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BOAC, Politics and ordering VC10s

The story of the relationship between BOAC, Vickers and the Government is a complicated one that includes many personalities, a changing scene and conflicting interests. This second article is an attempt at providing an overview of the changes in the VC10 order book and a small part of the surrounding political scene.

Background

In April 1957 BOAC's requirements were set out in a meeting between them and the Vickers top level management. The government would not be providing any money to Vickers to start up the project but they did send some senior officials to the meeting which illustrates their continued involvement. It is interesting to look at the situation from these three different viewpoints. In order of appearance:

  1. BOAC - The airline was in a bind in that it was still straddling the competing demands of commerce and politics. The company was headed by Gerard d'Erlanger, who was a part-time chairman, initially unpaid, with Basil Smallpeice running the company on a day-to-day basis as Managing Director. The previous chairman, Miles Thomas, had clearly indicated that he was not in favour of the company serving as a guinea pig, having to deal with the teething troubles of new British built designs. This was of course fueled by the Comet disasters that placed such a heavy burden on the company and all involved but the early troubles with the Bristol Britannia certainly confirmed this stance. Having received permission to buy 707s in 1956, there was a clear condition attached stipulating that the next airliner would have to be sourced in the UK as the government was not going to make any more dollars available for a foreign purchase. A point of interest here is that BOAC actually earned a lot of dollars from its North Atlantic and other US routes and was therefore a large contributor to the treasury's cache of US currency. There existed a somewhat conservative view that the African and Middle-East routes would require a tailor-made type, often referred to as a type for the 'Empire' routes. This term went back to the post-war Brabazon committee but still coloured the thinking at BOAC board level and in the political arena. As to how many airliners were needed, that is a question that is hard to answer. BOAC's needs and requirements were unclear and especially in the late 1950s, the discussion was more centred around the expected operating costs than the actual numbers. Any fleet planning always includes a bit of guesswork as future needs are hard to pin down, but in May 1957 it was becoming clear that the forecasted traffic 'could be seriously very optimistic'. BOAC went into the meeting willing to buy 20 VC10s, but ended up ordering 25 with an option on 10 more.
  2. Vickers - The aircraft firm was in a state of flux, having to move from government subsidised projects to fully independantly funded designs. The Vanguard was still two years away from its first flight and the construction of the Valiants was completed in 1957. One of the challenges of running an aeroplane design firm is that once you have a complete design department, which could consist of hundreds of employees, you needed to keep them occupied so that their experience did not disappear. This was one of the reasons that Vickers kept coming up with various design proposals, initially based on the Vanguard but using jet engines, that over time matured into the VC10 design that we know now. In March 1957 the design office also drew up a supersonic medium range airliner based on the latest Farnborough research into possible shapes but using a clearly Valiant inspired main gear and incorporating an adjustable nose cone to improve vision during landing, clearly a predecessor to the Weybridge-built Concorde nose. The Vanguard had been the first privately funded type but by 1957 doubts were beginning to appear about its feasability as the appeal of pure jets was starting to show and Rolls-Royce were having problems with its Tyne engines. While Vickers was hoping to recreate the Viscount's succes, it was also realising that another airliner programme might be needed to keep the workforce busy and the finances healthy.
  3. Government - Although the next project would be a privately funded affair, and government money would therefore not be involved, several senior officials from the Ministry of Transport and Civil Aviation did attend the April 1957 meeting, indicating that they were still interested in its outcomes. This shows on one hand how BOAC was still dependant on the Minister's and the Ministry's wishes, and on the other hand how the government wanted to keep the aviation industry on a tight leash. Just one month prior to the meeting at Weybridge, the 1957 Defence White Paper had sent shockwaves through the military with associated aftershocks in the aviation industry that would lead to the 1960 forced marriage that created BAC. This White Paper was the work of Duncan Sandys, at the time in the position of Defence Minister but who would later lead the Ministry of Aviation and succeed Harold Watkinson. Watkinson was the MP for the constituency of Woking, where many of the Vickers workers lived and which included the site of the Vickers factory at Brooklands, which made the financial success of the firm an item of interest for him. Another issue was that of the proposed mergers within the aviation industry, which would be assisted by a financially secure situation for Vickers. It is difficult to trace the exact origins of the decisions that were made in those days but it is safe to say that the government played a large role in them.

Ordering VC10s


Although Smallpeice distanced himself from the decision to order VC10s in his autobiography, he appeared happy to sign the contract with Vickers' George Edwards on 14th January 1958.
Photo copyright BAE Systems / Brooklands Museum archives

In that April meeting the main issue was how many VC10s would be needed to start production. Vickers had calculated that it would break even on 45 aircraft but would accept a minimum of 35 orders, knowing that there was a forecasted need for 62 aircraft within BOAC. The airline didn't want to commit to more than 20 orders initially but after a further meeting at the Ministry d'Erlanger wrote to the Minister asking for government approval to order 35 VC10s and that the aircraft's economic performance would be satisfactory for that price on 'the Corporation's route on which it would be flown'. Smallpeice was firmly in the camp that would have preferred a 'British 707' and had lobbied for a maximum of 26 aircraft but according to his autobiography he was removed from the scene for a gall bladder operation and found the agreement between d'Erlanger, the Ministers of Supply and Transport and Civil Aviation and Vickers as a 'fait accompli' upon his return to work. As Smallpeice is shown on various photos signing the official contracts between BOAC and Vickers for the VC10s, it is strange that he distances himself from the two occasions that really mattered in his writings, placing the blame squarely on d'Erlanger for the decisions that were made. As for why BOAC was happy to commit to 35 VC10s with options on 20 more, professor Keith Hayward quotes a senior civil servant in the Ministry of Aviation who recalled that "we bullied d'Erlanger". No doubt this attitude towards BOAC's chairman also influenced the 1960 decision to add 10 Super VC10s from the outstanding options during the last days of d'Erlanger's chairmanship, a decision that incoming chairman Matthew Slattery had specifically requested to be delayed until he could take over the chair.

Slattery did manage to adjust the orders to 15 Standard VC10s, of which three were later canceled (around this time the RAF ordered an additional six VC10s), and 30 Super VC10s. It wasn't until Giles Guthrie took over the running of the company in 1964 that the number of ordered Super VC10s was cut back to a more realistic 17, with the options later being cancelled.

The 1957 decision by BOAC to order the new design meant that Vickers was able to keep the factory running, even without any government contracts, something George Edwards described as a "highly interesting experience".

Smallpeice describes how the government had ways of making its wishes known without leaving any traces:

"Parliament had properly conferred on Ministers the power to give BOAC instructions, wisely adding that he should exercise that power only in the form of a written directive which should be published in our annual report. So we asked him for the necessary directive. He just laughed and said: 'Not bloody likely! What do you take me for?' In the fourteen years I worked in BOAC, there were several occasions when the chairman's or the board's arms were well and truly twisted by Ministers. But they all baulked at issuing a written directive."

Minister of Aviation Julian Amery launched an inquiry into BOAC's finances in 1963, appointing an accountant, John Corbett, to recommend what changes were needed to put the corporation on a sound financial basis. The resulting report was kept secret as the inquiry would "... be regarded as private and confidential". During a debate in July 1964 about BOAC, Mr. Jenkins was a bit more vocal and called it a "really ridiculous cloak-and-dagger accountancy exercise", which "put the whole discussion of the long-term policy of B.O.A.C. into purdah for 18 months". The resulting report did contain a separate chapter about the VC10 purchase (which is included in an appendix to Halford-MacLeod's 'Britain's Airlines Volume 2: 1951-1964) that set out the steps taken, quoting several letters between chairmen and Ministers, includes the relevant costs and prices that were agreed and clearly stated that "BOAC was leaning over backwards to meet the Minister's wishes". It also stated that d'Erlanger had told the Minister that "if BOAC had been given a free choice it would not have ordered the VC10".


Boeing was happy to pick up the bill for the addition of a ventral fin and other changes to their 707s, as requested by CAA test pilot Dave Davies. An attitude that pleased BOAC and one that Vickers was unable to match.
Photo BOAC

In the conclusion, Corbett is clear in saying that he felt that BOAC should not have ordered any additional VC10s and he also assumed that the Standard VC10s would be modified to eliminate the drag issue, something that was not fully embodied on BOAC's Standards as the airframes were too far advanced in production (Vickers also needed to deliver the Standards by the delivery dates set out in the contract to avoid a penalty) and the needed modifications to the wings would greatly increase the costs of the Standards. In contrast to Boeing, Vickers did not have the financial wiggle room to shoulder the extra costs. Also, Corbett suggested that the government should compensate BOAC for the financial penalty incurred by operating VC10s instead of 707s.

Financial compensation was organised but not in the way Corbett envisaged. With Guthrie at the helm, BOAC finally got the written directive that allowed him to structure the company on sound commercial lines. In return, the government wrote off a £80 million deficit. His initial plan was to cancel all the 30 Super VC10s on order but such a step would have had severe repercussions throughout the aircraft industry, scupper the merger into BAC and cost 4,500 jobs as the decision was sure to end the VC10 programme. In the end, the Treasury was brought in to broker a deal and the least costly solution was to cancel the 10 unbuilt VC10s. This left the BOAC order at twenty-nine VC10s, exactly the number suggested by Corbett. Part of this deal was the addition of three airframes to the RAF's second order.

In figure 1 I have tried to put the various actions on one timeline but have also added the various responsible personalities. My aim here is to show who was running the various shows at the time of the main decisions. It clearly shows how many different Ministers occupied that particular seat during this period, yet somehow Ministry views appeared to be pretty consistent. While Watkinson had been replaced by Sandys at the time of the second order from BOAC (the 10 Supers that d'Erlanger added on one of his last days in office) and the Ministry's name had already been changed, it would be safe to assume that a large part of the staff was the same and followed the same line of thinking. It took a particular combination of BOAC chairman and responsible minister to effect the change from a state-run firm to a commercial airline.

Figure 1: BOAC leaders and VC10 orders

Launch aid returns

The concept of an airframe producer setting up a project purely by using its own finances is one that didn't last long in the UK, at least in the late 1950s. While the Vanguard and VC10 projects started without any government funds on the table, by 1959 Vickers had a gloomy outlook as these projects were straining the company's finances and the VC10 costs especially turned out to be severely under-estimated. By October 1959 a conservative government was in place and the Ministry of Supply was being dismantled to make place for the new Ministry of Aviation. In November 1959 Minister Duncan Sandys started his 'marriage bureau' to enable the many aviation firms to merge into two large coorporations, which led to the formation of BAC. The dowry in this marriage was the promise that a form of launch aid would return and by February 1960 this was announced by Sandys. As a result of this, and to mollify the newly-wed firms, the BAC 1-11 project did qualify for government funding to overcome the initial costs of development and starting production, even though only one airline, Freddy Laker's BUA, had placed an order at the time. This went back to an earlier proposal to develop a downsized VC10, as the VC11, for British European Airways' specification that would later lead to the Hawker Siddeley Trident. The VC11 project was attractive enough, and small enough, to qualify for financial assistance from the government, who agreed to supply £9.75 million to cover 50 percent of both the development bill and the production commitments. In March 1961 BAC decided to cancel the VC11 project and develop the BAC 1-11 instead and the government agreed to move the funding to the new project. The return of launch aid initially did not benefit the VC10's finances as this would continue as an 'old account' type, leaving the financial burden of the project within the original Vickers account books. To keep the project from stalling, £9.4 million was provided to Vickers to improve the aerodynamics on the Standard VC10 and to support the launch of the larger Super VC10. When the RAF showed interest in the type, Vickers was able to bid for launch aid to develop the new military variant and after two tries, £10.2 million was awarded. At the end of the project, £50 million of government money had been used to keep the project going, money that should have been paid back from further VC10 sales.


A model of the stillborn VC11 short-range airliner.
Photo copyright BAE Systems

This top view of the VC11 model highlights the similarities with the VC10.
Photo copyright BAE Systems

The 'Superb'

The Ministry of Aviation also put pressure on BOAC to support the Super VC10 project, which, together with BOAC's concerns about its orders and finances did result in the changes to the overall VC10 orders although many of the Super VC10 orders would later be canceled when Guthrie managed to rationalise BOAC's commercial plans. In August 1965 BAC had approached BOAC to pitch the idea of developing a 250-seat VC10 derivative, tentatively named 'Superb'. Although clearly inspired by the VC10 design this would be a new development for BAC and as such, a new project in need of financing. With the new launch aid rules in place, BAC would have to come up with 50% of the estimated £40 million development costs but indicated to the Ministry of Aviation that its current financial position would not allow this. Basically, the government would have to support the entire development costs of this project. The government was fully aware that BOAC would at some point need a high-capacity airliner with the Boeing 747 (derived from the CX-HLS military project, by 1965 it was a serious design study that would lead to a first order in 1966) as the only other viable option, wich would entail a large purchase in dollars. Both the government and BAC realised that canceling the Superb project would mean the loss of long-range subsonic airliner production in the UK, but the Superb proposal failed to meet the criteria. BOAC was at most lukewarm towards the proposal as it projected a 15 to 20 percent higher operating cost for the Superb as opposed to the Boeing 747 and was still smarting from the VC10 order discussions. The government did not see a solid potential market for the design and it also did not meet the criterium of being a collaborative project as by now the aim was for firms across Europe to work together on large airliner projects. As a result, the launch aid for this project was not allocated and this was communicated to BAC in May 1966, pulling the plug on this planned design and basically abdicating a large part of the subsonic airliner market to the Americans.


What could have been. The type 1180 double-deck Super VC10.

Who to blame?

There is no shortage of opinions about the VC10 saga and one subject that is always sure to create debate is 'should we blame anyone for the VC10's commercial failure?'. Depending on your viewpoint, the VC10 could be described as an economic failure for Vickers, who did not get their investment back on this type. Because of this, the government was also out of pocket to the tune of several million pounds. The three parties involved in the story certainly did not make it easy for themselves and for each other, but let us look at this from their viewpoints:

  1. BOAC - If the airline would have gotten its way, the VC10 would most likely never have gotten off the ground in the first place. There were several occasions on which the reasonable way forward would have involved canceling the VC10 order. BOAC certainly handicapped the Vickers design team with their specification and it could have done more to bolster VC10 sales to other airlines. But the main issue at the time was to make the airline pay for itself and from a financial point of view, the VC10 was not the ideal solution. It ended up operating the type for seventeen years and once it was in service, it also appreciated the positive points that the design had to offer.
  2. Vickers - Can't place any blame here, they delivered what BOAC asked for and did their best to come up with improved versions of the design that were better suited to both BOAC's needs and other airlines' needs. Their aims were mostly commercial of course, they wanted to keep the factory going and make money selling aircraft. In hindsight, if they had created a VC10 model that was not as precisely tailored to BOAC's specification they might have sold more airframes. But the type would still have emerged too late to grab the major sales that the 707 had already claimed. Also, BOAC would most likely not have accepted the type.
  3. Government - This is a tricky one, as it is unclear exactly how the government managed to push BOAC into accepting the VC10 and how much it influenced Vickers' decisions. That there was some sort of influence is clear though. I would go so far as to say that without government influence, the VC10 design probably would never have flown. As we have seen, BOAC most likely would have canceled their VC10 order at some point had the government not required them to sign on the dotted line. This was always done within the context of having a large international airline that needed to be supported, and having a large aviation industry within the country that needed to be rationalised, and of course there were several other interlinked contributions and intentions that I have left out of this discussion for simplicity's sake. I think that what I'm trying to say here is that within the complexity of the whole situation, there may have been strange intentions, but never bad intentions.

In conclusion, I can echo professor Keith Hayward's comment that BOAC was caught between the devil and the deep blue sea with the VC10 (see The Aviation Historian, issue 18). They needed to act in a commercial manner while also serving the needs of the government and its various policies. In hindsight, those policies served to push the VC10 on BOAC and thereby allowed Vickers to build 54 of these magnificent aircraft.

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