i t i o n s i n the manufacture of s h o r t - h a u l  s t a b i l i z e d by  For  L o c k h e e d became f i r m l y e s t a b l i s h e d  appears t h a t once the  the  facing p a r t i c u l a r manufacturers.  dominant manufacturers o f l o n g - h a u l  the  the  corresponding  transports.  It  s t r u c t u r e of these p a r a l l e l duopolies  the e a r l y f i f t i e s ,  S u b s e q u e n t l y , the i n n o v a t i o n s  the rates of i n n o v a t i o n  attempted i n the  minor i n nature.  Each f i r m appeared content  d e r i v a t i v e designs  correspondingly  had  slowed.  i n d u s t r y were to  introduce  c l o s e l y to those of  their  rival. I t w o u l d h a v e b e e n p o s s i b l e f o r an o u t s i d e upset t h i s e q u i l i b r i u m only  i f a product demonstrably  t o t h a t o f t h e e s t a b l i s h e d f i r m s c o u l d be technology  f i r m to  developed.  j u s t d i d not o f f e r the p o t e n t i a l f o r such  improvement.  This  superior Piston radical  i s r e f l e c t e d i n the d e c i s i o n of the  Braba-  157 zon Committee i n B r i t a i n t o abandon any a t t e m p t d i r e c t l y w i t h Douglas  and Lockheed.  t o compete  They c h o s e  instead to  c o n c e n t r a t e e x c l u s i v e l y on t u r b i n e t e c h n o l o g y i n hopes o f eventually penetrating  the commercial  aircraft  market.  G i v e n t h e s t r o n g o l i g o p o l i s t i c p o s i t i o n o f Douglas and Lockheed  o n t h e one h a n d , a n d t h e c h a r a c t e r i s t i c s o f t r u n k l i n e  m a r k e t b e h a v i o u r on t h e o t h e r ,  i t i s not s u r p r i s i n g that the  p i s t o n e r a became a t e c h n o l o g i c a l ' p l a t e a u .  Both  1  and L o c k h e e d fundamental  were a p p r e h e n s i v e  the- s t a t u s quo.  Thus, t h e f i r s t  j e t w e r e d e v e l o p e d by o u t s i d e  Havailland)  firms  a n d t h e two d o m i n a n t m a n u f a c t u r e r s  c e r t e d attempt  t o be f i r s t  I t was t h e i n i t i a t i v e  Having  i n the turbine t r a n s i t i o n ,  appeared  by e x p e n d i n g  ( V i c k e r s a n d de made no c o n -  o f a new e n t r a n t , B o e i n g , t h a t  i n t e n t on r e s i s t i n g  finally  f a i l e d t o take the i n -  Douglas  p o s i t i o n o f dominance i n t h e i n d u s t r y . lar,  t u r b o p r o p and  t o d e v e l o p an American-made j e t .  p r o m p t e d them t o t a k e a c t i o n . itiative  the r i s k s involved i n  t e c h n o l o g i c a l change because t h e y had an i n t e r e s t  in maintaining the f i r s t  about  Douglas  quickly lost  Lockheed,  their  i n particu-r  t h e . s h i f t i n t e c h n o l o g y and  e f f o r t on a d e r i v a t i v e o f t h e i r o l d d e s i g n s ( t h e  L-1649A a n d p r o j e c t e d t u r b o p r o p v e r s i o n s )  t h e y were  displaced  by B o e i n g when t h e m a r k e t s t a b i l i z e d i n t h e e a r l y 1 9 6 0 ' s . Similar behaviour i s evident recent period.  Boeing and Douglas  t h r o u g h o u t much o f t h e developed  c o r r e s p o n d i n g de-  r i v a t i v e s o f t h e 707 a n d DC-8 l o n g - h a u l . a i r c r a f t a n d n e a r tical  short-haul  aircraft,  t h e 737 a n d DC-9 r e s p e c t i v e l y .  iden-  158 Technological 19 70,  c h a n g e r e m a i n e d e v o l u t i o n a r y b e t w e e n 19 60 a n d  and o u t s i d e  gain entry.  f i r m s s u c h as C o n v a i r  This suggestion  found i t d i f f i c u l t t o  that the rate of innovation  among a i r l i n e s was a f f e c t e d by t h e s t a t e o f e q u i l i b r i u m o r d i s e q u i l i b r i u m i n the manufacturing  i n d u s t r y does n o t r e v e a l t h e  whole p i c t u r e , however, because t h e l a t t e r i n d u s t r y i s s u b j e c t t o a s t r o n g exogenous i n f l u e n c e - t h a t o f t h e m i l i t a r y . The  Influence o f the M i l i t a r y Technical progress  i n aviation relies  d e g r e e upon t h e r e s u l t s o f r e s e a r c h under government a u s p i c e s . by  to a  considerable  and development c a r r i e d o u t  Much o f t h e i n n o v a t i o n c a r r i e d o u t  commercial a i r c r a f t manufacturers d e r i v e s from a d d i t i o n a l  development c a r r i e d o u t a f t e r seminal elsewhere.  With extensive  research  research  h a s b e e n done  and development  activi-  t i e s c a r r i e d o u t by n o n - p r o f i t o r g a n i z a t i o n s , a n d a c t i v e scientific industry, cial  d i s c i p l i n e s c l o s e l y r e l a t e d t o the technology the underlying source  o f major innovations  of the  i n commer-  a i r c r a f t has been exogenous t o t h e m a n u f a c t u r e r s and, i n  turn, the a i r l i n e s . dustry cepts.  Innovation  i s o f t e n merely refinement F o r example, w i t h o u t  i n the commercial a i r c r a f t i n and a d a p t a t i o n  o f proven con-  understating the contribution  w h i c h c o m m e r c i a l a c t i v i t y h a s made i n r e f i n i n g a n d  improving  power p l a n t s , i t c a n be s a f e l y s t a t e d t h a t a l m o s t a l l s i g n i f i c a n t changes i n t h e s t a t e o f t h e a r t i n a i r c r a f t e n g i n e n o l o g y c a n be t r a c e d t o m i l i t a r y o r o t h e r g o v e r n m e n t a l  techresearch  159 programs.  S i n c e a l l a i r c r a f t are designed around engine para-  m e t e r s ^ i t i s c l e a r t h a t t h e t i m i n g o f most i m p o r t a n t a i r c r a f t i n n o v a t i o n s has been l a r g e l y  dependent  upon t h e m i l i t a r y .  T h i s i s shown by t h e f a c t t h a t a l l o f t h e p i s t o n  en-  g i n e s u s e d on c o m m e r c i a l t r a n s p o r t s w e r e m i l i t a r y e n g i n e s o r their derivatives.  The  first  turbine-powered transports  de-  veloped i n B r i t a i n used engines o r i g i n a l l y developed f o r the m i l i t a r y w h i l e the f i r s t American not introduced u n t i l  t h e i r engines  had been proven i n m i l i t a r y another m i l i t a r y engine (the  T56).  jets,  t h e DC-8  and  (the m i l i t a r y  service.  The  707,  J 5 7 and  Convair jets  ( t h e J 7 9 ) as d i d t h e E l e c t r a  In addition,  were J75)  used  turboprop  t h e e n g i n e u s e d o n t h e DC-10  d e r i v a t i v e o f t h e m i l i t a r y TF39 w h i l e t h e 747's e n g i n e  is a was  developed f o l l o w i n g a m i l i t a r y research e f f o r t . The  o n l y two e n g i n e s t h a t do n o t a p p e a r  t o have  d i r e c t m i l i t a r y p a r e n t a g e a r e t h e P r a t t and W h i t n e y on a v a r i e t y o f s h o r t - h a u l a i r c r a f t , RB.211 u s e d on t h e L . 1 0 1 1 . scaled-down militaty  JT8D,  used  and t h e R o l l s - R o y c e  H o w e v e r , t h e JT8D i s i n e s s e n c e  J 5 7 and J 7 5  (JT3C and J T 4 A ) .  The  RB.211, a  three-  the f i r s t depart-  f r o m s t a t e - o f - t h e - a r t t e c h n o l o g y , t o o r i g i n a t e as a commer-  c i a l venture.  E v e n s o , i t c a n n o t s e r v e as a g o o d e x a m p l e o f  a s u c c e s s f u l independent r e s e a r c h e f f o r t because R o l l s - R o y c e was  a  JT3D and t h e l a t t e r i s a d i r e c t d e r i v a t i v e o f t h e  s h a f t , high-bypass t u r b o f a n , i s thus perhaps ure  had  f o r c e d i n t o bankruptcy l a r g e l y because  burden  o f the  financial  t h a t r e s u l t e d from t e c h n i c a l d i f f i c u l t i e s w i t h  the  160 engine. A separate f a c t o r r e l a t i n g t o the influence military  derives  f r o m t h e f a c t t h a t c o m m e r c i a l a i r c r a f t manu-  f a c t u r i n g i s a companion i n d u s t r y and  of the  aerospace a c t i v i t y .  to military aeronautical  A l l o f t h e f i r m s t h a t have  partici-  pated i n the commercial market i n the postwar p e r i o d p r o d u c e d m i l i t a r y a i r c r a f t as w e l l . tal,  production  facilities,  f i r m has thus been d i r e c t l y  have  The a v a i l a b i l i t y , o f c a p i -  and human r e s o u r c e s w i t h i n a n y one d e p e n d e n t upon t h e s t a t e o f t h e  m i l i t a r y market and, i n p a r t i c u l a r , t h e i r p o s i t i o n i n t h i s market.  I n o t h e r w o r d s , an exogenous i n f l u e n c e  economic as w e l l as s t r i c t l y  technical  arises  from  considerations.  D i f f u s i o n o f New T e c h n o l o g y The  rate of i n i t i a t i o n of technological  been a f f e c t e d by c o n d i t i o n s ing industry  e x i s t i n g i n the a i r c r a f t  and a l s o by a s t r o n g  of t e c h n o l o g i c a l  The a i r l i n e s  t h o u g h t o f as consumers, r a t h e r  degree,  exo-  a r e more c o r r e c t l y  than o r i g i n a t o r s , o f changes  were a d j u s t e d  i n accordance with  f a c t o r p r i c e s i s examined i n P a r t I I .  l i g h t o f t h e above, o b s e r v a t i o n s the  The r a t e  W h e t h e r t e c h n o l o g y c h a n g e d i n s u c h a way  factor proportions relative  manufactur-  military influence.  change has t h u s been, t o a g r e a t  genous t o t h e a i r l i n e s .  i n technology.  change has  that  airline  However, i n  i t seems a p p r o p r i a t e  t o examine  e f f e c t t h e a i r l i n e s h a d on t h e r a t e o f t e c h n o l o g i c a l  change  7  m  terms o f t h e r a t e o f a d o p t i o n  (or d i f f u s i o n ) of  as o p p o s e d t o . t h e r a t e o f t h e i r i n i t i a t i o n .  innovations  The q u e s t i o n  to  be  addressed i s :  given  t h e r a t e a t w h i c h new  become a v a i l a b l e t o t h e a i r c a r r i e r s , tor p r i c e trends  technology  has  t o what e x t e n t have f a c -  a f f e c t e d the r a t e of t h e i r adoption  by  the  industry? I t was  s u g g e s t e d e a r l i e r t h a t i n n o v a t i o n by  the  trunk  c a r r i e r s m i g h t be e x p e c t e d t o h a v e b e e n o r i e n t e d more t o quality considerations.than  cost reduction.  I f t h i s can  shown t o h a v e b e e n t r u e h i s t o r i c a l l y ,  i t would provide  b a s i s f o r r e j e c t i o n of the hypothesis  t h a t the r a t e of  o f new  technology  was  be  the> adoption  d e p e n d e n t s o l e l y upon f a c t o r p r i c e c o n -  siderations . There are  three important  examples o f i n n o v a t i o n which  took place p r i m a r i l y f o r ' q u a l i t y of s e r v i c e ' reasons: turbo-compound p i s t o n a i r c r a f t , craft.  the  j e t a i r c r a f t and w i d e - b o d y  air-  I n each case t h e r e were s i g n i f i c a n t improvements i n  q u a l i t y a c c o m p a n y i n g and, vation.  i n l a r g e p a r t , e x p l a i n i n g the  inno-  Under p r e v a i l i n g r e l a t i v e p r i c e s , t h e c o s t i m p l i c a -  8 t i o n s of these i n n o v a t i o n s were, r e s p e c t i v e l y adverse, ambi9 10 guous, and n e u t r a l . B a s e d on c o s t c o n s i d e r a t i o n s a l o n e , these  i n n o v a t i o n s w o u l d n o t have been a d o p t e d a t a l l ,  have d i f f u s e d s l o w l y ; but was  i n each case the r a t e o f  r a p i d because of q u a l i t y T h e r e a r e two  because of minor tions:  or would  diffusion  considerations.  o b v i o u s examples of i n n o v a t i o n s  (product  t h e JT3D t u r b o f a n  differentiation) quality and  the Convair  990  introduced  considera-  aircraft.  In  162 both cases, American A i r l i n e s acquired to  be  The  the equipment i n  a b l e t o o f f e r h i g h e r c r u i s i n g speeds than t h e i r  e f f e c t s on o p e r a t i n g c o s t s w e r e m a r g i n a l  i n the  order  rivals.  first in-  11 stance  and  adverse i n t h e second.  The  f a c t t h a t the  innova-  t i o n s d i d not d i f f u s e through the t r u n k l i n e i n d u s t r y i s p l a i n e d by t h e r e was  adoption  t h e i r v e r y m i n o r i m p a c t on q u a l i t y a t t r i b u t e s little  If  i m p a c t on o v e r a l l t r i p  times.  i t were f a c t o r p r i c e s t h a t d e t e r m i n e d the r a t e  of innovations  i t w o u l d be  e a r l y a n a l y s i s of each p r o s p e c t i v e  reasonable technology  e i t h e r complete r e j e c t i o n or r a p i d adoption, whether or not  the i n n o v a t i o n c o u l d p r o v i d e  H o w e v e r , s u c h was period.  ex-  The  c l e a r l y not  to expect  an  followed  by  depending  on  cost-savings.  the case d u r i n g the  Comet, f o r e x a m p l e , was  of  transition  known t o h a v e  higher  c o s t s t h a n p i s t o n a i r c r a f t a n d y e t some o f t h e c a r r i e r s  re-  t a i n e d an i n t e r e s t i n i t . I n the e a r l y f i f t i e s ,  cost expectations  surrounding  the American-made j e t s were ambiguous, y e t t h e i r a d o p t i o n felt for  t o be  inevitable.  On  t h e o t h e r h a n d , when t h e p o t e n t i a l  c o s t r e d u c t i o n w i t h t h e j e t s became a p p a r e n t t h e r e w e r e  a b r u p t c h a n g e i n a t t i t u d e on they No  was  remained defensive  the p a r t o f the t r u n k  r a t h e r than aggressive  carriers;  innovators.  c a r r i e r f e l t compelled to take u n i l a t e r a l a c t i o n , y e t  r e a c t i o n s had  b e e n p r o m p t e d by Pan  t h e r a t e o f d i f f u s i o n was q u a l i t y , or competitive  rapid.  no  once  American's j e t purchases The  reasons f o r t h i s  c o n s i d e r a t i o n s and  not  fears of  were being  0  163  out-maneuvered i n terms o f c o s t s o r f a r e s . . This behaviour 747  was  introduced.  were s e c o n d a r y and creased  was  repeated  a d e c a d e l a t e r when  In both instances  cost  t h e i m p a c t o f t h e new  the  considerations  technology  was  in-  s e r v i c e q u a l i t y a t t h e same, o r n e a r l y t h e same, f a r e  levels.  B e h a v i o u r was  e a r l i e r s i n c e t h e r e was  c o n s i s t e n t w i t h the p r e d i c t i o n given evidence of defensive  t u a l r e c o g n i t i o n o f i n t e r d e p e n d e n c e and quality  r a t h e r than  innovation,  competition  based  s i d e r a t i o n a l o n e were those  resulting  examples o f which are  DC-9-30.  from the  c a r r i e r s were not  innovations, suggesting  unaffected  fares  f o r c e d to adopt  these  o n c e more t h a t c o s t c o n s i d e r a t i o n s d i d  ' s t r e t c h e d ' a i r c r a f t were o f the n a t u r e  efficiency'  or  In fact, of  'pure-efficiency' innovations  quire t e c h n i c a l breakthroughs,  should  because  'biased-  t h a t d i d not  they have n o t  i f u n i t c o s t s were c o n s i d e r e d  re-  pre-empted  the  initial  The  answer r e q u i r e s c o n s i d e r a t i o n of a n o t h e r q u a l i t y v a r i a b l e ,  schedule  designs  and  and  not determine the r a t e o f t e c h n i c a l change. the  con-  ' s t r e t c h i n g ' of  t h e DC-8-61, 7 2 7 - 2 0 0 ,  H o w e v e r , b e c a u s e q u a l i t y was  r e g u l a t e d , the trunk  on  cost.  Perhaps the only i n n o v a t i o n s which i n v o l v e d c o s t  aircraft,  mu-  all?  frequency. As  discussed e a r l i e r , high schedule  e x p l i c i t o b j e c t i v e of each competitor and  at  i t i s one  frequency  is  an  i n the t r u n k l i n e i n d u s t r y  which c o n f l i c t s w i t h the o b j e c t i v e of  c o s t t h r o u g h i n n o v a t i o n when s u c h i n n o v a t i o n s  reducing  involve  increases  164 in  aircraft capacity.  provide  A new a i r c r a f t  ( e . g . t h e DC-8-61) may  reduced u n i t costs only w i t h a higher o v e r a l l  passenger  l o a d b e c a u s e i t s c o s t s p e r a i r c r a f t m i l e may be h i g h e r earlier,  smaller designs  ( e . g . t h e DC-8-50).  d i t i o n s a r e d u c t i o n i n frequency senger loads p e r departure.  than  Under such con-  i s required to increase  pas-  However, because u n i l a t e r a l  fre-  q u e n c y r e d u c t i o n c a n be e x p e c t e d t o h a v e an a d v e r s e i m p a c t on a c a r r i e r ' s m a r k e t , t h e i n n o v a t o r may f i n d i t i m p o s s i b l e t o achieve  a real cost reduction  Regulatory take  (per passenger mile)  i npractice.  c o n t r o l o v e r p r i c e t h u s removes t h e i n c e n t i v e t o  u n i l a t e r a l a c t i o n t o reduce f a r e l e v e l s through  In such a s i t u a t i o n ,  the rate of innovation  (where  innovation.  innovation  i n v o l v e s c a p a c i t y i n c r e a s e s ) w o u l d be c o r r e l a t e d w i t h t h e s e c u lar  i n c r e a s e i n demand i n t h e i n d u s t r y . S u p p o s e t h a t a new, l a r g e r c a p a c i t y a i r c r a f t w e r e  able that provided  lower  seat-mile costs than  avail-  contemporary 12  designs  b u t had a h i g h e r breakeven passenger l o a d .  t i m e a s e c u l a r i n c r e a s e i n demand o c c u r r e d ,  Each  a c a r r i e r would  have t o t r a d e - o f f t h e r e d u c t i o n i n a v e r a g e c o s t a t t a i n a b l e by accommodating t r a f f i c 13 in ure  average revenue frequency  w i t h t h e l a r g e r a i r c r a f t and t h e i n c r e a s e t h a t would r e s u l t from i n c r e a s e d  with a smaller  (higher cost)  aircraft.  departBecause  the l a t t e r e f f e c t i s s u b j e c t t o d i m i n i s h i n g r e t u r n s , the e f f e c t on average revenues w i l l  e v e n t u a l l y be o u t w e i g h e d b y  the  e f f e c t on average c o s t s .  T h u s , o n l y when m a r k e t demand  has  i n c r e a s e d t o some p o i n t w i l l  t h e l a r g e r a i r c r a f t be a c q u i r -  165 ed  i n s p i t e of  lower. on  the  fact that  Such c o n s i d e r a t i o n s  the  rate of innovation  w o u l d p o s e an  which further  to r e l a t e i t to f a c t o r p r i c e  PART I I :  THE  i t s unit costs  DIRECTION OF  are  known t o  important  be  constraint  f r u s t r a t e s any  attempt  effects.  TECHNOLOGICAL CHANGE  1NTR0VUCTJ0N The  f i r s t part  t i v e evidence that  the  e i t h e r a i r l i n e costs centives further the  of  t h i s c h a p t e r has  rate of  Part  related  I I of t h i s chapter  resulted  the  innovation?  14 arid c a p i t a l tion.  to  average costs  considers  and  discussion  question:  w h e r e an  explain  will  the  at-  innovation  the  theory of  did  occur- •  i s paid  e f f i c i e n c y for f l y i n g personnel, with  in  the  to what e x t e n t  Particular attention  . t h a t were c o n s i s t e n t  to  energy produc-  PERSONNEL A consistent  the  The  i n improved f a c t o r p r o d u c t i v i t y ,  changes i n t e c h n i c a l  1= LYING  change.  following  a c c o m p a n y i n g e f f e c t on  rence of  posi-  causality  h i s t o r i c a l r e l a t i o n s h i p between f a c t o r p r i c e s  tempt t o answer the  in  be  d i s t i n c t i o n b e t w e e n c o r r e l a t i o n and  d i r e c t i o n of technological  the  can  little  i n general or r e l a t i v e factor price i n -  in particular. the  innovation  offered  productivity  spection  of the  and of  rather  marked improvement o v e r  time  f l y i n g p e r s o n n e l i s r e v e a l e d upon i n ^  productivity  indices  calculated  i n Chapters  1^-  166 III. was  The  f a c t t h a t , as  discussed  a concurrent increase  plies  t h a t the  respect,  i n the  Introduction,  i n the r e l a t i v e p r i c e of labour  d i r e c t i o n o f t e c h n o l o g i c a l c h a n g e was,  consistent with  the  theory  of production.  and  - reduced crew complements, i n c r e a s e d  increased  a i r c r a f t capacity  - are  im-  in  this  Three  a v e n u e s by w h i c h f l y i n g p e r s o n n e l p r o d u c t i v i t y (FPP) increased  there  may  be  aircraft  examined here t o  speed,  deter-  mine w h e t h e r t h e p a r t i c u l a r changes t h a t have o c c u r r e d  over  time r e f l e c t c a u s a l i t y . R e d u c e d Crew C o m p l e m e n t s T h e r e has  been l i t t l e  activity  i n the  area of  ing  c r e w c o m p l e m e n t s , p r i m a r i l y b e c a u s e t h e r e was  for  improvement.  divisibility  This  a r i s e s p a r t l y as  ( i . e . i t i s impossible  o f human r e s o u r c e s  little  t o add  i n u n i t s l e s s t h a n one)  l e s s t h a n two.  minimum c o m p l e m e n t o f f l i g h t a i r c r a f t type.  or and  subtract  attendants  p a r t l y because  required  f l i g h t attendants  f o r each  amount o f  attention of  s t a f f i n g could  not  r e d u c e d w i t h o u t some c o m p r o m i s e o f q u a l i t y o f s e r v i c e .  a result,  t h e o n l y manner i n w h i c h c r e w c o m p l e m e n t s c o u l d  b e e n r e d u c e d was the  flight  i s a dimension  each c a r r i e r ' s s e r v i c e , f l i g h t attendants be  inputs  There i s a l s o a s a f e t y - r e l a t e d  In a d d i t i o n , because the  p a i d t o p a s s e n g e r s by  room  a r e s u l t o f an i n -  o f s a f e t y r e g u l a t i o n s w h i c h h a v e e s t a b l i s h e d minimum crews a t not  reduc-  by  operator.  have  t h e e l i m i n a t i o n o f n o n - p i l o t members o f  f l i g h t c r e w s u c h as t h e  radio  As  navigator,  f l i g h t engineer,  or  The  e l i m i n a t i o n o f r a d i o - o p e r a t o r s m u s t , h o w e v e r , be  a t t r i b u t e d t o improvements i n e l e c t r o n i c s t h a t were exogenous to the a i r transport i n d u s t r y .  While the adoption  o f new  c o m m u n i c a t i o n s e q u i p m e n t may a p p e a r t o be e v i d e n c e o f a capital-labour substitution, ity  t h e r e were a l s o s i g n i f i c a n t  qual-  c o n s i d e r a t i o n s stemming from t h e g r e a t e r r e l i a b i l i t y o f  t h e new e q u i p m e n t .  The e l i m i n a t i o n o f n a v i g a t o r s  r a n g e f l i g h t s m u s t be a t t r i b u t e d l a r g e l y  on s h o r t -  t o improvements i n  ground-based n a v i g a t i o n equipment, t h e c o s t s o f w h i c h were e x ternal to the a i r l i n e s . long-range f l i g h t s  E l i m i n a t i o n o f t h e n a v i g a t o r on  through the i n t r o d u c t i o n o f i n e r t i a l  navi-  g a t i o n s y s t e m s was, i n a s e n s e , a s u b s t i t u t i o n o f ( l o w priced) , c a p i t a l  f o r (high-priced)  l a b o u r b u t once a g a i n  were s i g n i f i c a n t i n d i r e c t b e n e f i t s . capable  o f performing  The new e q u i p m e n t was  t h e n a v i g a t i o n t a s k b e t t e r t h a n a human  n a v i g a t o r , making p o s s i b l e r e d u c t i o n s consumption on l o n g f l i g h t s . v a t i o n w o u l d n o t have t a k e n incentive  there  i n flight  times  and f u e l  I t i s not clear that this  inno-  p l a c e e v e n i n t h e a b s e n c e o f an  t o e c o n o m i z e on l a b o u r ;  of the influence of a r i s i n g  thus i t i s not c l e a r evidence  factor price.  A b e t t e r example o f a r e d u c t i o n i n crew complement b r o u g h t a b o u t a s an e f f o r t t o r e d u c e f l i g h t e l i m i n a t i o n of the f l i g h t engineer was n o t t r u l y  c r e w c o s t s was t h e  on t w i n - e n g i n e  jets.  This  an i n n o v a t i o n , h o w e v e r , b e c a u s e s e v e r a l e a r l y  a i r c r a f t s u c h a s t h e DC-4  and S t r a t o c r u i s e r had been  designed  15 t o be o p e r a t e d  b y two-man c r e w s .  The f a c t t h a t t h e s e a i r -  16 8 c r a f t and  l a t e r p i s t o n and  j e t t r a n s p o r t s were o p e r a t e d  t h r e e - m a n c r e w s r e s u l t e d f r o m a 1948 d e c i s i o n r e q u i r i n g f l i g h t engineers  C i v i l Aeronautics  subsequently  c o - p i l o t , but  Board  on a l l a i r c r a f t h a v i n g  16 g r o s s w e i g h t i n e x c e s s o f 80,000 p o u n d s . the p o s t w a r p e r i o d were t e c h n i c a l l y c a p a b l e o n l y t h e p i l o t and  by  Most a i r c r a f t o f of operating with  f l i g h t engineer  incorporated i n c o c k p i t designs  a  s t a t i o n s were  pursuant to  this  17 decision.  Thus, the f a c t t h a t t h e  e l i m i n a t e d on  t h e BAC-111, DC-9  a political  success  c a l breakthrough.  and  f l i g h t engineer  was  similar aircraft  reflected  i n labour r e l a t i o n s r a t h e r than a t e c h n i As  a r e s u l t t h e r e i s no  c l e a r evidence  of  i n n o v a t i o n i n the postwar p e r i o d which reduced crew complements i n o r d e r Increased  t o e c o n o m i z e on  Aircraft  labour.  Speed  Wages f o r f l y i n g p e r s o n n e l  have t r a d i t i o n a l l y been b a s -  e d on h o u r s f l o w n r a t h e r t h a n d i s t a n c e f l o w n  so i t f o l l o w s  an i n c r e a s e i n c r u i s i n g s p e e d b r i n g s a b o u t a p r o p o r t i o n t i o n i n inputs required per that, concurrent t h e r e has  seat-mile.  w i t h the h i s t o r i c a l  Figure  4.1  reduc-  reveals  i n c r e a s e i n wage r a t e s ,  been a monotonic i n c r e a s e i n a i r c r a f t  cruising  s p e e d s , c o n s i s t i n g o f an a b r u p t i n c r e a s e a t t h e t r a n s i t i o n w e l l as i n c r e m e n t a l logical  stability.  historical personnel  i n c r e a s e s w i t h i n the H o w e v e r , any  that  two  periods of  attempt to a t t r i b u t e  t r e n d i n a i r c r a f t speed w i t h the wages e n c o u n t e r s an i m p o r t a n t  trend of  as  technothis  flying  identification  problem  o  6001 o  o  o  o  8  op o  500 AGGREGATE SPEED  (DOMESTIC  TRUNKS)  4 0 0 •{  * 300 -1  200  AVERAGE  *  !  i  #  *  " L  PISTON A TURBOPROP O JET  * 100 H  T  1948  1950  1*55  I960 YEAR OF  Figure  4.1  Historical  1965  INTRODUCTION  Trend i n A i r c r a f t  C r u i s i n g S p e e d , 1948-70  1970  a\  170 r e s u l t i n g from t h e r e l a t i o n s h i p between service. in  speed and q u a l i t y o f  H i g h e r speeds would have been a d e s i d e r a t u m even  t h e absence o f a f a c t o r p r i c e The e a r l y p e r i o d  of piston  about a s i g n i f i c a n t i n c r e a s e stimulated intercity  incentive.  demand g e n e r a l l y  a i r c r a f t development  brought  i n the q u a l i t y of a i r service  that  ( i . e . by r e d u c i n g t h e d i s u t i l i t y o f  t r a v e l l i n g ) and f u r t h e r  improved the c o m p e t i t i v e  p o s i t i o n o f a i r v i s - a - v i s o t h e r modes  (especially r a i l ) .  For  18 example,  the increased  range  a n d s p e e d o f t h e DC-6  t o t h e DC-3 n o t o n l y i n c r e a s e d  flight  compared  crew p r o d u c i t i v i t y b u t  a l s o reduced t h e f l i g h t time r e q u i r e d f o r a westbound T 19 t m e n t a l j o u r n e y f r o m 17-4 h o u r s t o 11 h o u r s . This t i m e was r e d u c e d t o 8| h o u r s w i t h  the introduction  transconflight  of the  20 DC-7.  I t could  t h u s be a r g u e d t h a t  ed because o f q u a l i t y c o n s i d e r a t i o n s considerations. the  increased  c r u i s i n g speeds  not factor  increas-  productivity  I t w o u l d , i n f a c t , be p e r v e r s e t o a t t r i b u t e s p e e d o f t h e DC-7 s e r i e s t o t h e i n f l u e n c e  r e l a t i v e f a c t o r p r i c e s because  the a i r c r a f t s  1  costs  of  were h i g h e r  than those o f e a r l i e r a i r c r a f t i n s p i t e o f the increase  in  FPP. The i n c r e a s e  i n speed which accompanied  the t r a n s i t i o n  to j e t a i r c r a f t a l s o b r o u g h t about a marked i n c r e a s e  i n FPP  b u t o n c e a g a i n t h i s c a n n o t be a t t r i b u t e d t o t h e i n f l u e n c e relative  factor prices.  As d i s c u s s e d e a r l i e r ,  e f f o r t which l e d t o t h e development ous t o t h e a i r l i n e s i n d u s t r y  of  the research  o f j e t a i r c r a f t was  exogen-  and t h e a i r c r a f t were o r d e r e d by  1 7  the t r u n k  c a r r i e r s b e c a u s e o f demand c o n s i d e r a t i o n s ; no  1  one  was  completely  c e r t a i n what t h e i r o p e r a t i n g c o s t s would  be.  The  i m p o r t a n c e o f q u a l i t y as o p p o s e d t o c o s t c o n s i d e r a t i o n s i s  r e v e a l e d by t h e comments o f a B o e i n g o f f i c i a l p r i o r t o t h e i n t r o d u c t i o n of the  70 7:  Our p h i l o s o p h y i s t o p r o v i d e maximum p e r f o r m a n c e i n an a i r l i n e r t h a t c a n o p e r a t e w i t h r e a s o n a b l e economy ... we b e l i e v e t h a t we c a n c o m p e t e and have the advantage o f j e t performance w i t h o u t p a y i n g w h a t some p e o p l e m i g h t b e l i e v e i s an e x c e s s i v e penalty f o r that performance.^^ The cant  e x i s t e n c e o f the sound b a r r i e r p r e c l u d e s  i n c r e a s e i n FPP  of j e t a i r c r a f t . subsonic ed  through i n c r e a s e s i n the c r u i s i n g  For  t h i s reason,  c r u i s i n g speeds  recent e f f o r t s  In f a c t ,  any  c r u i s i n g speeds a p p r e c i a b l y above t h o s e  subsonic  jets i s likely  to  ( e . g . t h e CV-990) c a n n o t be  to f a c t o r p r i c e i n c e n t i v e s .  crease  signifi-  increase attribut-  e f f o r t to i n o f the  to i n v o l v e increased c a p i t a l  e n e r g y r e q u i r e m e n t s and y i e l d o n l y m a r g i n a l  speed  original and  improvements i n  FPP. Throughout the p e r i o d c o n s i d e r e d p e a r s t h a t w h i l e t h e e f f e c t o f s p e e d on was  recognized,  as i m p o r t a n t , presented  by  of a reverse  i n t h i s study  i t ap-  labour p r o d u c t i v i t y  q u a l i t y c o n s i d e r a t i o n s r e l a t i n g t o speed were  and  p e r h a p s more i m p o r t a n t  r i s i n g wage r a t e s .  than the i n c e n t i v e  Ironically,  dependency t h a t c l o u d s  there i s evidence  the p i c t u r e s t i l l  further;  t h e r a t e o f i n c r e a s e i n h o u r l y wages f o r f l y i n g p e r s o n n e l  was,  in  f a c t , a f f e c t e d by t h e r a t e a t w h i c h a i r c r a f t speeds were i n -  c r e a s e d by c h a n g i n g  technology.  I t was p o i n t e d  out earlier  t h a t wage r a t e s r o s e  abrupt-  22 l y when t h e j e t s w e r e i n t r o d u c e d , to c r u i s i n g speeds l o n g b e f o r e  b u t wages h a d b e e n  that.  indexed  As e a r l y as 1947, f l i g h t  c r e w s i n t h e U.S. w e r e p a i d a c c o r d i n g  to a formula that  i n t o account a i r c r a f t speed, d i s t a n c e  flown,  took  as w e l l as hours  23 flown.  The i m p l i c a t i o n s o f t h i s t y p e o f wage f o r m u l a was a  dampening o f t h e i n c e n t i v e t o i n c r e a s e rising relative  speed p r e s e n t e d by a  f a c t o r p r i c e ; t h e f a c t o r p r i c e t r e n d was  d e p e n d e n t upon t e c h n o l o g y .  itself  The i n c e n t i v e was n o t e n t i r e l y  r e m o v e d , h o w e v e r , b e c a u s e t h e wage f o r m u l a was s u c h t h a t an i n crease i n c r u i s i n g speed caused a l e s s than p r o p o r t i o n a l i n c r e a s e i n h o u r l y wage r a t e s . ^ 2  Increased  Aircraft  The  Capacity  parameters w h i c h have i n f l u e n c e d a i r c r a f t  were d i s c u s s e d  i n some d e t a i l e a r l i e r i n t h i s c h a p t e r .  e s s e n c e , i t was a r g u e d t h a t i n c r e a s e s ings  i n a l l inputs  i n capacity  achieved regardless  of the r e l a t i v e prices o f inputs.  rate a t which capacity  i n unit operating  i s increased  becomes  costs i s  the f a c t that the d i r e c t i o n of innovation i n capacity  Thus,  market-orient-  ed a n d i s n o t d e p e n d e n t upon t e c h n o l o g i c a l c a p a b i l i t y .  wards i n c r e a s e s  sav-  a n d a r e t h u s n o t d e p e n d e n t upon p a r t i c u l a r - a reduction  result,  In  produce  f a c t o r p r i c e trends  the  capacity  As a  has been t o -  i s not evidence o f the influence  o f r i s i n g wage r a t e s b e c a u s e t h e r e s u l t a n t s a v i n g s  i n labour  i n p u t s w o u l d have been e c o n o m i c a l l y Capacity  a t t r a c t i v e a t any wage r a t e .  increases are o f the nature of ' b i a s e d - e f f i c i e n c y '  t e c h n o l o g i c a l c h a n g e s b e c a u s e FPP i n c r e a s e s w h i l e tivity stant.  of a l l other  the produc-  i n p u t s e i t h e r i n c r e a s e s o r remains  Such i n n o v a t i o n s  con-  a r e a t t r a c t i v e under a l l . r e l a t i v e  f a c t o r p r i c e c o n d i t i o n s and w i l l  not occur only i f other  con-  s i d e r a t i o n s a r e i n v o l v e d , such as t h e adverse impact here on s c h e d u l e f r e q u e n c y b r o u g h t a b o u t by c a p a c i t y  increases.  ENERGY The 1948  t r e n d i n t h e average p r o d u c t i v i t y o f energy  between  a n d 1972 c a n be e s t a b l i s h e d f r o m t h e i n d i c e s p r e s e n t e d i n  C h a p t e r s I - I I I and compared w i t h t h e h i s t o r i c a l  trend i nthe  r e l a t i v e p r i c e o f energy g i v e n i n the I n t r o d u c t i o n . p a r i s o n r e v e a l s t h a t t h e r e l a t i o n s h i p between  The com-  p r i c e and produc-  tivity  was c o n s i s t e n t w i t h a p r e d i c t i o n b a s e d o n t h e e c o n o m i c  theory  of production;  energy-^productivity  (EP) c h a n g e d  d u r i n g t h e two p e r i o d s o f r e l a t i v e l y c o n s t a n t dropped s u b s t a n t i a l l y  little  f u e l p r i c e and  i n t h e t r a n s i t i o n p e r i o d when t h e r e was  a s i g n i f i c a n t drop i n t h e p r i c e o f f u e l .  The q u e s t i o n  t o be  a d d r e s s e d h e r e i s w h e t h e r i t c a n be shown t h a t t h e i n c e n t i v e s r e s u l t i n g from t h i s h i s t o r i c a l  f a c t o r p r i c e trend had a c a u s a l  e f f e c t on t h e d i r e c t i o n o f i n n o v a t i o n .  The d i s c u s s i o n  will  be d i v i d e d i n t o two s e c t i o n s w h i c h c o n s i d e r , i n t u r n , e n e r g y e f f i c i e n c y o f engines and o v e r a l l energy e f f i c i e n c y o f a i r craft.  Engine  Efficiency The  their  energy e f f i c i e n c y  specific  o f a i r c r a f t e n g i n e s i s g i v e n by  f u e l consumption  ( s f c ) which measures t h e  amount o f f u e l r e q u i r e d , i n p o u n d s , t o p r o d u c e one (piston  horsepower  and t u r b o p r o p e n g i n e s ) o r one pound o f t h r u s t ( j e t  e n g i n e s ) f o r one h o u r .  T h i s parameter  allows a  straightfor-  w a r d c o m p a r i s o n b e t w e e n e n g i n e s o f a n y one t y p e ;  comparison  25 between types i s l e f t t o t h e second  section.  PISTON ENGINES - The d e s i g n o f t h e W r i g h t a n d and Whitney  Pratt  e n g i n e s u s e d i n t h e DC-3 s e t a p a t t e r n f o r a l l l a t e r 26  p i s t o n - e n g i n e s u s e d on c o m m e r c i a l a i r c r a f t turbo-compound designs<  and a s i d e from the  none o f t h e s e l a t e r e n g i n e s  much i m p r o v e m e n t i n s f c .  offered  I n f a c t , w h i l e t h e DC-3's e n g i n e s  p r o v i d e d a twenty p e r c e n t r e d u c t i o n i n f u e l consumption p a r e d t o e a r l i e r d e s i g n s , even tributed  largely  t h e s e improvements have been a t -  t o changes i n f u e l q u a l i t y  which p e r m i t t e d the 27  use o f s u p e r c h a r g i n g and h i g h e r e n g i n e c o m p r e s s i o n Since these h i g h e r q u a l i t y priced,  (higher octane)  fuels  ratios.  were h i g h e r -  t h i s t e c h n o l o g i c a l i m p r o v e m e n t was n o t n e c e s s a r i l y  d i r e c t e d towards  r e d u c i n g f u e l c o s t s through improved  efficiency. Even though  energy-  t h e turbo-compound p i s t o n engines had t h e 28  l o w e s t s f c o f any s p a r k i g n i t i o n d e s i g n ,  t h e y were  neither  d e v e l o p e d n o r a d o p t e d by t h e a i r l i n e s i n o r d e r t o r e d u c e costs.  com-  fuel  T u r b o - c o m p o u n d e n g i n e s w e r e d e v e l o p e d f o r t h e U.S.  175 29 military  t o improve  T h e i r development  t h e range o f t h e i r s t r a t e g i c  bombers.  was, i n o t h e r w o r d s , exogenous t o t h e a i r  transportation industry.  The e n g i n e s w e r e a d o p t e d b y t h e  a i r l i n e s not with the intention of reducing fuel 30 b u t r a t h e r so t h a t range and c r u i s i n g speeds  consumption,  c o u l d be i n -  c r e a s e d w i t h a i r c r a f t s u c h a s t h e DC-7. There  i s further evidence that the d i r e c t i o n of innova-  t i o n i n r e s p e c t t o e n g i n e s f c was w h o l l y c o n s i s t e n t w i t h t h e economic Whitney  model o f response t o f a c t o r p r i c e s .  Both P r a t t and  and W r i g h t d e s i g n e d low f u e l consumption  engines  dur-  i n g t h e 1930's b u t d i d n o t p r o c e e d w i t h t h e e f f o r t s b e c a u s e a t t h e t i m e t h e demand was f o r h i g h e r p o w e r w h i c h i n v o l v e d 31 c o m p r e s s i o n r a t i o s and l e s s  f u e l economy.  This  lower  reflects  t h e f a c t t h a t t h e p r i c e o f f u e l was l o w a n d was n o t e x p e c t e d t o i n c r e a s e o v e r t i m e ; t h e r e was l i t t l e  i n c e n t i v e to develop  more e n e r g y - e f f i c i e n t e n g i n e t e c h n o l o g y a n d t h u s  innovation  c o u l d be d i r e c t e d t o w a r d s o t h e r g o a l s . JET ENGINES - T h e r e was a s i g n i f i c a n t r e d u c t i o n i n s p e c i f i c f u e l c o n s u m p t i o n b e t w e e n t h e de H a v a i l l a n d G h o s t t u r b o 32 jet  u s e d o n t h e Comet a n d t h e P r a t t a n d W h i t n e y  first  JT3C,  j e t e n g i n e t o be u s e d by t h e d o m e s t i c t r u n k s .  the I n no  way, h o w e v e r , c a n t h e r e l u c t a n c e o f t h e t r u n k s t o o r d e r t h e Comet be a t t r i b u t e d t o h i g h f u e l c o s t s .  To t h e e x t e n t t h a t  t h e r e was c o n c e r n o v e r t h e i n e f f i c i e n c y o f t h e G h o s t i t was p r i m a r i l y r e l a t e d t o t h e r e s t r i c t e d  engine,  range-payload per-  f o r m a n c e o f t h e Comet and  not  t o t h e amount o f f u e l  Behaviour surrounding efficiency,  the  that accords  turbofan,  the next improvement i n engine  a l s o r e v e a l s an  innovative  with theoretical prediction.  ample, i n i t i a l l y  consumed.  o f f e r e d t h e DC-8  response  Douglas, f o r  ex-  w i t h both American t u r b o j e t s 33  and  the Rolls-Royce  Conway t u r b o f a n .  In s p i t e of the  p o r t u n i t y t o reduce f u e l consumption w i t h t h i s bypass none o f t h e U.S. o r 707.  The  trunks ordered  t u r b o f a n was  eventually introduced  the h i g h e r c r u i s e t h r u s t o f the engine p e r m i t t e d i n c r u i s i n g speeds.  choose a General obtain higher B o e i n g and f a n on  Electric  engine,  t h e Conway on e i t h e r t h e  because  a slight in-  This l e d American A i r l i n e s turbofan  to  as p a r t o f t h e e f f o r t  speed w i t h the Convair  990  and  turbo-  aircraft. ^ 3  H o w e v e r , t h e new  engine technology  d i d not d i f f u s e  r a p i d l y through the i n d u s t r y because o f the absence o f a factor price incentive. creased  Only those  carriers  range o r b e t t e r a i r f i e l d p e r f o r m a n c e were e s p e c i a l l y  outweighed the r e d u c t i o n i n f u e l expense.  (to  strong  that required i n -  i n t e r e s t e d i n t h e JT3D e n g i n e b e c a u s e i t s h i g h e r  ple,  to  i n t u r n prompted  D o u g l a s t o o f f e r t h e P r a t t a n d W h i t n e y JT3D  their  DC-8  i n America,  not because of i t s i n c r e a s e d e n e r g y - e f f i c i e n c y , but  crease  op-  made c o n c u r r e n t B r a n i f f and  initial  Boeing,  f o r exam-  d e l i v e r i e s of the turbojet-powered  Eastern)  and  t h e t u r b o f a n - p o w e r e d 720B  N o r t h w e s t and W e s t e r n ) i n 1961. o n l y c a r r i e r t o s t a n d a r d i z e on  720 (to  A m e r i c a n A i r l i n e s were the turbofan  cost  the  engine through  new  177 orders ever,  and  the conversion  of older a i r c r a f t .  r e f l e c t e d a p e c u l i a r marketing  T h i s a c t i o n , how-  s t r a t e g y t h a t may  have been  35 inconsistent with cost The  minimization.  most r e c e n t e v e n t i n w h i c h e n g i n e  changed t o o k p l a c e w i t h t h e d e v e l o p m e n t and high-bypass turbofans percent ment was  lower  w h i c h h a v e an  t h a n t h a t o f the JT3D.  Because t h e i r  thirty develop-  l a r g e l y , t h e r e s u l t o f a m i l i t a r y program, i t does  goals which o f f e r the s t r o n g e s t technology  was  It  c a n be  be  d i r e c t e d toward  factor price incentive.  an e v e n t t h a t was  The  largely quality-oriented.  shown, h o w e v e r , t h a t an i m p o r t a n t  of i d e n t i f i c a t i o n e x i s t s ,  i n that reductions  a t t r a c t i v e even i f f u e l were a f r e e  problem  i n engine s f c good.  The  com-  p l i c a t i o n a r i s e s f r o m t h e f a c t t h a t an a i r c r a f t m u s t c a r r y only i t s payload flight.  but  a l s o the  range-payload performance.  in  s f c a r e e v e n g r e a t e r i f i t c a n be designed.  engine e f f i c i e n c y can  b o t h r a n g e and a i r c r a f t and  payload  engine  have been w i t h  any  a l l o w a commensurate improvement 36  in  the a i r c r a f t i s b e i n g  not  f u e l i t r e q u i r e s to complete a  Even i f the d e s i g n o f the a i r c r a f t i s unchanged,  r e d u c t i o n i n engine s f c w i l l  in  not  adopted j o i n t l y w i t h the i n t r o d u c t i o n of  wide-body a i r c r a f t ,  w o u l d be  i n t r o d u c t i o n of  s f c approximately  r e f u t e the p r e d i c t i o n t h a t research w i l l  new  efficiency  The  benefits of a taken  reduction  i n t o account  F o r e x a m p l e , an  while  improvement  result i n a substantial increase  w h i l e h o l d i n g the o v e r a l l s i z e of  t h r u s t r e q u i r e m e n t s t h e same as  less e f f i c i e n t engines.  they  There c o u l d a l s o  in the would be  178 a r e d u c t i o n i n a i r c r a f t weight and t h r u s t r e q u i r e m e n t s i f r a n g e - p a y l o a d p e r f o r m a n c e were l e f t  constant.  if  from the o u t s e t w i t h  t h e B o e i n g 707 h a d b e e n d e s i g n e d  bypass engines, lift  F o r example,  i t c o u l d h a v e b e e n made l i g h t e r , w i t h  and t h r u s t requirements,  f o r t h e same r a n g e a n d  high-  reduced payload  37 performance as t h e t u r b o j e t - p o w e r e d s u l t i n a corresponding It  This would r e -  reduction i n c a p i t a l cost per seat.  i s c l e a r t h a t the i n c e n t i v e t o reduce engine s f c  i s not adequately it  design.  reflected i n the price of fuel.  i s t o be e x p e c t e d t h a t a h i g h e r  fuel price w i l l  Certainly provide  a  greater i n c e n t i v e to increase engine e f f i c i e n c y , but t h i s i n c e n t i v e does n o t c h a n g e i n p r o p o r t i o n t o f u e l p r i c e . a t a zero  f u e l p r i c e the i n c e n t i v e t o optimize engine e f f i c i -  ency remains because o f i t s e f f e c t on r a n g e , p a y l o a d , s i z e and/or a i r f r a m e c o s t .  not disprove  engine  T h u s , t h e a p p e a r a n c e o f more  e f f i c i e n t engines i n a p e r i o d o f constant  would  Even  f u e l p r i c e s does  t h e argument t h a t t h e d i r e c t i o n o f i n n o v a t i o n  have been towards g o a l s o t h e r  than the r e d u c t i o n o f f u e l  consumption p e r u n i t o f output. Overall Energy-Efficiency Because a i r c r a f t e n e r g y - e f f i c i e n c y has r e c e i v e d a t t e n t i o n e a r l i e r i n t h i s study  and i s c o n s i d e r e d  Appendix, t h i s s e c t i o n serves  f u r t h e r i n an  t o i n d i c a t e o n l y two phenomena  as e v i d e n c e o f i n n o v a t i v e r e s p o n s e t o t h e d e c l i n i n g r e l a t i v e price of fuel:  - improvements i n e n g i n e e f f i c i e n c y have n o t s a r i l y a p p e a r e d as c o r r e s p o n d i n g all  energy-efficiency,  neces-  increases, i n  over-  and  - improvements i n o v e r a l l e n e r g y - e f f i c i e n c y have generally  occured  only i n a s s o c i a t i o n w i t h e i t h e r improve-  ments i n ' q u a l i t y *  or increases  i n the p r o d u c t i v i t y of  other f a c t o r s . Evidence presented  in this  study,  as w e l l as  another  38 source  i n d i c a t e s t h a t the f u e l consumption the  t h e DC-7  was  as g r e a t a s , o r p e r h a p s g r e a t e r t h a n t h a t o f t h e DC-6B. appears to c o n f l i c t w i t h engine.  The  o f t h e DC-7  the reduced s f c of the  reason f o r t h i s  turbo-compound  i s the i n c r e a s e d c r u i s i n g  r e q u i r e d h i g h e r power o u t p u t s  which, i n e f f e c t ,  b e n e f i t s of improved engine e f f i c i e n c y .  vair but  The  w i t h the i n t r o d u c t i o n of t u r b o f a n  990,  f o r e x a m p l e , had  the  aircraft  d i s s i p a t e d the  same phenomenon  engines.  more e f f i c i e n t t u r b o f a n  the i n c r e a s e d t h r u s t r e q u i r e d to achieve  The  cruising  improved  efficiency. Some o f t h e m o s t s i g n i f i c a n t i n c r e a s e s i n o v e r a l l  ergy-efficiency As  Con-  engines,  a higher  speed than t u r b o j e t a i r c r a f t negated the e f f e c t of engine  speed  w h i c h r e q u i r e d an i n c r e a s e i n e n g i n e t h r u s t .  W h i l e t h e e n g i n e s p r o d u c e d p o w e r more e f f i c i e n t l y ,  occurred  This  stemmed f r o m t h e  'stretching' of  d i s c u s s e d p r e v i o u s l y , however, t h i s type  change i s a t t r a c t i v e r e g a r d l e s s o f r e l a t i v e  en-  airframes.  of t e c h n o l o g i c a l factor prices.  180 A n o t h e r s i g n i f i c a n t i m p r o v e m e n t i n e n e r g y - e f f i c i e n c y accompanied  t h e i n t r o d u c t i o n o f wide-body a i r c r a f t b u t t h i s  t i o n , i t h a s b e e n a r g u e d , was t h e r e s u l t o f ' q u a l i t y ations.  1  innovaconsider-  I n b o t h o f t h e above e x a m p l e s , t h e d e v e l o p m e n t s  would have been a t t r a c t i v e even i n the absence o f t h e improvement i n o v e r a l l e n e r g y - e f f i c i e n c y . CAPITAL  Data g i v e n i n t h e I n t r o d u c t i o n r e v e a l e d t h a t the p r i c e of c a p i t a l has been r e l a t i v e l y c o n s t a n t clined relative  to the p r i c e o f labour.  l a t e d i n Chapters I - I I I remained r e l a t i v e l y  The i n d i c e s c a l c u -  show t h a t t h e p r o d u c t i v i t y o f c a p i t a l  constant  the p r o d u c t i v i t y o f l a b o u r . g i c a l change i s once a g a i n theory  o v e r time and has de-  over time b u t f e l l  relative to  Thus t h e d i r e c t i o n o f t e c h n o l o consistent with p r i n c i p l e s of the  of production. T h e r e a r e , h o w e v e r , two o b s t a c l e s w h i c h make i t d i f f i -  c u l t t o make c o n c l u s i o n s plicit  r e g a r d i n g t h e degree o f c a u s a l i t y im-  i n t h i s innovative behaviour.  F i r s t o f a l l , t h e r e has  a l r e a d y b e e n d i s c u s s i o n i n t e r m s o f two o t h e r f a c t o r i n p u t s , and  i t i sdifficult  out rendering are  t o c o n s i d e r an a d d i t i o n a l p a r a m e t e r w i t h -  the analysis t a u t o l o g i c a l .  several complications  Furthermore,  relevant to the analysis of c a p i t a l  i n v e s t m e n t w h i c h c a n n o t be t r e a t e d a d e q u a t e l y of the present two  sources  study.  o f these  there  This discussion w i l l complications  w i t h i n t h e scope therefore outline  and, i n t h i s  light,  examine  181 whether there i s s t i l l interest rates  evidence to suggest that  has i n f l u e n c e d  the d i r e c t i o n of  the l e v e l of technological  change. Distortions Affecting Capital Productivity  Measurement  The f i r s t d i s t o r t i o n a f f e c t i n g m e a s u r e m e n t o f c a p i t a l productivity  i s a technical  one w h i c h was a l l u d e d  t o i n Chap-  ter I.  I t arises  from t h e c o r r e l a t i o n between s t a t i c  capi-  tal cost  ( i . e . o r i g i n a l c o s t p e r s e a t ) and a i r c r a f t range.  The DC-7C, f o r e x a m p l e , was d e s i g n e d t o p r o v i d e r a n g e i n excess of that required  f o r d o m e s t i c o p e r a t i o n s , and t h i s i n 39  evitably  resulted  range o r i n c r e a s e d  i n a more e x p e n s i v e a i r c r a f t . safety  a i r c r a f t c a p a b i l i t y that  Increased  a r e j u s t two o f t h e d i m e n s i o n s o f c a n n o t be i n c o r p o r a t e d  ment o f c a p i t a l p r o d u c t i v i t y  i n t o a measure40  i n terms o f s e a t - m i l e  output.  A r e l a t e d shortcoming of the average c a p i t a l v i t y measurement stems f r o m i t s i n a b i l i t y that  intangible quality referred  tility. not as  Typical  producti-  to take i n t o  t o i n C h a p t e r I I I as  account versa-  o f most c a p i t a l equipment, an a i r c r a f t can-  be d e s i g n e d t o p e r f o r m a v a r i e t y t a s k s f o r t h e same p r i c e a n o t h e r a i r c r a f t d e s i g n e d t o p e r f o r m j u s t one t a s k .  was r e f l e c t e d i n t h e c o m p a r i s o n o f c a p i t a l p r o d u c t i v i t y short-  t o medium-range 727 a n d t h e s h o r t - r a n g e DC-9  This of the  a n d 737.  Based on a measurement o f average c a p i t a l p r o d u c t i v i t y  per se,  the  air-  l a t t e r a i r c r a f t a p p e a r t o be s u p e r i o r .  line's total  Y e t i f an  f l e e t a c q u i s i t i o n w e r e e x a m i n e d , t h e f o r m e r may  be  182 t h e more p r o f i t a b l e i n v e s t m e n t . may,  The  v e r s a t i l i t y o f the  f o r e x a m p l e , a l l o w i t t o be o p e r a t e d  over  short-haul  r o u t e s as w e l l as l o n g e r r o u t e s t h a t a r e b e y o n d t h e o f t h e DC-9  and  737.  d u c t i v i t y w i t h the achieve spares  A c a r r i e r may  72 7 on  accept  lower c a p i t a l  a i r c r a f t type.  s u r e m e n t o f c a p i t a l p r o d u c t i v i t y may i n g a i r c r a f t ;in terms o f economic  maintenance  expenses,  suitable  f r o m t h e manner i n  a i r c r a f t are determined.  o f f i x e d d e v e l o p m e n t c o s t s on  seems r e a s o n a b l e o f a new  to expect  of performing  same o r s i m i l a r r a n g e ,  This i s a  industry  by  t h e same t a s k  ( i . e . having The  l i m i t t o t h e p r i c e o f t h e g i v e n a i r c r a f t w o u l d be Subject then  of c l o s e s u b s t i t u t e s , the manufacturer d e s i g n anywhere w i t h i n t h i s r a n g e . l i m i t t o t h e p r i c e o f t h e DC-8 a directly  was  competitive design.  t h e o t h e r h a n d , was  It  price  the p r i c e of c o m p e t i t i v e  speed, c a p a c i t y e t c . ) .  costs of i t s manufacture.  and  selling prices.  t h a t the upper l i m i t to the  design i s determined  c r a f t capable  f o r rank-  efficiency.  r e s u l t o f o l i g o p o l y power i n t h e m a n u f a c t u r i n g the impact  result  T h u s , a d i r e c t mea-  n o t be  Additional complications arise w h i c h t h e p r i c e s o f new  pro-  to  i n v e n t o r y and p e r h a p s i n c r e a s e d u t i l i s a t i o n as a  o f s t a n d a r d i z i n g on one  707,  capability  i t s short routes i n order  savings i n t r a i n i n g requirements,  727  to the  air-  the  lower  the  direct  availability  i s f r e e to p r i c e the  F o r example, the  upper  f i x e d by t h e p r i c e o f The  the  p r i c e o f t h e 727,  c o n t r a i n e d o n l y by t h e c a p i t a l i z e d  new  value  on  183 of the d i f f e r e n c e i n o p e r a t i n g c o s t s between i t and route  and  depreciation)  the n e x t most s u i t a b l e a i r c r a f t f o r a  structure.  t h i s study  (excluding  The  given  measure o f c a p i t a l p r o d u c t i v i t y used i n  i s a f f e c t e d by  this oligopolistic  t h u s does n o t r e f l e c t t e c h n i c a l v a r i a b l e s  interdependence alone.  A r e l a t e d d i s t o r t i o n a r i s e s from the f a c t t h a t a n i f i c a n t p o r t i o n o f an a i r c r a f t ' s  s e l l i n g price represents  w r i t e - o f f of the f i x e d c o s t s of research To  t h e e x t e n t t h a t two  price, ing  and  the b a s i s  a strong resistance to  a p r i c e below a l e v e l equal  a  development.  m a n u f a c t u r e r s compete on  t h e r e w o u l d l i k e l y be  sig-  of  establish-  to d i r e c t manufacturing  cost  41 plus a pro-rated  share of t o t a l development c o s t s .  d e v e l o p m e n t c o s t component o f p r i c e w i l l t o t a l s a l e s f o r the t a t i o n and,  type.  in  d e p e n d on a n t i c i p a t e d  Thus t h e demand f o r a i r t r a n s p o r -  i n t u r n , t h e d e r i v e d demand f o r new  i m p a c t upon c a p i t a l . c o s t s . a range/capacity  The  747,  equipment  f o r e x a m p l e , may  i n d i v i d u a l d i r e c t manufacturing taken  comes o b v i o u s t h a t t h e p r i c e s o f new as  i n t h e i r design.  of  total  costs.  i n t o a c c o u n t i t be-  a i r c r a f t c a n n o t be  t r u e m e a s u r e s o f t h e m a t e r i a l , l a b o u r and  porated  so,  to that  the l a t t e r r e g a r d l e s s of the r e l a t i o n s h i p between t h e i r  When t h e a b o v e e f f e c t s a r e  total  I f t h i s were  s e l l i n g p r i c e of the former would r i s e r e l a t i v e  d e v e l o p m e n t c o s t s and  will  fall  s p e c i f i c a t i o n f o r which there i s l e s s  demand t h a n f o r a i r c r a f t s u c h as t h e DC-10. the  This  taken  other inputs incor-  T h i s p o s e s an o b v i o u s  identification  problem i n t h a t i t i m p l i e s t h a t changes o v e r time i n t e c h n i c a l  184 efficiency  i n t h e u s e o f c a p i t a l r e f l e c t more t h a n s i m p l y  adjustment o f f a c t o r proportions. illustrate  The f o l l o w i n g s e c t i o n  an will  t h a t even i f a i r c r a f t p r i c e were a r e l i a b l e i n d i c a -  tor of the inputs  embodied i n c a p i t a l equipment, t h e i n c e n t i v e  facing the a i r l i n e s always t r u l y  t o maximize c a p i t a l p r o d u c t i v i t y i s n o t  represented  by i n t e r e s t r a t e s .  D i s t o r t i o n s i n the Cost of C a p i t a l Any relatively  study o f the a i r l i n e s  i n d u s t r y would r e v e a l a  low i n c e n t i v e t o minimize o v e r a l l c a p i t a l  t u r e s because of the p e c u l i a r c o m p e t i t i v e lines.  behaviour o f the a i r -  F o r example, d a i l y a i r c r a f t u t i l i z a t i o n - which has a  d i r e c t i n f l u e n c e on u n i t c a p i t a l c o s t s f a c t t h a t t r a v e l demand p e a k s d u r i n g Market-share r i v a l r y , route  expendi-  and c o m p e t i t i o n  - i s constrained  by t h e  c e r t a i n hours o f the day. o v e r t h e a w a r d i n g o f new  a u t h o r i t i e s , discourages a i r l i n e s  from b e i n g  conserva-  t i v e i n t h e i r a n a l y s i s o f f u t u r e equipment needs and o f t e n  leads  42 to c h r o n i c  overcapacity  vant to t h i s  i n the industry.  What i s more  rele-  s t u d y , h o w e v e r , i s a d i s t o r t i o n due t o r e g u l a t o r y  r e s t r a i n t w h i c h i m p a c t s upon t h e d e t e r m i n a t i o n combination o f f a c t o r inputs.  This  o f t h e optimum  d i s t o r t i o n - the Averch-  43 Johnson e f f e c t  - can upset the behaviour o f firms i n respect  t o t h e optimum l e v e l o f t e c h n i c a l e f f i c i e n c y i n t h e use o f c a p i t a l wherever the i n d u s t r y i s subject  t o r e g u l a t i o n on t h e  b a s i s o f r e t u r n on i n v e s t m e n t . The  underlying  source of the d i s t o r t i o n i s the f a c t  t h a t where t h e r e g u l a t e d  rate of return i s greater  than the  185 cost of c a p i t a l but exist  i f the  l e s s than the r a t e of r e t u r n t h a t would  f i r m were u n r e g u l a t e d ,  the cost of c a p i t a l  market c o s t .  The  to  f i r m no  longer equals  capital  f o r other, .factors such t h a t s o c i a l c o s t s are not  firm w i l l substitute  mized because f o r each a d d i t i o n a l u n i t of c a p i t a l firm i s permitted  to earn  a p r o f i t equal  tween the market c o s t o f c a p i t a l return.  The  and  and may  phenomenon c a n be  carrier earning p r o f i t s  the regulated r a t e  attempt to  directly  be-  of rela-  link  t o changes i n r e l a -  r e t u r n on  investment.  i l l u s t r a t e d by  i n the current year  i n v e s t m e n t b a s e o f $100 To  million, satisfy  c e n t and  considering o f $10  p r o f i t o f $12  m i l l i o n w i t h no  the c a r r i e r would exceed the  f o l l o w i n g year  high operating  c o s t s and  condi-  I f demand a  investment,  a l l o w a b l e r e t u r n and. c o u l d  i n new  per-  there-  However, i f i t  a i r c r a f t that  had  i m p o s e d an e c o n o m i c l o s s o f $0.1 m i l ^ -  t o t a l p r o f i t s w o u l d be  r e d u c e d t o $11.9  r e d u c t i o n i n p r o f i t , combined w i t h the i n r a t e base would leave  percent  to permit  increase i n capital  million  with  r a t e o f r e t u r n i s 10  fore anticipate a forced reduction i n fares. w e r e p o s s i b l e t o i n v e s t $20  million  the Averch-Johnson  the market r a t e o f i n t e r e s t i s 8 p e r c e n t .  were e x p e c t e d t o i n c r e a s e i n t h e  a  t h u s a c h i e v i n g a 10  t i o n s , i t i s assumed t h a t t h e a l l o w e d  lion,  the  factor prices. The  an  input  t o the d i f f e r e n c e  f r u s t r a t e any  changes i n b e s t p r a c t i c e technique tive  mini-  e f f e c t i s a n a l o g o u s - t o t h a t of changing the  t i v e p r i c e of c a p i t a l  the  $20  million.  million  This  increase  t h e c a r r i e r w i t h a r e t u r n on i n v e s t -  186 ment j u s t b e l o w t h e a l l o w a b l e l e v e l o f 10 p e r c e n t . 44 i n v e s t m e n t p e r m i t s an i n c r e a s e  The ' l o s s '  i n p r o f i t o f $1.9 m i l l i o n f o r a n  i n v e s t m e n t o f $20 m i l l i o n , y i e l d i n g a r e t u r n  o f 9.5 p e r c e n t w h i c h  exceeds t h e c o s t o f c a p i t a l . E v i d e n c e o f I n n o v a t i v e Response t o t h e R e l a t i v e Price of Capital Calculations increase-in  the average p r o d u c t i v i t y  DC-4 a n d t h e DC-6. either  i n Chapter I o f t h i s study i n d i c a t e d  an  o f c a p i t a l between t h e  T h i s does n o t , h o w e v e r , a p p e a r , t o be  a factor substitution effect  (for i n fact the price of  c a p i t a l was d e c l i n i n g r e l a t i v e t o t h a t o f l a b o u r ) n o r a r e s u l t of  technological  the  DC-4).  change  ( t h e DC-6 was s i m p l y a d e r i v a t i v e o f  The i m p r o v e m e n t was s i m p l y t h e r e s u l t o f c i r c u m -  stances i n the manufacturing industry. had it  The DC-4 a n d t h e DC-6  e s s e n t i a l l y t h e same a e r o d y n a m i c a n d s t r u c t u r a l d e s i g n a n d i n e v i t a b l e t h a t b o t h t h e development and m a n u f a c t u r i n g  costs 45  o f t h e DC-6 w o u l d be b e l o w t h o s e o f t h e e a r l i e r a i r c r a f t . O r i g i n a l c o s t o f t h e DC-6 may h a v e b e e n f u r t h e r unlike  t h e DC-4, i t h a d o r i g i n a t e d  engine had been i n l a r g e fore  appeared. ^ 4  d e s i g n t h a t a p p e a r e d a f t e r t h e DC-6, t h e DC-7, h a d  capital productivity productivity  as a m i l i t a r y d e s i g n and i t s  s c a l e p r o d u c t i o n f o r the m i l i t a r y be-  the commercial version The  reduced because,  e q u a l t o 0.77 t i m e s a n d f l i g h t  e q u a l t o 1.17 t i m e s t h a t o f t h e DC-6B.  g l a n c e , t h i s may a p p e a r t o be an i n n o v a t i v e clining relative price of capital.  personnel At f i r s t  response t o t h e de-  In actual  f a c t , there i s  187 strong  e v i d e n c e t h a t t h i s change i n f a c t o r c o m b i n a t i o n s can  explained  i n terms o f the Averch-Johnson e f f e c t .  f r o m 1950  t o 1956,  the  a v e r a g e r e t u r n on  I n the  investment f o r  be  period the  47 domestic trunks ing  t h e CAB  r a n g e d b e t w e e n 9.4  and  rate of return standard  13.6  percent,  exceed-  which at t h a t time  stood  48 at 8 percent.  This  allowable  r a t e of r e t u r n exceeded  m a r k e t c o s t o f l o n g - t e r m d e b t f i n a n c i n g w h i c h was 5 percent f o r the were s a t i s f i e d ,  trunks.  and  the  then below  Thus, the Averch-Johnson  trunks  were f a c e d w i t h  an  conditions  incentive  p u r c h a s e t h e more c a p i t a l - i n t e n s i v e DC-7's e v e n t h o u g h operating fact, fit  the  their  c o s t s w e r e known t o e x c e e d t h o s e o f t h e DC-6B.  t h e CAB  was  preparing  In  to take a c t i o n to reduce the  l e v e l s o f t h e c a r r i e r s j u s t as  A subsequent d e c l i n e i n the  to  t h e DC-7  pro49 introduced.  was  average r a t e of r e t u r n of  the  50 trunks  l e d the Board to reverse 51  increase  i n 1958.  m u s t be the  In the  r e j e c t e d as  an e x a m p l e o f an  discussed  f o u n d i n f l u e n c e on in  l i g h t of  d e c l i n i n g r e l a t i v e p r i c e of As  the U n i t e d  t a r y u n i t s and cial  j e t , the  t h i s a c t i o n and  previously,  t h i s e v i d e n c e , the innovative  The  the m i l i t a r y e x e r t e d  e n g i n e s were  first  jet  ' o f f the  the development c o s t s of the 707,  response  707  a  DC-7 to  pro-  transports  shelf  f i r s t U.S.  were l a r g e l y w r i t t e n o f f a g a i n s t  t i o n o f KC-135 t a n k e r - t r a n s p o r t s .  fare  capital.  the development of the  States.  permit a  the  mili-  commerproduc-  Thus i t i s u n l i k e l y t h a t  the  p r i c e of the  reflected fairly  upon t h e  costs of  new  technology r e l a t i v e to those of p i s t o n a i r c r a f t .  the It is  188 f a r more l i k e l y t h a t the i m p o r t a n t the 70 7 was  c o n s t r a i n t s on the p r i c e o f  the e x p e c t e d response of c o m p e t i t i v e m a n u f a c t u r e r s  as w e l l as the impact o f c a p i t a l c o s t s on the o v e r a l l  operat-  i n g c o s t s of the 707 r e l a t i v e to- p i s t o n a i r c r a f t . The  r e l a t i v e l y h i g h o r i g i n a l c o s t p e r s e a t o f the  747  a g a i n s u g g e s t s a p o s s i b l e example o f a f a c t o r s u b s t i t u t i o n c r e a t e d by a low r e l a t i v e p r i c e f o r c a p i t a l .  A g a i n , however,  t h i s h y p o t h e s i s must be r e j e c t e d and the phenomenon a t t r i b u t e d i n s t e a d t o o l i g o p o l y power i n a i r c r a f t m a n u f a c t u r i n g .  For  example, an e f f o r t might have been made to reduce the  original  c o s t p e r s e a t o f the a i r c r a f t by As i t was  however, t h e 74 7 was  ' s t r e t c h i n g ' the a i r f r a m e .  f e l t t o be too l a r g e a t the time  o f i t s i n t r o d u c t i o n , and any i n c r e a s e i n c a p a c i t y would doubtedly  have reduced t o t a l s a l e s and t h e r e b y  increased  development c o s t component o f the a i r c r a f t p r i c e . t h a t the o r i g i n a l c o s t o f the 74 7 was  unthe  I t appears  s e t i n accordance w i t h  the o v e r a l l o p e r a t i n g c o s t s o f i t s n e a r e s t s u b s t i t u t e ; i t was no c o i n c i d e n c e t h a t t h e lower f u e l and l a b o u r c o s t s o f the  air-  c r a f t were j u s t o f f s e t by h i g h e r c a p i t a l c o s t s , r e s u l t i n g i n t o t a l o p e r a t i n g c o s t s p e r s e a t - m i l e t h a t were c o m p e t i t i v e  with  those o f the S e r i e s - 6 0 DC-8's.  CONCLUSIONS a)  O l i g o p o l i s t i c i n t e r d e p e n d e n c e and government r e g u l a t i o n  i n the a i r l i n e i n d u s t r y have removed much o f the i n c e n t i v e t o  189 e i t h e r i n i t i a t e o r adopt c o s t - r e d u c i n g  innovations.  Innova-  t i o n h a s become o r i e n t e d a s much t o q u a l i t y a s t o c o s t  consid-  erations . b)  There i s s t r o n g evidence t h a t t h e r a t e o f t e c h n o l o g i -  c a l change has been d e t e r m i n e d c)  exogenously.  P r o b l e m s o f i d e n t i f i c a t i o n s u r f a c e when a n a t t e m p t i s  made t o d e t e r m i n e w h e t h e r t h e d i r e c t i o n o f t e c h n o l o g i c a l c h a n g e has  been c a u s a l l y r e l a t e d t o r e l a t i v e  factor prices.  The m o s t  c o n v i n c i n g e v i d e n c e t h a t f a c t o r p r i c e had a c a u s a l e f f e c t on the p a t t e r n o f i n n o v a t i o n i s i n t h e h i s t o r i c a l cal efficiency the  f o renergy.  T e c h n i c a l e f f i c i e n c y dropped i n  t r a n s i t i o n p e r i o d t o take  a n d was s u b s e q u e n t l y  trend of techni-  advantage o f a l o w e r - c o s t  fuel  i m p r o v e d o n l y a s an i n d i r e c t r e s u l t o f  i n n o v a t i o n s adopted t o achieve o p p o r t u n i t i e s f o r improving  other goals.  T h e r e w e r e many  energy p r o d u c t i v i t y t h a t were n o t  e x p l o i t e d because o f t h e low r e l a t i v e p r i c e o f energy. Appendix D provides w i t h an e x a m i n a t i o n  further insight into this  o f t h e p o s s i b l e i m p a c t s on p a s t  c a l events o f a higher  r e l a t i v e p r i c e f o r energy.  situation  technologi-  REFERENCES INTRODUCTION: 1.  C f . M. K a t s o u l i s , E n e r g y I m p a c t s of. P a s s e n g e r T r a n s p o r t a t i o n , pp.1-5 a n d E. H i r s t , "Transportation Energy Conservation: O p p o r t u n i t i e s and P o l i c y Issues," T r a n s p o r t a t i o n J o u r n a l ( S p r i n g 1974) pp.42-52.  2.  See K a t s o u l i s , o p . c i t . ; H i r s t , o p . c i t . ; W. E. Mooz, The E f f e c t o f F u e l P r i c e I n c r e a s e s o n E n e r g y I n t e n s i v e n e s s o f F r e i g h t T r a n s p o r t ; a n d R. A. R i c e , "System Energy and F u t u r e T r a n s p o r t a t i o n , " T e c h n o l o g y R e v i e w ( J a n u a r y 1972) p p . 3 1 - 3 7 .  3.  See K a t s o u l i s , o p . c i t . , p p . 1 5 5 - 5 9 ; W. P. Goss a n d J . G. McGowan"^ " T r a n s p o r t a t i o n and Energy - A F u t u r e C o n f r o n t a t i o n , " T r a n s p o r t a t i o n , V o l . 1, No. 3 (November 1972) pp,265-89 a n d D. A. P i 1 a t i , ' A i r p l a n e E n e r g y Use a n d C o n s e r v a t i o n S t r a t e g i e s .  4.  R. M i l l e r a n d D. S a w e r s , The T e c h n i c a l D e v e l o p m e n t o f Modern A v i a t i o n , p.303.  5.  A v i a t i o n Week, V o l . 8 5 , No. 18 ( O c t o b e r 3 1 , 1966) p.95. The ' B i g F o u r ' t r u n k s a r e A m e r i c a n , E a s t e r n , Trans World and United A i r l i n e s .  6.  "ATA A n a l y s i s F o r e c a s t s A i r l i n e E c o n o m i c S q u e e z e , " " A v i a t i o n Week, (May 27, 1974). p . 2 7 . s  7.  Op. c i t . , p.303.  8.  Sources: 1949, G. L. C h r i s t i a n , "Spark Advance Saves at National," A v i a t i o n Week,, V o l . 54, No. 10 (March 5, 1951) p.23; 19 51, A v i a t i o n Week, V o l . 54, No. 4 (January 8, 1951) pp.15-17; 1959, M i l l e r and Sawers, op. c i t . , p.187; 1967, C i v i l A e r o n a u t i c s B o a r d , A i r c r a f t O p e r a t i n g C o s t a'n'd Performance R e p o r t , V o l . I l l (August 1969) . v  !  9.  10.  Sources: 1951, A v i a t i o n Week, V o l . 54, No. 4 ( J a n u a r y 8, 1951) pp.15-17; 1959, M i l l e r a n d S a w e r s , o p . c i t . , p.187; 1967, CAB,-op. c i t . R i c h a r d E. C a v e s , A i r T r a n s p o r t p.393.  11. ' A v i a t i o n Week,  s  and Its' R e g u l a t o r s , "  ( A u g u s t 21, 1967) p.26. 190  191 12.  This i s discussed i n Chapter I I .  13.  Op.  14.  Ibid.,  15.  Aaron J . Gellman, C h o i c e , p.195.  The E f f e c t o f R e g u l a t i o n o n  16.  Almarin  T e c h n o l o g y and M a r k e t S t r u c t u r e ,  c i t . , p.30 3. p.421.  Phillips,  Aircraft  p.71. 17.  Op. c i t .  18. 19.  Op. c i t . , p p . 5 6 , 6 3 - 6 8 . T. E. K e e l e r , " A i r l i n e R e g u l a t i o n and M a r k e t P e r f o r m a n c e , " B e l l J o u r n a l o f E c o n o m i c s a n d Management S c i e n c e , V o l . 3, No. 2 (Autumn 1972) p p . 3 9 9 - 4 2 4 .  20.  C a v e s , op. c i t . , p.67, K e e l e r , op. c i t . , p.402.  192  CHAPTER I : 1.  The B-307 was l o o k e d upon a s i n f e r i o r t o t h e a i r c r a f t w h i c h f o l l o w e d i t a n d met w i t h p a s s e n g e r r e s i s t a n c e i n c o m p e t i t i o n w i t h TWA's r i v a l s d u r i n g t h e l a t e 1940's. See f o r e x a m p l e , P a u l C h e r i n g t o n , A i r l i n e P r i c e P o l i c y , p p . 2 0 6 , 253-54.  2.  Wing l o a d i n g i s d e f i n e d as t h e g r o s s weight o f t h e a i r c r a f t d i v i d e d by t o t a l w i n g a r e a . For a given d e s i g n , an i n c r e a s e i n w i n g l o a d i n g i m p l i e s an i n c r e a s e i n t a k e - o f f and l a n d i n g speeds and a conseq u e n t i n c r e a s e i n runway l e n g t h r e q u i r e m e n t s . T h u s , t h e DC-3 ( w i n g l o a d i n g 24.3 p o u n d s p e r s q u a r e f o o t ) h a d a 2680 f o o t runway l e n g t h r e q u i r e m e n t w h i l e t h e DC-4 (35.6 p o u n d s p e r s q u a r e f o o t ) r e q u i r e d 4400 f e e t . See M i l l e r and Sawers, op. c i t . , p.130.  3.  Hughes h a d become TWA's p r i n c i p a l s h a r e h o l d e r b y 1 9 3 9 . See R. E. G. D a v i e s , A H i s t o r y o f t h e W o r l d ' s A i r l i n e s , p.246.  4.  Only one t r u n k c a r r i e r , N a t i o n a l A i r l i n e s , took d e l i v e r y o f new DC-4s a f t e r t h e w a r . Gellman, op. c i t . , p.40.  5.  Phillips,  6.  T y p i c a l ( a n d maximum) c r u i s i n g s p e e d s g i v e n f o r t h e DC-4, DC-6, a n d C o n s t e l l a t i o n b y v a r i o u s s o u r c e s range as f o l l o w s : DC-4, 180-227 ( 2 3 4 - 2 4 6 ) ; DC-6, 270-310 ( 3 1 0 ) ; C o n s t e l l a t i o n , 260-285 (310-328). A l l speeds a r e i n m i l e s p e r hour.  7.  T h i s s t a t e m e n t i s made i n C a v e s , o p . c i t . , p . 1 0 0 , o n t h e b a s i s o f information, given i n T a y l o r , High Horizons The U n i t e d A i r l i n e s S t o r y , p . 1 5 0 .  8.  Cherington,  9.  Caves, op. c i t . , p.145.  10.  op. c i t . , pp.151-52.  op. c i t . , pp.186-95.  U n i t e d a n d TWA f o l l o w e d A m e r i c a n ' s l e a d q u i c k l y b u t E a s t e r n r e t a i n e d t h e s u r c h a r g e u n t i l n e a r l y two years l a t e r . See f o r e x a m p l e , C h a r i n g t o n , opY c i t . , p.341.  193 11.  The  number o f DC-3s i n s e r v i c e w i t h t h e d o m e s t i c t r u n k s i n c r e a s e d f r o m 174 t o 44 3 b e t w e e n 1942 a n d 1946 i n s p i t e o f t h e f a c t t h a t t h e d e s i g n was by t h e n more than ten years o l d . Because of the c o n c e n t r a t i o n on t h e war e f f o r t , no m a n u f a c t u r e r was a b l e t o o f f e r a new d e s i g n u n t i l 1946.  12.  A m e r i c a n A i r l i n e s o r d e r e d s e v e n t y - f i v e C o n v a i r 240s i n 1946, t h e l a r g e s t number o f a i r c r a f t o r d e r e d by one c a r r i e r a t one t i m e . C o n v a i r , h o w e v e r , l o s t money on t h e o r d e r . See P e r r i n S t r y k e r , " T h e r e ' s More Than One Way t o Run an A i r l i n e , " F o r t u n e , F e b r u a r y , 1961, p . 1 0 0 .  13.  U n i t e d o r d e r e d f i f t y o f a n o t h e r v e r s i o n , t h e M a r t i n 303, b u t t h e o r d e r was c a n c e l l e d i n 1947 and t h e c a r r i e r s u b s e q u e n t l y a c q u i r e d C o n v a i r 3 4 0 s , an e n l a r g e d v e r s i o n o f t h e 24 0. I b i d . , p.101.  14.  Departure frequency c o n s i d e r a t i o n s are discussed i n Chapter I I I , P a r t I I . See a l s o M i l l e r and S a w e r s , op. c i t . , p . 1 3 5 .  15.  Phillips,  16.  A r e d u c t i o n i n s p e c i f i c f u e l consumption i m p l i e s t h a t l e s s f u e l i s r e q u i r e d by t h e e n g i n e t o p r o d u c e a g i v e n amount o f p o w e r . T h i s does n o t n e c e s s a r i l y i m p l y an o v e r a l l r e d u c t i o n i n a i r c r a f t f u e l c o n s u m p t i o n b e c a u s e t o t a l power r e q u i r e m e n t s may i n c r e a s e .  17.  A m e r i c a n had d i f f i c u l t y i n m e e t i n g t h e e i g h t h o u r s c h e d u l e t i m e and w e r e f o r c e d by t h e CAB t o o f f e r a more r e a l i s t i c t i m e t a b l e . The a i r l i n e was s u c c e s s f u l i n e x t e n d i n g the duty p e r i o d o f f l i g h t crews t o t e n h o u r s so t h a t no c r e w c h a n g e w o u l d be r e q u i r e d on DC-7 t r a n s c o n t i n e n t a l f l i g h t s . See, f o r example, C h e r i n g t o n , op. c i t . , p . 2 6 2 .  18.  Ibid.,  19.  I b i d . , p.25 8.  20.  The  21.  A p p a r e n t l y , DC-7s c o u l d n o t e a s i l y be c o n f i g u r e d f o r mixed c l a s s s e a t i n g . I b i d . , p.265.  op.  cit.,  p.200.  p.261.  a i r c r a f t h a d 20 c o a c h s e a t s f o r w a r d and class seats a f t .  47  first-  194 22.  C o a c h c l a s s s u b s e q u e n t l y grew f a s t e r t h a n f i r s t - c l a s s b o t h r e l a t i v e l y a n d a b s o l u t e l y , a n d by 1955 a c c o u n t e d f o r o n e - t h i r d o f the domestic market. See f o r e x a m p l e , D e r o A. S a u n d e r s , "The A i r l i n e s ' F l i g h t F r o m R e a l i t y , " F o r t u n e , ( F e b r u a r y 1956) p . 9 5 .  23.  C f . , G e l l m a n , op. c i t . , pp.397-400.  24.  M i l l e r and Sawers,  25.  Stryker,  26.  Ibid.  27.  Phillips,  28.  I b i d . , p.102.  29.  One a n a l y s i s o f t h e u s e d a i r c r a f t m a r k e t i n 1960 s u g g e s t e d t h a t t h e DC-7 was n o t s a l a b l e i n t h e c u r r e n t m a r k e t , w i t h i t s turbo-compound e n g i n e s c i t e d as a s p e c i a l disadvantage. See G l e n n G a r r i s o n , "Used P l a n e M a r k e t S o f t , b u t N o t G l u t t e d , " Aviation Week, ( M a r c h 2 1 , 1960) p p . 3 8 - 3 9 .  30.  Phillips,  31.  M i l l e r and Sawers, op. c i t . , p.37.  32.  I b i d . , p.35.  33.  I b i d . , p.128, a l s o C a v e s , op. c i t . , p.70.  op. c i t . , p.137.  op. c i t . , p.146.  op. c i t . , p.202.  op. c i t . , p.211.  CHAPTER I I : 1.  Miller  and Sawers, o p . c i t . , p.156.  2.  For a discussion of the r e l a t i v e merits of turboprop and t u r b o j e t p r o p u l s i o n as s e e n i n t h e e a r l y y e a r s , see S. G. H o o k e r , "The A p p l i c a t i o n o f t h e Gas Turbine Engine t o A i r c r a f t P r o p u l s i o n , " Journal o f t h e R o y a l A e r o n a u t i c a l S o c i e t y , (May 1946) pp.298-335.  3.  C f . , C a v e s , op. c i t . , p.310.  4.  "The S e l l i n g p.131.  5.  The J-47 t u r b o j e t u s e d o n t h e B-47 bomber h a d an i n i t i a l o v e r h a u l l i f e o f o n l y 50 h o u r s (650 h o u r s by 1952), C f . , M i l l e r and Sawers, op. c i t . , p.186.  6.  John McDonald, " J e t A i r l i n e r s : Year of Decision," F o r t u n e , V o l . 57 ( A p r i l 1953) p . 2 4 4 . See, a l s o , Caves, op. c i t . , p.310.  7.  Ibid.,  8.  John McDonald, " J e t A i r l i n e r s (May 1953) p . 1 3 0 .  9.  A v i a t i o n Age,  o f t h e 707",  Fortune  (October  1957)  p.126. I I " , F o r t u n e , V o l . 57  ( O c t o b e r 1954) p . 1 0 ;  (November 1954) p . 8 .  10.  D o n a l d D o u g l a s , t h e company v i c e - p r e s i d e n t d i d ^ o w e v e r , p r e d i c t that a l a r g e , long-range turboprop t o u r i s t c l a s s a i r c r a f t w o u l d be d e v e l o p e d b e f o r e 1964. A v i a t i o n A g e , ( J u l y , 1954) p . 1 1 .  11.  Craig Lewis, " A i r Force Tests Turboprop R e l i a b i l i t y " , A v i a t i o n Week, ( A p r i l 29, 1957) p p . 5 0 - 6 1 .  12.  I t was g e n e r a l l y f e l t t h a t t h i s h a d b e e n t h e p r i m a r y o b j e c t i v e of Eastern's expression of i n t e r e s t i n the Comet. S e e , f o r e x a m p l e , M c D o n a l d ( A p r i l 1953) op. c i t . , p . 2 4 4 , p . 2 4 8 .  13.  See P. M. B o w e r s ,  14.  "The S e l l i n g  Boeing A i r c r a f t  o f t h e 707," p . 2 4 6 .  S i n c e 1916, p . 3 5 2 .  196 D e r o A. S a u n d e r s , "The A i r l i n e s ' F l i g h t From R e a l i t y " , F o r t u n e , V o l . 5 8 ( F e b r u a r y 1956) p . 9 1 , a l s o C. J . V. Murphy a n d T. A. W i s e , "The P r o b l e m o f Howard Hughes," F o r t u n e , V o l . 59 ( J a n u a r y 1959) p.166. The d e l a y i n TWA's r e - e q u i p m e n t r e s u l t e d i n Hughes' r e m o v a l f r o m c o n t r o l o f t h e company. A 115 m i l l i o n d o l l a r l a w s u i t f o l l o w e d a n d r e m a i n e d i n l i t i g a t i o n f o r o v e r a decade. See W o r l d A i r l i n e R e c o r d , pp.466-67. P e r r i n S t r y k e r , " T h e r e ' s More Than One Way t o Run an Airline," F o r t u n e , V o l . 63 ( F e b r u a r y 1961) p p . 1 5 1 52 . Ibid.,  pp.152-53.  Saunders, op. c i t . , p.92. Caves, op. c i t . , p.70. TWA s t a t e m e n t d u r i n g t h e G e n e r a l P a s s e n g e r F a r e g a t i o n , I b i d . , p.53. McDonald,  "The Y e a r o f D e c i s i o n , "  op. c i t . ,  Investi-  p. 246.  The e c o n o m i c s o f t h e E l e c t r a a n d V i s c o u n t a r e d i s c u s s e d below, b u t t h e r e a r e i n d i c a t i o n s t h a t l a t e r t u r b o p r o p s t h a t w e r e n o t u s e d i n t h e U.S. o f f e r e d s u p e r i o r performance. Economic c r u i s e speed i n c r e a s e d t o 420 m i l e s p e r h o u r o n t h e V i c k e r s V a n g u a r d , c o m p a r e d t o 310 a n d 375 f o r t h e V i s c o u n t a n d E l e c t r a , r e s pectively. See C h a p t e r I a n d A p p e n d i x B. For a g i v e n f a c t o r p r i c e , average c o s t i s i n v e r s e l y prop o r t i o n a l t o average p r o d u c t i v i t y . The  c a l c u l a t i o n u s e d a v e r a g e , n o t maximum, s p e e d a n d capacity.  C a l c u l a t e d from d a t a a p p e a r i n g i n L. Doty, " C a p i t a l Reveals Viscount Operating Costs," A v i a t i o n Week, (March 1 1 , 1957). p p . 3 8 - 4 0 . Ibid. i . e . t o t a l a n n u a l d i r e c t expense d i v i d e d by a n n u a l u t i l i z a t i o n o f t h e a i r c r a f t based on e l a p s e d t i m e s between t e r m i n a l a r r i v a l s and d e p a r t u r e s . Op. c i t . ,  p.187.  197 CHAPTER  III:  1.  The d o m e s t i c DC-8-10 a n d 707-120 u s e d t h e 13,500 p o u n d t h r u s t JT3C e n g i n e a n d h a d g r o s s w e i g h t s o f 273,000 a n d 247,000 p o u n d s , r e s p e c t i v e l y . The l o n g - r a n g e DC-8-30 a n d 707-320 u s e d 15,800 o r 17,500 p o u n d t h r u s t JT4As and h a d g r o s s w e i g h t s o f a p p r o x i m a t e l y 315,000 p o u n d s .  2.  T h e s e w e r e , l i k e t h e P r a t t a n d W h i t n e y t u r b o j e t s , a commercial derivative of a m i l i t a r y design.  3.  T h i s was a g a i n d u e t o t h e e c c e n t r i c i t y o f TWA's c o n t r o l l i n g s h a r e h o l d e r , Howard H u g h e s . See " G e n e r a l D y n a m i c s , Who Wants I t ? " , F o r t u n e , (January 1962), p.69.  4.  R o l l s - R o y c e had been t e s t i n g t h e s e engines s i n c e 1953.  5.  Range a t maximum p a y l o a d , w i t h r e s e r v e s , i n c r e a s e d f r o m 3,200 m i l e s t o 4,200 m i l e s . T a k e - o f f r u n t o 35 f e e t was r e d u c e d t o 7,450 f e e t f r o m o v e r 10,000 f e e t .  6.  T h i s i s t r u e o n l y t o a degree s i n c e t h e t u r b o f a n s o f f e r e d some c l e a r a d v a n t a g e s o t h e r t h a n s p e e d .  7.  I n t h e words o f a spokesman f o r U n i t e d A i r l i n e s , " t h e j e t h a s an e f f e c t i v e b a r r i e r - y o u e i t h e r s t o p j u s t b e l o w Mach 1, t h e s p e e d o f s o u n d , o r y o u h a v e t o jump way a b o v e i t . " See S a u n d e r s , op. c i t . , p.217.  8.  S t r y k e r , op. c i t . , p.96.  9.  Caves, op. c i t . , pp.349-50. Caves a t t r i b u t e s t h e a c q u i s i t i o n o f t h e t u r b o f a n by A m e r i c a n as a r e s p o n s e t o TWA's e f f o r t s t o o f f e r h i g h e r s p e e d s w i t h t h e 707-320. S e e , a l s o D a v i d H. H o f f m a n , "TWA May S p a r k 707, DC-8 J e t R a c e , " A v i a t i o n Week, V o l . 7 2 , (February 29, 1960), p.45. The d i f f e r e n c e s i n s p e e d w e r e s m a l l , h o w e v e r : t h e c r u i s i n g s p e e d o f t h e 707-120B was 557-618 m i l e s p e r h o u r c o m p a r e d t o 549-571 m i l e s p e r h o u r f o r 7 0 7 - 1 2 0 . A m e r i c a n e x p e c t e d t o be t w e n t y - f i v e m i n u t e s f a s t e r t h a n U n i t e d ' s t u r b o j e t s o n t h e New Y o r k - L o s A n g e l e s route.  19 8 10.  These were b u l l e t - s h a p e d f a i r i n g s mounted a f t o f t h e e n g i n e pods t o r e d u c e h i g h s p e e d d r a g a c c o r d i n g . t o t h e area-rule principle. A n o t h e r v e r s i o n o f t h e 990, designed f o r long-range i n t e r n a t i o n a l r o u t e s , d i d not incorporate this feature.  11.  By t h e e n d o f 1 9 6 1 , l o s s e s on t h e 880 and t o 425 m i l l i o n d o l l a r s , b e a t i n g F o r d ' s d o l l a r l o s s on t h e E d s e l . See R. A. "General Dynamics," F o r t u n e , (January  12.  R. Sweeney and I . S t o n e , " M a n u f a c t u r e r s P u s h t o Meet Jet Deadlines," A v i a t i o n Week, ( A p r i l 1 5 , 1957) pp.37-41.  13.  U n i t e d d i d operate V i s c o u n t s a f t e r t h e i r merger w i t h C a p i t a l A i r l i n e s i n 1961.  14.  The C a r a v e l l e was, i n t h e w o r d s o f A m e r i c a n ' s p r e s i d e n t , C. R. S m i t h , " t o o damn s l o w . " See S t r y k e r , o p . c i t . , p.158.  15.  Bowers, op. c i t . ,  16.  Ibid.,  17.  The 727 became t h e m o s t s u c c e s s f u l c o m m e r c i a l j e t i n t e r m s o f t o t a l s a l e s a n d by 1974 o v e r 1100 h a d b e e n built.  18.  R. E. G. D a v i e s , 1914, p . 5 2 2 .  19.  The f i r s t DC-9 u s e d a d e - r a t e d v e r s i o n o f t h e . J T 8 D a n d thus had i m m e d i a t e growth p o t e n t i a l .  20.  Two B A C - l l l s w e r e l o s t i n t h e a i r c r a f t ' s c e r t i f i c a t i o n program. The DC-9, w h i c h h a d t h e same t a i l d e s i g n as t h e 1 1 1 , b e n e f i t t e d f r o m t h e e a r l i e r B r i t i s h e x perience. S e e , f o r e x a m p l e , C. M. P l a t t n e r , "DC-9 U n v e i l e d E a r l y D e s p i t e T a i l Change," A v i a t i o n Week, ( J a n u a r y 1 8 , 1965) p p . 3 0 - 3 3 .  21.  T h i s was t h e v i e w o f most o f t h e t r u n k s by 1 9 6 6 , a l t h o u g h U n i t e d c o n s i d e r e d f r e q u e n c y t o be " s t i l l o f p a r a m o u n t interest." C. M. P l a t t n e r , "U.S. F i r m s S t u d y H i g h C a p a c i t y , Mid-Range J e t T r a n s p o r t , " A v i a t i o n Week, V o l . 85 ( O c t o b e r 3 1 , 1966) p p . 4 2 - 4 7 .  990 amounted 200 m i l l i o n Smith, 1962) p . 64.  p.380.  p.380.  A i r l i n e s of the United States  The 707-320 e m e r g e d a s s o o n as t h e J T 4 A e n g i n e available.  Since  became  199 23.  The p o s i t i o n o f t h e e n g i n e o n t h e w i n g was c h a n g e d a n d the engine i n c o r p o r a t e d a f u l l - l e n g t h bypass duct t o i n c r e a s e t h r u s t and r e d u c e d r a g compared t o t h e s t a n d a r d JT3D.  24.  The DC-8-61 f u s e l a g e h a d b e e n made a s l o n g a s p o s s i b l e w i t h the e x i s t i n g landing gear.  25.  The 707-820 w o u l d a l s o h a v e r e q u i r e d a new e n g i n e b e c a u s e i t s g r o s s w e i g h t (410,000 p o u n d s ) was f a r g r e a t e r t h a n t h a t o f t h e DC-8-61 (325,000 p o u n d s ) . See A v i a t i o n Week, ( A u g u s t 9, 1 9 6 5 ) , p . 3 8 .  26.  Bowers, op. c i t . ,  p.380.  27. • The f i r s t DC-9 e n t e r e d s e r v i c e two y e a r s a h e a d o f t h e 737 a n d t h e DC-9-30 n i n e months a h e a d o f t h e 737-200. 28.  U n i t e d f i n a l l y r e t i r e d i t s f l e e t o f DC-6Bs when t h e 737s e n t e r e d s e r v i c e i n 1 9 6 8 .  29.  A v i a t i o n Week, ( F e b r u a r y 1 9 , 1968) p . 3 0 ; ( F e b r u a r y 2 6 , 1968) p . 3 3 .  30.  F o r e x a m p l e , c r e w e x p e n s e s o n t h e 727 w e r e s i m i l a r f o r U n i t e d a n d E a s t e r n , a t $200 a n d $213 p e r b l o c k h o u r , r e s p e c t i v e l y , i n 1972. E a s t e r n ' s crew expenses on t h e DC-9-30 a v e r a g e d $164 p e r h o u r w h i l e U n i t e d ' s 737 e x p e n s e s w e r e $219 p e r h o u r . Source: CAB, A i r c r a f t O p e r a t i n g C o s t a n d P e r f o r m a n c e R e p o r t , J u l y 1973 e d .  31.  I n 1969, f o r example, d i r e c t o p e r a t i n g expenses on D e l t a ' s DC-8-50 a n d DC-8-61 w e r e $693 a n d $781 p e r block hour, r e s p e c t i v e l y . Because o f t h e i n c r e a s e i n p r o d u c t i v i t y , s e a t - m i l e c o s t s w e r e 1.34 3C a n d 0.985^ r e s p e c t i v e l y , a d i f f e r e n c e o f t w e n t y - s i x p e r cent. Source: CAB, o p . c i t . , A u g u s t 1971 e d .  32.  James R. A s h l o c k , " P l a n n e r s C o n c e r n e d O v e r E a r l y 747 Buy", A v i a t i o n Week, ( M a r c h 2 6 , 1 9 6 6 ) , p p . 3 8 - 3 9 .  33.  G e n e r a l E l e c t r i c was o c c u p i e d w i t h d e v e l o p m e n t o f t h e TF39 e n g i n e f o r t h e C-5A.  34.  M i c h a e l L. Y a f f e , "JT9D E n g i n e f o r 747 E m p h a s i z e s T h r u s t for Cruise," A v i a t i o n Week, ( A p r i l 18, 1966) pp.42-43.  200 35.  A s h l o c k , o p . c i t . , pp.38-39 a n d W. H. G r e g o r y , "Pan A m e r i c a n O r d e r f o r 747 Opens New E r a i n A i r l i n e J e t T r a n s p o r t Equipment," A v i a t i o n Week, ( A p r i l 1 8 , 1966) p p . 3 8 - 4 0 .  36.  H a r o l d D. W a t k i n s , " D o u g l a s R o l l s O u t F i r s t S t r e t c h e d DC-8," A v i a t i o n Week, ( J a n u a r y 3 1 , 1966) pp.32-33.  37.  CAB, o p . c i t . ,  38.  Watkins, op. c i t . , p.33.  39.  S e e , f o r e x a m p l e , W. M. M a g r u d e r , D e v e l o p m e n t o f R e q u i r e ment, C o n f i g u r a t i o n a n d D e s i g n f o r t h e L o c k h e e d 1 0 1 1 Jet Transport,  40.  L o c k h e e d was a b l e t o c a r r y on w i t h t h e L . 1 0 1 1 p r o g r a m o n l y a f t e r r e c e i v i n g a $250 m i l l i o n g o v e r n m e n t guaranteed loan. Rolls-Royce entered receivership and were r e - f i n a n c e d i n 1971.  41.  I n 1 9 7 2 , 279 727-100's w e r e i n s e r v i c e w i t h n i n e t r u n k s c o m p a r e d t o 49 DC-8-61's o p e r a t e d by f o u r t r u n k s . CAB, o p . c i t . , J u l y 1973 e d . .  42.  F o r example, t y p i c a l c r u i s i n g speeds f o r B o e i n g a i r c r a f t are: 5 8 0 , 5 5 0 , 5 7 0 , a n d 560 m i l e s p e r h o u r f o r t h e 747, 707-320B, 727 a n d 737 r e s p e c t i v e l y .  43.  F o r e x a m p l e , TWA f e l t t h a t t h e L . 1 0 1 1 was s u f f i c i e n t l y f l e x i b l e t o p e r f o r m t a s k s t h a t m i g h t o t h e r w i s e have r e q u i r e d two a i r c r a f t . A v i a t i o n Week, ( A p r i l 8, 1968) p . 3 6 . "  44.  T h a t i s , t h e f r a c t i o n o f t o t a l s e a t s t h a t must be o c c u p i e d so t h a t , a t e x i s t i n g f a r e l e v e l s , revenues w i l l cover d i r e c t expenses.  45.  The o n l y c o n s i s t e n t b a s i s o f c o m p a r i s o n i s a s t a n d a r d f i g u r e b a s e d on m a n u f a c t u r e r s ' d a t a . The a v e r a g e c a p a c i t y o f t h e 7 4 7 , f o r e x a m p l e , d e c l i n e d f r o m 341 i n 1970 t o 317 i n 1972 f o r t h e t r u n k c a r r i e r s b e c a u s e of excess capacity i n the industry. The DC-8-61 a n d DC-8-63, t h o u g h i d e n t i c a l i n p h y s i c a l d i m e n s i o n s , had average c a p a c i t i e s d i f f e r i n g by f i f t e e n s e a t s i n 1972.  46.  On s h o r t e r t r i p s , f u e l c o n s u m p t i o n i s h e a v i l y i n f l u e n c e d by t h e d e g r e e o f a i r p o r t a n d a i r w a y s c o n g e s t i o n .  A u g u s t 1 9 7 2 , J u l y 1973 e d . .  201 CHAPTER I V : 1.  The  2.  Fruhan, 39.  3.  Cf.-, D o u g l a s  4.  R e g u l a t i o n of r a t e of r e t u r n i s a r a t h e r crude i n s t r u m e n t f o r c o n t r o l l i n g p r o f i t s i n a g i v e n market. However, t h e c a r r i e r s , r e c o g n i z e t h a t t h e CAB c a n l i c e n c e a d d i t i o n a l c a r r i e r s t o s e r v e a m a r k e t t h a t has a l o a d f a c t o r g r e a t e r than t h a t which the Board f e e l s r e f l e c t s 'adequate' s e r v i c e .  5.  C f . , F r u h a n , op. c i t . ,  6.  T o t a l engine t h r u s t determines a i r c r a f t gross weight a n d c r u i s i n g s p e e d ; e n g i n e s p e c i f i c w e i g h t and s p e c i f i c f u e l c o n s u m p t i o n d e t e r m i n e range and payload capacity.  7.  A d o p t i o n i s meant t o r e f e r t o t h e t i m e a t w h i c h an i n n o v a t i o n i s f i r s t i n t r o d u c e d by any c a r r i e r . Diffus i o n r e f e r s to the rate at which a p a r t i c u l a r innovat i o n i s a d o p t e d b y t h e i n d u s t r y as a w h o l e .  8.  C o s t s o f t h e DC-7 DC-6.  9.  When t h e j e t s w e r e o r d e r e d i t was n o t known w h e t h e r t h e i r c o s t s w o u l d be h i g h e r o r l o w e r t h a n t h o s e o f piston transports.  ' a d e q u a t e ' r a t e . o f r e t u r n was d e t e r m i n e d t o be 8 p e r c e n t i n t h e 1 9 5 0 ' s , 10.5 p e r c e n t i n t h e 1 9 6 0 ' s and 12 p e r c e n t i n 1 9 7 1 . See C a v e s , o p . c i t . , p.150 and G e o r g e W. D o u g l a s and James C. M i l l e r , "The- CAB's D o m e s t i c P a s s e n g e r F a r e I n v e s t i g a t i o n , " B e l l J o u r n a l o f E c o n o m i c s a n d Management S c i e n c e , V o l . 5, No. 1 ( S p r i n g 1974) p p . 2 0 5 - 2 1 2 . The  Fight  f o r C o m p e t i t i v e Advantage,  and M i l l e r ,  op. c i t . ,  pp.126-  pp.209-213.  p.145; pp.166-70; pp.179-82.  were e x p e c t e d t o e x c e e d t h o s e o f t h e  10.  S e a t m i l e c o s t s o f t h e 747 w e r e e x p e c t e d t o be t o t h o s e o f t h e DC-8-61.  11.  The  similar  JT3D e n g i n e O f f e r e d r e d u c e d f u e l c o n s u m p t i o n b u t h a d a higher i n i t i a l cost, r e s u l t i n g i n a marginal net e f f e c t on c o s t s . The CV-990 h a d h i g h e r o p e r a t i n g costs than other j e t s .  202 12.  i . e . T o t a l ( a i r c r a f t ) c o s t s were h i g h e r b u t t o t a l c o s t d i v i d e d b y c a p a c i t y ( s e a t - m i l e c o s t ) was l o w e r .  13.  F o r a g i v e n number o f t o t a l s e a t s i n a m a r k e t , a h i g h e r f r e q u e n c y w o u l d g e n e r a t e a g r e a t e r number o f p a s s e n gers, r e s u l t i n g i n g r e a t e r average revenue p e r seat (higher load f a c t o r ) .  1  14.  Maintenance i s n o t discussed f o rtwo.reasons: one, i t i s i m p o s s i b l e t o d e f i n e a unique measure o f m a i n t e n a n c e i n p u t s t h a t w o u l d be v a l i d o v e r t h e e n t i r e p e r i o d , and two, maintenance p r o d u c t i v i t y g e n e r a l l y c h a n g e d j o i n t l y w i t h i n n o v a t i o n s t h a t h a d more important i m p l i c a t i o n s f o r other inputs.  15.  Cf. C h a r l e s Adams, ' T h i r d Crewman: F l i g h t E n g i n e e r ' , A v i a t i o n Week, V o l . 4 8 , No. 16 ( A p r i l 2 6 , 1948) p.38.  16.  I b i d . , a l s o 'Use o f F l i g h t E n g i n e e r s P r o t e s t e d ' , A v i a t i o n Week, V o l . 49, No. 4 ( J u l y 2 6 , 1948) p . 4 0 .  17.  I b i d . , a l s o 'CAB I n s i s t s o n F l i g h t E n g i n e e r s ' , A v i a t i o n Week, V o l . 49, No. 16 ( O c t o b e r 1 8 , 1948) p . 4 1 .  18.  Increased route  range e l i m i n a t e s t h e n e c e s s i t y o f making enstops  and thereby/.increases  average  speed.  19.  See R. E. G. D a v i e s ,  op. c i t . , p p . 1 3 4 , 246.  20. 21.  I b i d . , p.248. V i c e - P r e s i d e n t o f B o e i n g i n ' B o e i n g 707 J e t T r a n s p o r t N e a r s R o l l o u t ' , A v i a t i o n Week, V o l . 6 0 , No. 10 ( A p r i l 7, 1954) p p . 1 4 - 1 5 [ e m p h a s i s a d d e d ] .  22.  See C h a p t e r I I I , P a r t I I , a l s o R. L. C o o k , ' J e t P r o b l e m s K e t t o 1960 L a b o u r T a l k s , ' A v i a t i o n Week, V o l . 7 2 , No. 14 ( A p r i l 4, 1960) p p . 4 0 - 4 2 .  23.  Cf. 'EAL, C & S a n d PCA A g r e e m e n t s C r e a t e P r o b l e m s f o r P i l o t ' s Pay' , A v i a t i o n Week, V o l . .47, No. 3 ( J u l y 2 1 , 1947) p . 5 8 .  24.  F o r example, t h e r e remained a s i g n i f i c a n t crew expense component t h a t was i n d e p e n d e n t o f s p e e d : monthly base pay and t r a i n i n g expenses.  203 25.  The s e c t i o n o n o v e r a l l account both engine given a i r c r a f t type quirements r e l a t i v e  26.  Cf.  S. D. H e r o n ,  Engine,  energy e f f i c i e n c y takes i n t o e f f i c i e n c y and t h e a b i l i t y o f a t o minimize engine t h r u s t r e t o i t s passenger c a p a c i t y .  History of the A i r c r a f t  Piston  p.28.  27.  M i l l e r and Sawers,  op. c i t . , p.94.  28.  Heron, op. c i t . , p.30.  29. 30.  S e e ' P i s t o n E n g i n e s B o o s t e d t o 4000 Hp', A v i a t i o n Week, V o l . 4 9 , No. 6 ( A u g u s t 9, 194 8) p. 12. The t u r b o - c o m p o u n d W r i g h t e n g i n e o n t h e DC-7 h a d a l o w e r s f c t h a n t h e DC-6B's e n g i n e s a n d i n a d d i t i o n , p o w e r was i n c r e a s e d by a b o u t 2 5 % a l l o w i n g f o r a n i n c r e a s e i n c r u i s i n g speed.  31.  Heron, bp. c i t . , p.111.  32.  S f c ' s w e r e , r e s p e c t i v e l y , 1.08 l b : l b t - h r a n d 0.76 lb:lbt-hr. See ' L e a d i n g F o r e i g n J e t E n g i n e s ' , A v i a t i o n Week, V o l . 54 , No. 9 ( F e b r u a r y 28, 1951) p.165 .  33.  See ' D o u g l a s A n n o u n c e s New DC-8 D e s i g n ' , A v i a t i o n Week, V o l . 62 , No. 8 , ( F e b r u a r y 27, 1956) p . 1 0 3 .  34.  G e o r g e S. S c h a i r e r , 'The R o l e o f C o m p e t i t i o n i n A e r o nautics', Journal of the Royal Aeronautical Society, V o l . 73 (March 1969) p . 2 0 2 .  35.  See S t r y k e r , o p . c i t . , p . 9 6 .  36.  i . e . An i n c r e a s e i n p a y l o a d o r r a n g e o r b o t h , s u b j e c t t o physical capacity constraints.  37.  F o r e x a m p l e , f u e l c o n s u m p t i o n o f a t u r b o j e t 707 o n a f l i g h t f r o m New Y o r k t o L o s A n g e l e s w o u l d be a p p r o x i m a t e l y 78,000 p o u n d s a n d 16,000 p o u n d s w o u l d be required f o r reserve fuel. A reduction i n sfc to t h a t o f t h e JT9D h i g h - b y p a s s t u r b o f a n c o u l d r e d u c e t h e r e q u i r e d f u e l l o a d t o p e r h a p s 44,000 p o u n d s ( i n c l u d i n g 8,000 p o u n d r e s e r v e s ) . This reduction i n f u e l l o a d i s a l m o s t a s g r e a t a s t h e maximum p a y l o a d o f a 707-120, 37,000 pounds'.  38.  Gellman, op. c i t . , pp.395-405.  204 The  a i r f r a m e , f o r e x a m p l e , m u s t be a b l e t o accommodate •-. h e a v i e r f u e l l o a d s and t h i s i s r e f l e c t e d i n a h i g h e r o r i g i n a l cost.  The p r o b l e m a r i s e s f r o m t h e d i f f i c u l t y i n d e f i n i n g a c c e p t a b l e measure o f o u t p u t s where changes i n q u a l i t y have o c c u r r e d .  an  The p r i c e s e l e c t e d w o u l d d e p e n d on t h e p e r c e i v e d l e v e l o f p r i c e e l a s t i c i t y i n t h e a i r l i n e s ' demand f o r new equipment. N e i t h e r m a n u f a c t u r e r i s l i k e l y t o be induced i n t o s e t t i n g a p r i c e a t which both firms would s u s t a i n l o s s e s . Cf.  F r u h a n , op. c i t . ,  pp.124-52..  See H a r v e y A v e r c h and L e l a n d L. J o h n s o n , 'Behaviour of t h e F i r m Under R e g u l a t o r y C o n s t r a i n t ' , American E c o n o m i c -Review, V o l . 52 (December 1962) p p . 1 0 5 2 - 6 9 . R e t u r n o n i n v e s t m e n t w o u l d be  (12-0.1)/(100+20)=9.9%.  i . e . The DC-6 e n j o y e d b e n e f i t s r e s u l t i n g f r o m p r i o r d e v e l o p m e n t o f t h e DC-4 a n d s h o u l d h a v e h a d l o w e r manuf a c t u r i n g c o s t s because o f the ' l e a r n i n g curve' phenomenon. C o m p e t i t i o n p r o v i d e d by L o c k h e e d ' s d e s i g n s ( L - 0 4 9 , a n d -749) a l s o e n s u r e d t h a t t h e p r i c e o f t h e DC-6 was k e p t r e l a t i v e l y l o w . F r u h a n , op. c i t . , Caves, op. c i t . , Ibid., To  p.30. p.150.  pp.145-50.  4.8 p e r c e n t i n 1957 and 6.5 See F r u h a n , o p . c i t . , p . 3 0 .  C a v e s , op. c i t . ,  p.151.  per cent i n  1958.  -649  BIBLIOGRAPHY  Adams, C h a r l e s , " T h i r d Crewman: . F l i g h t E n g i n e e r , " A v i a t i o n Week, V o l . 4 8 , No. 1 6 , ( A p r i l 26, 1 9 4 8 ) , p. 38. A s h l o c k , James R., " P l a n n e r s . 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M., Development o f Requirement, Configuration and D e s i g n f o r t h e L o c k h e e d 1011 J e t T r a n s p o r t " , S o c i e t y o f A u t o m o t i v e E n g i n e e r s ( O c t o b e r 1968) SAE 680688. McDonald, John, "Jet Airliners: Year of Decision," F o r t u n e , V o l . 57 ( A p r i l , 1 9 5 3 ) , p p . 1 2 5 - 2 1 9 . (May, Miller, x  Mooz, W. N  , . " J e t A i r l i n e s I I " , - F o r t u n e , V o l . 57, 1953), pp.125-201.  R. and- S a w e r s , D., ' The T e c h n i c a l D e v e l o p m e n t o f Modern A v i a t i o n , P r a e g e r , (New Y o r k : 1970) . E. , • The E f f e c t o f F u e l P r i c e I n c r e a s e s on'- E n e r g y T r i t e n s i v e r i e s s o f F r e i g h t T r a n s p o r t , Rand Co ., ( S a n t a M o n i c a C.: 1 9 7 1 ) , R-804-NSF.  M u r p h y , C. J . V. and W i s e , T. A., . "The P r o b l e m ' o f Howard Hughes," F o r t u n e , V o l . 59 ( J a n u a r y 1 9 5 9 ) . O f f i c i a l A i r l i n e Guide, ~" (November 19 70) .  R, H. D o n n e l l e y , Oak  Brook,  111.  !  P h i l l i p s , A l m a r i n , T e c h n o l o g y and M a r k e t S t r u c t u r e , Rand • C o r p . , ( L e x i n g t o n , Mass.: 1971) . Pilati,  D. A., A i r p l a n e E n e r g y Use arid C o n s e r v a t i o n S t r a t e g i e s , Oak R i d g e N a t i o n a l L a b o r a t o r y (Oak R i d g e , T e n n . , 1974) ORNL-NSF-EP-69. :  P l a t t n e r , C. M., "DC-9 U n v e i l e d E a r l y D e s p i t e T a i l Change," A v i a t i o n Week, ( J a n u a r y 18, 1965), pp.30-33. , 'M5.S. F i r m s S t u d y H i g h - C a p a c i t y , M i d - R a n g e J e t T r a n s p o r t , " A v i a t i o n Week, V o l . 85, No. 18 ( O c t o b e r 31, 1966), pp.42-47.  208 R i c e , R. A., " S y s t e m E n e r g y a n d F u t u r e T r a n s p o r t a t i o n , " Technology Review, (January 1972), pp.31-37. S a l t e r , W. E. G., P r o d u c t i v i t y a n d T e c h n i c a l C h a n g e , C a m b r i d g e U n i v e r s i t y P r e s s , ( L o n d o n : 1969) . S a u n d e r s , D. A., . "The A i r l i n e s ' Fortune (February 1956),  F l i g h t From R e a l i t y " , pp.91-225.  S c h a i r e r , G e o r g e S. "The R o l e o f C o m p e t i t i o n i n A e r o n a u t i c s , " J o u r n a l o f t h e R o y a l A e r o n a u t i c a l S o c i e t y , V o l . 73 (March 1969) , p p . 1 9 5 - 2 0 7 . ~~ ~~ :  S e a r l s , F. a n d J o e , C. Y., "Reengining J e t Transports i n 1 9 7 2 ? " . SAE P a p e r No. 6 6 0 3 2 1 , S o c i e t y o f A u t o m o t i v e E n g i n e e r s , (New Y o r k : 1966) mimeo. Smith,  R. A., " G e n e r a l D y n a m i c s , " Fortune, pp. 5 9 - 7 2 . ''•  Stryker, Perrin, Airline,"  ( J a n u a r y 1962)  " T h e r e ' s More Than One Way t o Run a n F o r t u n e , (February 1961), pp.96-158.  Sweeney, R. a n d S t o n e , I . , " M a n u f a c t u r e r s P u s h t o M e e t Jet Deadlines," A v i a t i o n Week, ( A p r i l 1 5 , 1 9 5 7 ) , pp.37-41. Watkins,  H a r o l d D., "Douglas R o l l s Out F i r s t S t r e t c h e d DC-8," A v i a t i o n Week, ( J a n u a r y 3 1 , 1 9 6 6 ) , p p . 3 2 - 3 3 .  World A i r l i n e Record, 7 t h e d . , Roadcap and A s s o c i a t e s , ( C h i c a g o : 1972) .Y a f f e , M i c h a e l L . , "JT9D E n g i n e f o r 747 E m p h a s i z e s T h r u s t f o r C r u i s e , " A v i a t i o n Week, ( A p r i l 1 8 , 1 9 6 6 ) , pp.42-43.  APPENDIX A CONCEPTUAL BACKGROUND:  T e c h n i c a l E f f i c i e n c y , and The ent concept  THE  THEORY OF  Economic  PRODUCTION  Efficiency  economic theory of p r o d u c t i o n p r o v i d e s a for examination  the p r o d u c t i o n techniques  conveni-  o f t h e e f f e c t o f f a c t o r p r i c e s on  e m p l o y e d by  firms.  One  of  the  u n d e r l y i n g p r i n c i p l e s of the theory i s the d i s t i n c t i o n t e c h n i c a l e f f i c i e n c y and e c o n o m i c  between  efficiency.  C o m p a r i s o n s o f t h e amount o f e n e r g y r e q u i r e d by f e r e n t modes t o p r o d u c e a g i v e n o u t p u t  dif-  ( i . e . i n BTU/seat m i l e ,  f o r example) r e f e r t o d i f f e r e n c e s i n t e c h n i c a l e f f i c i e n c y  for  one  than  i n p u t , energy.  Technical efficiency  the average p h y s i c a l p r o d u c t  i s n o t h i n g more  o f c o n v e n t i o n a l economic  t h e a v e r a g e amount o f o u t p u t p r o d u c e d by one  unit of  theory, factor  input. C o m p a r i s o n s on t h i s b a s i s a r e a p p r o p r i a t e i n t e c h n i c a l l i t e r a t u r e b u t have l i m i t e d economic s i g n i f i c a n c e because entrepreneur  supplying transportation service i s  concerned,  not w i t h t e c h n i c a l e f f i c i e n c y , but r a t h e r w i t h the o v e r a l l nomic e f f i c i e n c y o f p r o d u c t i o n p r o c e s s e s . s i m p l y by  a given output.  f i c i e n c y r e m a i n s an i n d i r e c t c o n c e r n average  c o s t a t t r i b u t a b l e t o any .  209  one  eco-  T h i s i s measured  the degree t o which a p a r t i c u l a r process  t h e money c o s t o f p r o d u c i n g  an  1  minimizes  Technical ef-  b e c a u s e t h e component o f factor  (a m e a s u r e o f  the  210 e f f e c t on economic e f f i c i e n c y ) i s d i r e c t l y p r o p o r t i o n a l t o f a c t o r p r i c e and i n v e r s e l y p r o p o r t i o n a l t o t h e t e c h n i c a l e f f i c i e n c y of i t s use. Best P r a c t i c e Technique The is  most i m p o r t a n t  the production  concept i n the theory  f u n c t i o n , which expresses  of production  t h e r e l a t i o n be-  tween t h e q u a n t i t y o f o u t p u t and t h e i n p u t s r e q u i r e d t o p r o duce i t , This  as w e l l as t h e r e l a t i o n between t h e i n p u t s  themselves.  f u n c t i o n embodies a l l t h e t e c h n o l o g i c a l c o n s t r a i n t s t h a t  r e s t r i c t t h e range o f f e a s i b l e i n p u t and o u t p u t c o m b i n a t i o n s and  impose themselves on economic d e c i s i o n s .  the p r o d u c t i o n maximization  Implicit i n  f u n c t i o n i s a presumption that a t e c h n i c a l  p r o b l e m h a s b e e n s o l v e d s u c h t h a t f o r e a c h com-  b i n a t i o n o f i n p u t s t h e maximum p o s s i b l e o u t p u t i s o b t a i n e d . A production  f u n c t i o n c a n be r e p r e s e n t e d  quant which f o r a t w o - f a c t o r  production  process  b y an i s o i sa  curve  s h o w i n g t h e v a r i o u s c o m b i n a t i o n s o f t h e two i n p u t s t h a t y i e l d a (constant)  given output.  will  F i g u r e A . l shows an i s o -  2 quant  f o r a production  process  i n which labour  (E) a r e c o m b i n e d i n d i f f e r e n t p r o p o r t i o n s  (L) a n d e n e r g y  t o produce a f i x e d  q u a n t i t y o f o u t p u t (Q). The and  costs o f d i f f e r e n t combinations of inputs of labour  e n e r g y c a n be shown o n a s i m i l a r d i a g r a m a s an i s o c o s t  which describes  t h e v a r i o u s c o m b i n a t i o n s t h a t c a n be  f o r a f i x e d money o u t l a y w i t h c o n s t a n t  factor prices.  obtained Figure  A.2 shows a s t r a i g h t - l i n e i s o c o s t d r a w n i n t h e same s p a c e a s  211  (units of labour)  Figure A . l A T w o - F a c t o r P s o q u a n t - A a n d B a r e two f e a s i b l e c o m b i n a t i o n s o f t h e two i n p u t s , l a b o u r a n d c a p i t a l t h a t w i l l a t t a i n an o u t p u t Q. A i s r e l a t i v e l y more l a b o u r - i n t e n s i v e t h a n B ( w h i c h i s more e n e r g y - i n t e n s i v e ) .  212  (units of labour)  t , (units of energy) F i g u r e A.2 A T w o - F a c t o r I s o c o s t - The i s o c O s t shows t h e v a r i o u s c o m b i n a t i o n s o f l a b o u r a n d e n e r g y t h a t c a n be o b t a i n e d w i t h a f i x e d o u t l a y T = L,P = E,P , w h e r e P and P a r e f a c t o r p r i c e s . The s l o p e o f t h e i s o c o s t = -P /P , t h e r a t i o o f f a c t o r p r i c e s . L  213 the isoquant w i t h t h e curve output  to combinations  i s equal  transformed  of inputs.  from q u a n t i t i e s o f  The s l o p e o f t h e i s o c o s t  t o t h e r a t i o o f f a c t o r p r i c e s ' and i t s d i s t a n c e  from  the o r i g i n i s p r o p o r t i o n a l t o the t o t a l o u t l a y f o r f a c t o r s . The  s l o p e o f t h e i s o c o s t c h a n g e s when t h e p r i c e o f one f a c t o r  c h a n g e s w i t h r e s p e c t t o t h e o t h e r a s shown i n F i g u r e A.3 f o r an i n c r e a s e i n t h e r e l a t i v e p r i c e o f l a b o u r . 'Best p r a c t i c e technique' combination technology of producing  i s t h e name g i v e n t o t h a t  o f f a c t o r inputs which, f o ra given state o f ( i . e . a given isoquant), minimizes a given output  This optimal combination  the t o t a l  costs  at prevailing factor prices.  o f i n p u t s i s g i v e n by t h e p o i n t o f  tangency between t h e (given) i s o q u a n t and t h e l o w e s t  feasible  i s o c o s t , a s shown i n F i g u r e A . 4 .  condi-  tions  Here t h e m a r g i n a l  f o r c o s t m i n i m i z a t i o n have been s a t i s f i e d .  The p o i n t  o f tangency i m p l i e s p a r t i c u l a r u n i t l a b o u r and energy r e q u i r e ments; t h e optimum t e c h n i c a l e f f i c i e n c y f a c t o r s has been d e t e r m i n e d , maximum e c o n o m i c  i n t h e use o f both  corresponding  t o the point of  efficiency.  Changes i n B e s t P r a c t i c e T e c h n i q u e Because b e s t p r a c t i c e technique of the e x i s t i n g production and  function (i.e. state of  prevailing factor prices,  f a c t o r p r i c e s o r technology tor prices w i l l  was d e f i n e d i n t e r m s  i t changes whenever  change-.  technology) relative  A change i n r e l a t i v e  fac-  a l t e r t h e s l o p e o f t h e i s o c o s t ( a s shown i n  F i g u r e A.3) a n d move t h e p o i n t o f t a n g e n c y t o a new p o s i t i o n  214  L, (units of labour)  F i g u r e A.3 The E f f e c t o f an I n c r e a s e i n t h e P r i c e o f L a b o u r The i n t e r c e p t on t h e l a b o u r a x i s moves t o w a r d t h e o r i g i n ( f r o m L-j^ t o L ) a s P i n c r e a s e s a n d t h e number o f l a b o u r u n i t s o b tainable with a given outlay declines. 2  L  215  F i g u r e A. 4 The O p t i m a l C o m b i n a t i o n o f I i t p u t s - The p o i n t o f t a n g e n c y (C) b e t w e e n t h e i s o c o s t and i s o q u a n t i s t h e o p t i m u m c o m b i n a t i o n o f i n p u t s s i n c e i t p r o v i d e s f o r maximum economic e f f i c i e n c y . T e c h n i c a l e f f i c i e n c y i s not maximized but i s set i n accordance w i t h p r e v a i l i n g f a c t o r p r i c e s a t Q/L^ and Q/E^ f o r l a b o u r and e n e r g y r e s p e c t i v e l y .  on  the isoquant,  implying  a new o p t i m a l  combination of inputs.  The r e s p o n s e i s i n t h e f o r m o f a f a c t o r s u b s t i t u t i o n ; t h e new technique w i l l  a c h i e v e maximum e c o n o m i c e f f i c i e n c y b y  using  more o f t h e f a c t o r whose r e l a t i v e p r i c e h a s f a l l e n a n d l e s s of  t h e f a c t o r whose r e l a t i v e p r i c e h a s r i s e n .  i l l u s t r a t e d i n Figure a)  A . 5 , may come a b o u t a s a r e s u l t o f :  changes i n t h e method o f o p e r a t i o n p l a n t o r equipment of operation  b)  of existing  (e.g. i n c r e a s i n g  the speed  t o economize on l a b o u r ) ,  replacement o f o l d equipment w i t h ting)  The phenomenon,  d e s i g n w h i c h has l o w e r c o s t s  another  (exis-  under t h e  new s e t o f f a c t o r p r i c e s , o r c)  a d o p t i o n o f new t y p e s o f e q u i p m e n t d e s i g n e d (with e x i s t i n g technology) i n response t o changed f a c t o r p r i c e s . I t m u s t be n o t e d t h a t f a c t o r p r o p o r t i o n s  charged only w i t h i n defined  the range o f t e c h n o l o g i c a l  by t h e i s o q u a n t .  vative possibilities  This  c a n be possibilities  study presupposes that  a r e n e u t r a l and s p e c i f i c a l l y  inno-  excludes 3  the  possible existence  o f complementarity between  Since the production put  function defines  inputs.  t h e maximum o u t -  a t t a i n a b l e u n d e r e x i s t i n g t e c h n o l o g y f o r a l l f e a s i b l e com-  binations  of inputs,  the p o s i t i o n of the isoquant i t s e l f  will  1  217  6  E, (units of energy)  F i g u r e A.5 Change i n B e s t P r a c t i c e T e c h n i q u e A f t e r a Change i n R e l a t i v e F a c t o r P r i c e s - An i n c r e a s e i n t h e p r i c e o f energy r e l a t i v e to t h a t o f labour from i s o c o s t P t o P_ r e s u l t s i n a c h a n g e i n b e s t p r a c t i c e t e c h n i q u e ( f r o m D t o F ) . • The new o p t i m a l c o m b i n a t i o n o f i n p u t s (L„,Ep) u s e s l e s s e n e r g y a n d more l a b o u r t h a n that the old (L ,E ). D  D  D  218 . change o n l y when new k n o w l e d g e - b y e a s i n g t e c h n i c a l c o n s t r a i n t s - o p e n s up a s u p e r i o r r a n g e o f p r o d u c t i o n t e c h n i q u e s .  The  s i m p l e s t t y p e o f t e c h n o l o g i c a l c h a n g e i s one i n w h i c h t h e i s o quant i s s h i f t e d towards t h e o r i g i n w i t h o u t shape o r o r i e n t a t i o n . efficiency' is  This i s c a l l e d a neutral or  t e c h n o l o g i c a l change because economic  i n c r e a s e d through  ency f o r every nology  a change i n i t s 'pure-  efficiency  a p r o p o r t i o n a l change i n t e c h n i c a l e f f i c i -  input.  The e f f e c t o f a n e u t r a l c h a n g e i n t e c h -  on b e s t p r a c t i c e t e c h n i q u e  w h e r e t h e new i s o q u a n t  i s tangent  i s shown i n F i g u r e t o a lower  A.6,  isocost.  The  p o i n t o f t a n g e n c y i s p o s i t i o n e d on a l i n e c o n n e c t i n g  the o r i g i n  w i t h the former p o i n t o f tangency, i m p l y i n g a p r o p o r t i o n a l r e duction i n a l l i n p u t requirements (i.e.  f o r t h e same l e v e l o f o u t p u t ,  f a c t o r q u a n t i t i e s are reduced but f a c t o r proportions are  unchanged.) Not  a l l changes i n t e c h n o l o g y  e x a c t l y a s shown i n F i g u r e A.6; t o w a r d s one a x i s t h a n  will  shift  the isoquant  t h e movement may be more  t h e o t h e r , as shown i n F i g u r e  A.7.  T h i s i s an e x a m p l e o f a ' b i a s e d ' t e c h n o l o g i c a l c h a n g e .  It  l e a d s t o uneven f a c t o r s a v i n g s because t e c h n i c a l e f f i c i e n c y is  i m p r o v e d more f o r one i n p u t t h a n  f o r the other.  This  r e s u l t i n a c h a n g e i n f a c t o r p r o p o r t i o n s w i t h t h e new p r a c t i c e technique  i frelative  T h u s , a s shown i n F i g u r e A.7 lower  will  best  f a c t o r p r i c e s a r e unchanged.  t h e new i s o q u a n t  i s tangent  i s o c o s t , i m p l y i n g an improvement i n economic  to a  efficiency.  U n l i k e t h e r e s u l t s o f a n e u t r a l change, however, f a c t o r p r o -  219  (units of labour)  F i g u r e A.6 E f f e c t o f a N e u t r a l Change i n T e c h n o l o g y Isoquants and Q d e f i n e t h e combination o f i n p u t s t h a t w i l l p r o d u c e t h e same o u t p u t u n d e r t h e o l d a n d new t e c h nology, r e s p e c t i v e l y . The c h a n g e i n t e c h n o l o g y was n e u t r a l so f a c t o r p r o p o r t i o n s a r e l e f t unchanged 2  ( L  G  / E  G  =  L  / H E  H  )  '  220  (units of labour)  F i g u r e A.7 E f f e c t o f a ' B i a s e d ' Change i n T e c h n o l o g y - As i n F i g u r e A.6 t h e i s o q u a n t has s h i f t e d ( f r o m t o C^) as a r e s u l t o f a change i n t e c h n o l o g y . I n t h i s c a s e , however, t h e i s o q u a n t s h i f t e d more t o w a r d s t h e l a b o u r a x i s t h a n t h e energy a x i s . T h i s r e s u l t s i n uneven (biased) f a c t o r savi n g s ; f a c t o r p r o p o r t i o n s change because t h e r e i s a g r e a t e r savings of energy than of l a b o u r . However, b e c a u s e t h e new i s o q u a n t i s e v e r y w h e r e c l o s e r t o t h e o r i g i n t h a n t h e o l d , t h e new t e c h n o l o g y i s more a t t r a c t i v e f o r any s e t o f relative factor prices.  221 portions the  have been a l t e r e d i n a c c o r d a n c e w i t h  the d i r e c t i o n of  'bias ' . It  i s i m p o r t a n t t o n o t e , however, t h a t  cal  change i l l u s t r a t e d  any  set of relative factor prices.  the  technologi-  i n F i g u r e A.7 w o u l d be a t t r a c t i v e u n d e r I n other words, i t would  r e s u l t i n improved economic e f f i c i e n c y r e g a r d l e s s slope of the isocost.  o f the  I t i s c o n c e i v a b l e , h o w e v e r , f o r new  t e c h n o l o g y t o o f f e r a n i s o q u a n t t h a t h a s s h i f t e d away f r o m one axis  and towards t h e o t h e r , i m p l y i n g  efficiency former•  f o r the l a t t e r  a reduction  f a c t o r and an improvement f o r t h e  Such a t e c h n o l o g i c a l  c h a n g e w o u l d be a t t r a c t i v e  o n l y under a p a r t i c u l a r c o n d i t i o n  of factor prices  former f a c t o r has a h i g h e r r e l a t i v e . p r i c e . an  energy-intensive biased technological  attractive one  (i.e. offers  i n technical  - when t h e  F i g u r e A.8 shows  change t h a t i s  improved economic e f f i c i e n c y ) , under  set of r e l a t i v e factor prices but i s unattractive  another.  For reasons that w i l l  become a p p a r e n t l a t e r i n t h i s  study, i t i s convenient to r e f e r t o only t h i s type o f n o l o g i c a l change as ' b i a s e d ' .  under  tech-  The e a r l i e r t y p e , w h i c h  implied  unequal f a c t o r s a v i n g b u t improved economic e f f i c i e n c y r e g a r d less of relative factor prices w i l l  be r e f e r r e d  t o h e r e as a  4 'biased-efficiency'  change.  I n n o v a t i v e and Inventive'  Responses  T e c h n o l o g y i s s o m e t i m e s t h o u g h t t o be a u t o n o m o u s , o r 5 u n i n f l u e n c e d by f a c t o r p r i c e s . ever, that  Some e c o n o m i s t s c o n t e n d , how-  t h e s e a r c h f o r t e c h n i c a l knowledge w i l l  t e n d t o be  222  F i g u r e A.8 A S e c o n d Type o f ' B i a s e d ' Change - The t y p e o f t e c h n o l o g i c a l c h a n g e shown i n F i g u r e A.7 i s r e f e r r e d t o as ' b i a s e d - e f f i c i e n c y ' because i t improved economic e f f i c i e n c y regardless of r e l a t i v e factor prices. The 'pure b i a s e d ' change d e p i c t e d h e r e i m p r o v e s economic e f f i c i e n c y o n l y f o r certain factor price relationships (i.e. for isocost P but n o t i s o c o s t P, ) 2  223 directed tors.  towards e c o n o m i z i n g on t h e use o f h i g h e r - p r i c e d There has been, f o r example, a l a r g e  saving inventions  t e r m e d an i n v e n t i v e  and  number o f l a b o u r -  d u r i n g t h e l a s t c e n t u r y when wages h a v e i n -  creased f a s t e r than the p r i c e s is  o f energy and c a p i t a l .  response to f a c t o r p r i c e  t h r o u g h d e s i g n changes w i t h  the  given technology  This  incentives  has e f f e c t s analogous t o f a c t o r s u b s t i t u t i o n s  responses).  achieved  (i.e.  innovative  The p o s s i b i l i t y o f t h e e x i s t e n c e o f ' ' b i a s ' i n  s e a r c h f o r new t e c h n o l o g y was s u g g e s t e d b y H i c k s :  change i n t h e r e l a t i v e p r i c e s itself kind  fac-  a spur to invention,  - directed  of the factors  and t o i n v e n t i o n  "A  of production i s of a particular  t o e c o n o m i z i n g t h e use o f a f a c t o r w h i c h has 6  become r e l a t i v e l y  expensive."  A l t h o u g h t h e c o n c e p t i s n o t a c c e p t e d by a l l e c o n o m i s t s , i t would appear t o h o l d  some v a l i d i t y w h e r e t h e t r e n d  i n rela-  7  tive  factor prices  tion that on  a firm  the basis  i s . c o n s i s t e n t , based on F e l l n e r ' s  'learns'  of past  to anticipate  technological  factor  prices  trends.  I n any c a s e , t h e r e c o u l d between i n n o v a t i v e  future  proposi-  be no c l e a r d i v i d i n g  response and i n v e n t i v e  change) because a l l t h a t  response  (induced  c a n be o b s e r v e d a r e t h e 8  net  r e s u l t s i n t e r m s o f changes, i n b e s t p r a c t i c e  The  two f o r c e s  act simultaneously:  line  technique.  improving technical  know-  l e d g e e x p a n d s t h e r e a l m o f t h e t e c h n i c a l l y f e a s i b l e a t t h e same time that  changing f a c t o r p r i c e s  technical alternatives. the  two o n l y a t a h i g h l y  shape t h e c h o i c e between  A d i s t i n c t i o n c a n be made b e t w e e n 9 abstract level.  NOTES  See  R i c h a r d E. L i p s e y , E c o n o m i c s , p.166.  An  Introduction  to P o s i t i v e  By  t h e law o f t h e d i m i n i s h i n g r a t e o f s u b s t i t u t i o n , a l l i s o q u a n t s are convex t o the o r i g i n . Because t h i s study i s concerned only w i t h the production f u n c t i o n o f c a p i t a l equipment r a t h e r than t h a t o f f i r m s o r i n d u s t r i e s , the p o s s i b i l i t y of s c a l e economies (or d i s e c o n o m i e s ) c a n be n e g l e c t e d . Thus, the chara c t e r i s t i c s o f t h e i s o q u a n t w o u l d be t h e same f o r any l e v e l of output. See J . M. H e n d e r s o n and R. E. Quandt, M i c r o e c o n o m i c Theory: A Mathematical Approach.  As w i l l be shown i n C h a p t e r s I - I I I t h e r e was no e v i d e n c e t h a t c o m p l e m e n t a r i t y e x i s t e d b e t w e e n any i n puts. For a d i s c u s s i o n of problems t h a t a r i s e w i t h more t h a n two f a c t o r s s e e H. P. B i n s w a n g e r , "The M e a s u r e m e n t o f T e c h n i c a l Change B i a s e s w i t h Many F a c t o r s of P r o d u c t i o n , " American Economic Review, (December 1974) p p . 9 6 4 - 7 6 . A t e c h n o l o g i c a l c h a n g e may a l s o a l t e r t h e d e g r e e o f c u r v a t u r e o f the i s o q u a n t , i m p l y i n g a change i n the e l a s t i c i t y of s u b s t i t u t i o n . For reasons o u t l i n e d b e l o w , t h i s t y p e o f c h a n g e n e e d n o t be considered here. Cf.  W. E. p. 33.  J . R.  G.  Hicks,  S a l t e r / P r o d u c t i v i t y and The  T e c h n i c a l ' Change,  T h e o r y o f Wages, p . 1 2 5 .  W i l l i a m F e l l n e r , . "Two P r o p o s i t i o n s i n t h e T h e o r y Induced Innovations," The' E c o n o m i c J o u r n a l , V o l . 71 ( J u n e 1961) pp.305-308. M u r r a y B r o w n , On' t h e T h e o r y and c a l C h a n g e , p.15. Cf.  S a l t e r / op.  c i t . , p.29.  224  of  Measurement - o f ^ T e c h n i 1  APPENDIX B HOURLY AIRCRAFT PRODUCTIVITY TECHNICAL E F F I C I E N C Y FOR  Hourly seat miles per c a p a c i t y and to the  AND  F L Y I N G PERSONNEL  a i r c r a f t p r o d u c t i v i t y , i n terms o f a v a i l a b l e a i r c r a f t h o u r was  c r u i s i n g speed.  estimated  Although  from s e a t i n g  the  former i s s u b j e c t  c o n s i d e r a b l e v a r i a t i o n d e p e n d i n g upon s e a t i n g d e n s i t y l a t t e r i s d e p e n d e n t on  provide  acceptable  stage  estimates  length, simple c a l c u l a t i o n s  of average p r o d u c t i v i t y i n  t i v e terms s i n c e the e f f e c t of d i f f e r e n c e s i n o p e r a t i n g t i o n s are not of i n t e r e s t In order productivity personnel,  and  relacondi-  here.  to convert  estimates  of hourly  aircraft  i n t o measures of t e c h n i c a l e f f i c i e n c y f o r  flying  a method o f c o n v e r t i n g v a r i o u s crew r e q u i r e m e n t s  i n t o a c o n s i s t e n t 'crew e q u i v a l e n t ' i n d e x was m e t h o d c h o s e n was b a s e d on e s t i m a t e d  required.  The  a s y s t e m o f w e i g h t s f o r a l l c r e w members r e l a t i v e h o u r l y wage r a t e s .  s e l e c t e d w e r e as f o l l o w s :  P i l o t 1.0 C o - P i l o t 0.5 4  225  The  weights  F l i g h t Engineer Cabin Attendant  0.50 0.20  RESULTS;  a) P i s t o n P e r i o d  Seating Capacity Cruising Speed F i r s t A i r c r a f t (mph) Class T y p i c a l Coach DC-4 DC-6 DC-6B DC-7 DC-7C  220 280 280 320 310  44 50 55 . 55 62  54 56 64 76 76  66 70 82 90 99  Crew F l y i n g PerEquiv- sonnel Prod. R e l a t i v e Hourly A i r c r a f t P r o d u c t i v i t y a l e n t (ASM/Equiv. Technical Index (ASM/hour) hour) Efficiency 9,680-14,520 14,000-19,600 15,400-22,960 17,600-28,800 19,220-30,690  2.44 2.44 2.44 2.44 2.44  3,967- 5,951 0.63 5,738- 8,033 0.85-0.91 6,310-9,410 1.0 7,213-11,800 1.14-1.25 7,877-12,578 1.25-1.34  Expected Relative Seat M i l e Expense 1.58 1.1-1.2 1.0 0.8-0.87 0.75-0.8  b) T r a n s i t i o n P e r i o d  Aircraft DC-6B Viscount Electra 707-120 DC-8-10  Cruising Speed (mph) 280 302 360 585 585  Typical Seating Capacity 62 45 82 125 125  Hourly , Aircraft Productivity (ASM/hour) 17,600 11,560 24,930 62,270 62,270  Crew Equivalent Index 2.64 1.94 2.64 3.04 3.04  "Assumes speed equal t o 0.85•(cruising speed).  Flying Personnel Prod. (ASM/Equiv.Relative Techni- Expected R e l a t i v e hour) c a l E f f i c i e n c y Seat M i l e Expense 6,670 5,958 9,442 20,483 20,483  (A) 1.0 0.9 1.42 3.07 3.07  (B)  -  0.63 1.0 2.17 2.17  (A) 1.0 1.12 0.71 0.33 0.33  (B)  -  1.58 1.0 0.46 0.46  c)  Recent P e r i o d A l l j e t a i r c r a f t have very s i m i l a r spaed c h a r a c t e r i s t i c s so the examination o f r e l a t i v e hourly a i r c r a f t p r o d u c t i v i t y and r e l a t i v e t e c h n i c a l e f f i c i e n c y f o r f l y i n g personnel d i d not take i n t o account speed.  Aircraft  Equivalent Crew Index  Relative Crew Requirement B a s e  707-120 DC-8-50 707-300 DC-8-61 DC-10 , L.1011' 747 720 727-100 727-200 .  Relative Capacity .  A i r c r a f t :  Relative Technical Efficiency  Expected Relat i v e Seat M i l e Expense  7 0 7 - 1 2 0  3.04 3.04 3.24 3.44 3.84  1.00 1.00 1.07 1.13 1.26  135 135 147 195 270  1.00 1.00 1.09 1.44 2.00  1.00 1.00 1.01 1.28 1.59  1.00 1.00 0.99 0.78 0.63  4.44 2.84 2.84 3.04  1.46 0.93 0.93 1.00  374 115 98 135  2.77 0.85 0.73 1.00  1.89 0.92 0.79 1.00  0.53 1.09 1.27 1.00  B a s e 727-100 727-200 DC-9-10 DC-9-30.. 737-200  Typical Seating Capacity  2.84 3.04 2.14 2.34 2.84.  1.00 1.07 0.75 0.82 1.00  Assumes three-man f l i g h t crew.  A i r c r a f t : 98 135 68 92 95  1.00 1.38 0.74 0.94 0.97  7 2 7 - 1 0 0 1.00 1.28 0.99 1.15 0.97  1.00 0.78 1.01 0.87 1.03  228  APPENDIX C I . CALCULATION OF TECHNICAL E F F I C I E N C Y FOR C A P I T A L a) P i s t o n  Aircraft DC-4 DC-6 DC-6B DC-7 DC-7B DC-7C L-649 L-749 L-1049 L-1049C L-1049G L-1649A  Period  Cruising Speed 220 280 280 330 330 330 260 270 290 310 315 310  'Source:  O r i g i n a l P r i c e ($U;S., Thousands) Seating Capacity Year 1947 1951 1953 1955 1956 1957 1  44-66 50-70 55-82 55-90 55-90 62-99 54-88 54-88 60-88 60-88 60-88 60-85  447 614  -  755 -  -  -  860 960 -  -  907 1256  -  •-  -  1016 1641  -  1459  -  -  -  1792 1900  -  -  1917  1141  -  1230  -  1900 1900 2230 -• 2027 2011 — 2378  Aaron J . Gellman, The E f f e c t o f Regulation on A i r c r a f t Choice, unpublished Ph.D. t h e s i s , Massachusett's I n s t i t u t e o f Technology (1968) pp.390-405.  C a l c u l a t i o n s o f h o u r l y a i r c r a f t o u t p u t were made a s s u m i n g a v e r a g e s p e e d o f 0.85 t i m e s c r u i s i n g s p e e d . A n n u a l ASM o u t p u t , a s s u m i n g a u t i l i z a t i o n o f 2,000 a i r b o r n e h o u r s p e r y e a r , was t h e n c a l c u l a t e d a n d c o m p a r e d w i t h o r i g i n a l c o s t t o g i v e a measure o f t e c h n i c a l e f f i c i e n c y f o r c a p i t a l i n t e r m s o f a n n u a l ASM o u t p u t p e r d o l l a r o f i n i t i a l investment.  229 Results: ANNUAL ASM OUTPUT PER DOLLAR YEAR  AIRCRAFT  1947  FIRST CLASS  TYPICAL  COACH  DC-4 DC-6 L-649  15.2 39.5 33.4  18.6 44.2 39.6  23.0 55.3 54.5  1951  DC-6 DC-633 L-749 L-1049  28.2 26.2 27.8 23.6  31.6 30.5 33.0 26.3  39.5 39.0 45.4 34.5  1953  DC-6B DC-7 L-1049C  25.8 20.0 21.7  30.0 27.6 24.2  38.4 32.6 31.8  1955  DC-7 DC-7B L-1049G  18.3 22.7 16.8  25.2 23.8 18.7  30.0 28.2 24.6  1956  DC-6B DC-7B DC-7C  24.6 19.5 15.6  28.6 23.9 19.1  36.7 31.1 24.9  1957  DC-6B DC-7B L-1049G L-1649A  22.8 17.3 16.0 13.3  26.5 23.9 17.8 15.7  34.0 28.2 23.4 18.8  230 b) T r a n s i t i o n P e r i o d T e c h n i c a l e f f i c i e n c y f o r c a p i t a l was e s t i m a t e d u s i n g h o u r l y a i r c r a f t p r o d u c t i v i t y f r o m A p p e n d i x B, o r i g i n a l c o s t f r o m T a b l e 2,3 and s e v e n a i r b o r n e - h o u r s p e r day f o r t h e u t i l i z a t i o n r a t e (2555 a i r b o r n e h o u r s p e r y e a r ) . A sample c a l c u l a t i o n o f t e c h n i c a l e f f i c i e n c y i s given below: DC-6B  17,600 ASM/hr x 2,555 h o u r s / y e a r = original  4.5 ( 1 0 ) A S M / y e a r 7  cost  average p r o d u c t i v i t y =  (1957)  $1.23  (10 ) 6  45/1.23 = 36.6 ASM a n n u a l output per d o l l a r ofi n vestment.  I T . MAINTENANCE MAINTENANCE EXPENSES  FOR J E T AIRCRAFT  OPERATED BY UNITED A I R L I N E S  1  (1967-72)  Aircraft DC-8-10 DC-8-20 DC-8-30 DC-8-50 DC-8-61 DC-8-62 727-100 727-QC 727-200 737 720 Caravelle 747 DC-10  Airframe 1967-69 1970-72 $55.51 52.79 51.26 52.72 50.70 46.85 46.43 45.58 44.10 40.43 67.54 55.01  -  % -  60.79 60.53 61.22 60.63 60.35 52.09 51.34 50.66 46.99 49.79 63.08 119.49 92.63  I n d o l l a r s per block hour.  Percent Change —  +15.2% +18.1% +16.1% +19.5% +28.8% +12.2% +11.9% +14.9% +16.2% -26.3% +14.7%  -  Engine 1967-69 1970-72 $43.48 57.86 54.67 43.73 37.63 44.45 50.68 • 47.80 42.99 25.43 , 55.94 33.33  -  $ -  Percent Change —  38.39 -33.7% 38.32 -30.0% -35.4% 28.25 28.20 -25.1% 46.32 • + 4.2% -33.5% 33.68 33.52 -29.9% -25.0% 32.25 21.33 -16.1% 29.92 -46.5% +21.7% 40.57 129.55 (78.89)  APPENDIX D PAST EVENTS UNDER CONDITIONS OF HIGH ENERGY P R I C E S Introduction One o f t h e c o n c l u s i o n s has  of t h i s study  i s that  there  b e e n an a s s o c i a t i o n b e t w e e n t h e d i r e c t i o n o f c h a n g e s i n  t e c h n i c a l e f f i c i e n c y and t h e h i s t o r i c a l  trend of r e l a t i v e  f a c t o r p r i c e s t h a t i s c o n s i s t e n t w i t h t h e economic theory o f production.  I n most r e s p e c t s , h o w e v e r , t h e e v i d e n c e was  inadequate t o prove c a u s a l i t y . p a s t e v e n t s were r e s p o n d i n g tives i s to hypothesize  One way o f t e s t i n g w h e t h e r  t o t h e p r e v a i l i n g economic  a different set of relative  incen-  factor  p r i c e s and d e t e r m i n e whether t h i s would have u p s e t t h e h i s torical pattern. recent events,  I t i s especially appropriate, i n light of  to analyze  changes w h i c h m i g h t have been c r e -  a t e d by a h i g h e r p r i c e f o r energy..  The f i r s t  section of  this  a p p e n d i x c a l c u l a t e s t h e e f f e c t on a i r f a r e s o f s e l e c t e d  high  f u e l p r i c e s based on t h e t e c h n o l o g y  and  1970.  u s e d i n 1 9 5 0 , 1960  The c o m p a r a t i v e e c o n o m i c s o f v a r i o u s a i r c r a f t a n d  innovations a r e then re-examined t o r e v e a l the impact o f these new f u e l p r i c e s . E f f e c t s o f H i g h e r F u e l P r i c e s on A i r The is,  Fares  immediate impact o f a h i g h e r  o f course,  each a i r l i n e .  fuel price for fuel  an i n c r e a s e i n t h e o v e r a l l o p e r a t i n g e x p e n s e s o f I n t h e s h o r t r u n , t h e r e w o u l d be no e f f e c t o n  e i t h e r technology,  investment,  or competitive  231  behaviour  so i t  232 can  be  assumed t h a t a new  e q u i l i b r i u m w o u l d be  u n c h a n g e d r e l a t i o n s h i p b e t w e e n f a r e s and costs.  I n o t h e r w o r d s , f a r e s and  1  an e q u a l amount t o p r o v i d e  the  reached with  direct  operating  average costs would  carriers with  an  the  rise  same r e t u r n 2  on  investment assuming a l l nonfuel  Combining t h i s assumption w i t h of Chapters I - I I I , 1960  and  1970 The  t e n and of the  the e f f e c t of h i g h  w o u l d be  as  three  o f f u e l t o 30 The  periods,  cents per i m p a c t on  c r e a s e s e x c e e d i n g 50% cents per  gallon.  p r i c e t o one e f f e c t on  the  has  and  (which determines the  D.3.  has  impact  v a r i e d between  d e c l i n e d over time.  i m p a c t o f an  1950,  f r a c t i o n of a i r fare  fuel p r i c e increase)  t w e n t y p e r c e n t and  small.  fuel prices for  shown i n T a b l e s D . l , D.2  to f u e l expense  of a given  unchanged.  f u e l consumption c a l c u l a t i o n s  c a l c u l a t i o n s r e v e a l t h a t the  attributable 'leverage'  expenses are  increase  g a l l o n w o u l d have been  In  i n the  any price  relatively  f a r e s becomes q u i t e s i g n i f i c a n t ( i n i n many c a s e s ) a t a f u e l p r i c e o f  Not  d o l l a r per  u n e x p e c t e d l y , an  increase  g a l l o n w o u l d h a v e had  a i r f a r e s i n any  of the  a  in  65  fuel  dramatic  periods.  Because of the r e l a t i o n s h i p between f a r e s t r u c t u r e the  v a r i a t i o n of  f u e l consumption w i t h  p a c t w o u l d have been g r e a t e s t Chicago) market.  the medium-haul  (New  In a l l cases, i t i s obvious that  f u e l p r i c e s c o u l d h a v e had it  on  stage length,  s i g n i f i c a n t e f f e c t s on  i s w o r t h w h i l e t o e x a m i n e t h e i r i m p l i c a t i o n s on  a t i v e economics of p a r t i c u l a r i n n o v a t i o n s .  the  im-  Yorkhigher  fares, the  and  so  compar-  TABLE D . l EFFECT OF HIGH FUEL P R I C E S : Fuel Consumption Per M i l e (U.S. gal.)  Total Fuel Consumption (U.S. gal.)  1.55/1.75  3973  127.3  $21.64  13.7%  3  Route  1  Fare  2  New York-Los Angeles $157.85  1950 CONDITIONS* Fuel Consumption Per Pass.  • Imbedded' Fuel Cost  Percent Of Fare  New York-Chicago  $ 35.00  1.74  1254  40.2  $ 6.83  19.5%  New York-Boston  $ 11.59  2.10  399  12.8  $ 2.18  18.8%  Based on:  DC-6B, 52 seats, 60% l o a d f a c t o r , i n i t i a l f u e l p r i c e 17C/gal. ABSOLUTE AND  PERCENTAGE FARE INCREASES FOR  SELECTED  HIGH FUEL PRICES Route New York-Los Angeles New York-Chicago New York-Boston  P =30<r/gal.  P =65<r/gal.  $16.55 $5.23 $1.66  $61.12 $19.30 $ 6.14  £  11% 15% 14%  £  39% 55% 53%  ' P = $ l . 00/gal. £  $94.03 ' 60% $33.37 95% $10.62 92%  1 Route lengths a r e , r e s p e c t i v e l y : 2,453 m i l e s ; 721 miles and 190 m i l e s , O f f i c i a l A i r l i n e Guide, November, 1970. 2 One-way coach.  M i l l e r and Sawers, op. c i t . , pp.233-36. Federal t a x not included.  3 Chapter I I , P a r t I I . New York-Los Angeles assumes one stop a f t e r 1,600 m i l e s .  M OJ  TABLE  D.2  EFFECT OF HIGH FUEL P R I C E S :  1960 CONDITIONS* Fuel Consumption Per Pass. (U.S. gal.)  Fuel Consumption Per M i l e (U.S. gal.)  Total Fuel Consumption (U.S. gal.)  New York-Los Angeles $181.45'  4.80  11,774  170.6  $15.53  7.2%  New York-Chicago  $40.25'  6.00  4,326  62.7  $ 5.71  14.2%  New York-Boston  $ 13.40  2.80  532  11.1  $ 1.00  7.6%  Route  Fare  *Based on:  'Imbedded' Fuel Cost  Percent Of Fare  DC-8-20, 115 seats, 60% load f a c t o r , i n i t i a l f u e l p r i c e 9.0<Vgal. except f o r New York-Boston which i s based on Lockheed E l e c t r a , 80 seats. ABSOLUTE AND PERCENTAGE FARE FOR SELECTED Route  New York-Los Angeles New York-Chicago New York-Boston  INCREASES  FUEL PRICES  P =30<:/gal.  P =65<Vgal.  $35.65 $13.10 $ 2.32  $95.38 $35.05 $ 6.19  f  20% 33% 18%  f  53% 87% 47%  P =$1.00/gal. £  $155.10 $ 57.00 $ 10.08  86% 142% 77%  "Sillier and Sawers, op. c i t . , pp.233-36, one-way coach, Federal t a x included. 'Includes j e t surcharge ($10, $3 r e s p e c t i v e l y )  U)  TABLE  D.3  EFFECT OF HIGH FUEL P R I C E S :  Route  Aircraft  New York-Los Angeles 707-320 747 New York-Chicago 720 727-100 New York-Boston DC-9-30 Based on:  Fuel Consumption Per M i l e 1  Total Fuel Consumption  5.04 7.23 5.08 3.65 3.93  12,360 17,735 3,660 2,630 747  1970 CONDITIONS* Fuel Consumption Per Passenger  2  147.2 89.6 53.1 44.8 13.5  'Imbedded Fuel Cost  1  $16.93 $10.30 $ 6.11 $ 5.15 $ 1.56  Percent, o f Fare' 11.9% 7.3% 12.0% 10.1% 7.8%  a i r c r a f t as shown, 60% load f a c t o r , i n i t i a l f u e l p r i c e o f 11.5 C per U.S. g a l l o n . ABSOLUTE AND FOR Route  New York-Los Angeles New York-Chicago New York-Boston  PERCENTAGE SELECTED  P =30C/gal. £  $17-$27 $ 8-$10 $ 2.50  12-19% 16-19% 12.5%  FARE^INCREASES  FUEL PRICES P =65C/gal. f  $48-$79 $24-$28 $ 7.24  34-56% 47-56% 36.2%  P =$1.00/gal. £  $79-131 $40-$47 $11.98  56-92% 78-92% 60%  A l l f u e l consumptions are i n U.S. g a l l o n s . "Capacities from Chapter I I I . 3  1970 fares were: New York-Los Angeles, $142, New York-Chicago, $51 and New York-Boston, $20.  OJ Ul  236 E f f e c t o f H i g h e r E n e r g y P r i c e s on C o m p a r a t i v e Past  Economics  Innovations One  of the obvious  reactions to a higher fuel  price  w o u l d h a v e b e e n t h e a d o p t i o n o f t h e t u r b o - c o m p o u n d and the t u r b o f a n engine  t o reduce  crease c r u i s i n g speeds. at  of  later,  f u e l consumption r a t h e r than i n -  C a l c u l a t i o n s i n T a b l e D.4  show t h a t ,  a f u e l p r i c e o f 65 c e n t s p e r g a l l o n , c o n v e r s i o n o f  the  DC-6B t o t u r b o - c o m p o u n d p o w e r w o u l d h a v e y i e l d e d a r a t e o f r e t u r n on t h e i n c r e m e n t a l i n v e s t m e n t w h i c h of  cost  capital. T a b l e D.5  t u r b o f a n s was ing  exceeded the  i n 1960,  reveals that conversion of turbojets to  a marginal investment as s u g g e s t e d  by  a t the f u e l p r i c e  prevail-  t h e f a c t t h a t some c a r r i e r s  sidered i t worthwhile while others d i d not.  Any  con-  significant  i n c r e a s e i n f u e l p r i c e d u r i n g t h i s p e r i o d , however, would p r o b a b l y have l e d t o t h e immediate demise o f t h e ent t u r b o j e t engine.  less-effici-  An e v a l u a t i o n o f c o n v e r s i o n o f  the  3 DC-8-61 t o h i g h - b y p a s s t h a t at expected  turbofan engines  fuel prices  done i n 1966  showed  (10. 5 < r / g a l . ) t h e c o n v e r s i o n  was  uneconomic i n s p i t e o f a r e d u c t i o n i n f u e l consumption o f twenty-four per cent. DC-8-61 t o t h e new at  The of  shows t h a t c o n v e r s i o n o f  the  t y p e o f e n g i n e w o u l d h a v e become e c o n o m i c  a f u e l p r i c e o f 24.2  P r e d i c t i n g Induced  T a b l e D.6  cents per  gallon.  Changes i n T e c h n i c a l E f f i c i e n c y  a b o v e e x a m p l e s make i t c l e a r t h a t t h e  f o r Energy direction  i n n o v a t i o n w o u l d have been d i f f e r e n t i n t h e p a s t i f f u e l  237  TABLE  D.4  CONVERSION OF DC-6B TO TURBO-COMPOUND POWER WITH HIGHER FUEL PRICES  Block f u e l consumption:  466 U.S. g a l . / n r .  Reduction w i t h turbo-compound engine:  15% 69.9 g a l / h r  Annual f u e l savings a t 2,000 h r , utilization: I n i t i a l Investment:  =  140,000 g a l . $91,000 a t 65$/gal.  =  $700,000.  1  2 Annual r e t u r n on investment:  13%  Cost o f C a p i t a l :  4%  Depreciation ( s t r a i g h t l i n e t o 15% r e s i d u a l over 10 years) Annual cost o f investment  8.5% 12.5%  'Based on the d i f f e r e n c e i n o r i g i n a l cost between the DC-6B and DC-7B. 'The costs are l i k e l y t o be lower o r the r e t u r n higher because o f the i n d i r e c t e f f e c t s o f a r e d u c t i o n i n s f c (e.g. increased range/payload).  238 TABLE  D.5  FUEL P R I C E REQUIRED FOR CONVERSION OF DC-8-2 0 TO TURBOFAN POWER  Savings i n f u e l consiamption per m i l e w i t h turbofan power  D a i l y f u e l savings  0.9 gal./mile" " (1,200 m i l e average stage length) 1  4,050 g a l l o n s (4,500 m i l e d a i l y u t i l i z a tion ) 2  D a i l y expense savings  $40.5 (P ) where P equals fuel p r i c e i n cents per g a l l o n  Monthly expense savings  $1,215 (P ) (30 days/month)  Based on a 6% r a t e o f i n t e r e s t , 12 year l i f e w i t h no r e s i d u a l value, t h i s conv e r t s i n t o an annuity w i t h monthly payments having a present value o f :  $1,215 (P ) x 102.5  f  f  f  f  Based on a conversion c o s t o f one m i l l i o n d o l l a r s , the investment would be p r o f i t a b l e f o r P > 8.1<r/gal. 3  f  "Based on d i f f e r e n c e i n f u e l consumption o f DC-8-20 and DC-8-50. The savings would be greater a t shorter average stage lengths. See Chapter I I I , P a r t I I . Based on average u t i l i z a t i o n o f the trunks i n 1963. 'See P e r r i n S t r y k e r , op. c i t . , p.96.  239 TABLE  D.6  ECONOMICS OF CONVERSION  OF  DC-8-61 TO HIGH-BYPASS ENGINES  Comparison based on a n t i c i p a t e d costs i n 1966:' Increased d e p r e c i a t i o n Increased maintenance Sub-Total Reduction i n f u e l expense Net Increase  $77.60 $52.00 $129.60 $ 56.40 $ 73.20  per airborne per airborne per airborne per airborne per airborne  hour hour hour hour hour  Assumed engine p r i c e o f $260,000 f o r JT3D, $52,000 f o r high-bypass, $120,000 f o r n a c e l l e ; 10 year d e p r e c i a t i o n , 3,300 hour annual u t i l i z a t i o n , maintenance equal t o 5% o f o r i g i n a l cost/1,000 h r ; f u e l consumption reduction o f 24%, f u e l p r i c e o f 10.5<r/gal.  Conversion would be economic on t h i s b a s i s a t a f u e l p r i c e o f 24.2<r/gallon r e q u i r e d t o equate costs and savings ( i . e . reduction o f f u e l expense, $125.60).  Source:  F. Searls and C. Y. Joe, 'Reengining Large J e t Transports i n 1972?', SAE Paper No. 660321, Society of Automotive Engineers, (New York 1966), mimeo, pp.3-4.  240 p r i c e s had been h i g h e r , b u t t h e r e  i s limited usefulness to  pursuing  The r e a s o n f o r t h i s i s t h a t  it  t h i s argument f u r t h e r .  i s p o s s i b l e t o analyze  o n l y those  innovations  appeared under h i s t o r i c economic c o n d i t i o n s . earlier  actually  From t h e  d i s c u s s i o n on f a c t o r s u b s t i t u t i o n i t i s o b v i o u s  s p e c i f i c designs not adequately niques  that  - r e p r e s e n t i n g p o i n t s o n an i s o q u a n t  represent  the f u l l  - do  range o f a v a i l a b l e t e c h -  t h a t c o u l d have been d e v e l o p e d w i t h a v a i l a b l e t e c h n i c a l  knowledge.  W i t h o u t an e x t r e m e l y  d e t a i l e d knowledge o f t h e  t e c h n i c a l b a c k g r o u n d i t i s n o t p o s s i b l e t o make a v a l i d m a t i o n o f t h e changes i n f a c t o r p r o p o r t i o n s occurred it  that higher  esti-  t h a t m i g h t have  had f u e l p r i c e s been r a d i c a l l y h i g h e r .  i s likely  Thus, w h i l e  f u e l p r i c e s would have l e d t o g r e a t e r  improvements i n t e c h n i c a l e f f i c i e n c y gested  that  ( f o r energy) than  sug-  a b o v e , a n y e s t i m a t i o n o f s u c h i m p r o v e m e n t s w o u l d be  conjectural. Two c o n s i d e r a t i o n s p r o v i d e extent  some i n d i c a t i o n o f t h e  t o which t e c h n i c a l e f f i c i e n c y • i n t h e use o f energy  m i g h t have been i m p r o v e d r e g a r d l e s s o f t h e economic i n c e n t i v e . The  first  c o n s i d e r a t i o n , mentioned e a r l i e r ,  f a c t that there  are important  derives from t h e  i n d i r e c t b e n e f i t s t o be  gained  from a r e d u c t i o n i n f u e l consumption i n a d d i t i o n t o t h e savi n g s i n f u e l expense p e r s e .  These b e n e f i t s a r i s e because o f  the i n t e r d e p e n d e n c e between f u e l consumption,  range-payload  4 performance, and o r i g i n a l thetical  cost.  F o r these  reasons,  any h y p o -  ( o r a c t u a l ) i n c r e a s e i n f u e l p r i c e does n o t i m p l y  a  p r o p o r t i o n a l i n c r e a s e i n the i n c e n t i v e t o economize of  fuel.  In addition,  aerodynamic boundary  on t h e  there are c o n s t r a i n t s - defined  and thermodynamic  laws - t h a t ' f o r m a  t o r e d u c t i o n s i n f u e l consumption.  ment i n t e c h n i c a l  Barring  be c l o s e r  t o t h i s boundary  f u e l might  because  of  the second c o n s i d e r a t i o n ,  o f commercial a i r c r a f t development  t e c h n o l o g y m u s t be r e c a l l e d . the m i l i t a r y  a technical  price  to  indicate.^  extensive reliance  lines,  improve-  technology i s l i k e l y  than t h e low r e l a t i v e  In order to i l l u s t r a t e  tary  funda-  unlikely  f o r f u e l would prompt a g r e a t  efficiency  by  technical  mental t e c h n o l o g i c a l breakthroughs i t i s therefore that a higher price  use  sense)  are l i k e l y t o changes  the  on  mili-  In c o n t r a s t w i t h the  air-  t o be q u i t e u n r e s p o n s i v e ( i n i n the price  of f u e l .  Because  6 of  their strategic  c o n c e r n f o r combat r a d i u s  and  thrust-to-  w e i g h t r a t i o s , a n d t h e i m p a c t o f f u e l c o n s u m p t i o n on t h e r e w i l l be few a v e n u e s tary to  f o r i m p r o v i n g f u e l economy o f  a i r c r a f t l e f t unexplored.  reduce f u e l consumption would  complexity, engine weight e t c .  I n o t h e r words, likely  result  The m i l i t a r y  performance  to reject  such changes;  characteristics  t i c w i t h r e s p e c t t o changes H i g h f u e l p r i c e s may  any  attempt  - because  of  (e.g. speed)  t h e i r demand f o r  i s , i n o t h e r words, h i g h l y i n fuel  mili-  i n increased  t h e i r o v e r r i d i n g concern f o r a i r c r a f t performance - are l i k e l y  these  certain inelas-  price.  therefore lead to a s i t u a t i o n  which the design o b j e c t i v e s of m i l i t a r y  and c o m m e r c i a l a i r -  in  craft diverge. study,, r e l a t i v e  In the h i s t o r i c a l p e r i o d  i n this  f a c t o r p r i c e s were such t h a t c o m m e r c i a l a i r c r a f t  manufacturers properly economy.  discussed  emphasized speed r a t h e r than  B e c a u s e s p e e d was  fuel  an i m p o r t a n t a t t r i b u t e  of  mili-  t a r y a i r c r a f t , t h e o b j e c t i v e s o f t h e two g r o u p s c o i n c i d e d commercial a i r c r a f t design •research  c o u l d make j o i n t u s e o f  and d e v e l o p m e n t .  fuel price,  however,  With a s i g n i f i c a n t  T h i s may  military  increase  the m i l i t a r y  would con-  speed.  result  i n a dilemma  i n w h i c h any e f f o r t  i m p r o v e t h e f u e l economy o f c o m m e r c i a l a i r c r a f t w o u l d c o m m e r c i a l a i r c r a f t m a n u f a c t u r e r s t o i n c u r huge expenses.  A radical  capital  t h a t f u e l expenses were r e d u c e d . a l l y assuming a t e c h n i c a l b a r r i e r fuel  consumption - higher  s m a l l i m p a c t on t h e d i r e c t i o n questions  ties.  require  development  e x p e n s e s a t t h e same t i m e In t h i s situation  to large-scale  f u e l p r i c e s may  -  especi-  reductions  have a r e l a t i v e l y  o f t e c h n o l o g i c a l change.  c a n n o t be a n s w e r e d w i t h o u t m a k i n g  speculative  to  d e p a r t u r e from technology developed f o r  the m i l i t a r y would i n c r e a s e  in  in  a i r l i n e s w o u l d be w i l l i n g t o t r a d e - o f f  s p e e d f o r i m p r o v e d f u e l economy w h i l e t i n u e t o emphasize  and  Such  some r a t h e r  a s s u m p t i o n s as t o t h e range o f t e c h n i c a l p o s s i b i l i -  NOTES  1.  T h i s assumes z e r o e l a s t i c i t y o f t e c h n i c a l e l a s t i c i t y of s u b s t i t u t i o n i n the short run. Of c o u r s e , t h e i n c r e a s e i n a v e r a g e c o s t s may n o t be r e f l e c t e d i n c o r r e s p o n d i n g changes i n f a r e s i n a l l (e.g. s h o r t haul) markets.  2.  T h i s a s s u m e s , f o r s i m p l i c i t y , z e r o demand p r i c e city.  3.  F.  4.  F o r e x a m p l e , an i n c r e a s e i n f u e l c o n s u m p t i o n r e d u c e s range-payload performance and/or i n c r e a s e s a i r c r a f t w e i g h t and e n g i n e t h r u s t , r e s u l t i n g i n an i n c r e a s e d original cost.  5.  T h i s i s i l l u s t r a t e d by t h e f a c t t h a t a i r c r a f t r a n g e i s a l m o s t i n e v i t a b l y i n c r e a s e d s i m p l y by i n c r e a s i n g f u e l c a p a c i t y r a t h e r than reducing f u e l consumption  S e a r l s and C. Y. J o e , 1972?," SAE P a p e r No.  (e.g.  elasti-  "Reengining J e t Transports 6 6 0 3 2 1 , mimeo.  DC-7/DC-7C, DC-8-50/DCT8-62,  in  DC-10-10/DC-10T30).  6.  That i s , the d i s t a n c e over which a m i l i t a r y a i r c r a f t c a n f l y , p e r f o r m i t s m i s s i o n and r e t u r n t o b a s e .  7.  S i n c e a l l f u e l l o a d o f m i l i t a r y a i r c r a f t t y p i c a l l y forms a l a r g e p a r t o f i t s g r o s s w e i g h t , any r e d u c t i o n i n f u e l c o n s u m p t i o n can have a s i g n i f i c a n t e f f e c t upon t h r u s t - t o - w e i g h t r a t i o and a i r c r a f t p e r f o r m a n c e .  243  

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