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- [00:00]
Lindsey Graham
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- [00:29]
Michael Heseltine
It's spring 1972, in the center of London. Michael Heseltine paces around his office at the Department for Transport, gearing himself up for a meeting. Michael is the latest minister with responsibility for the Concorde supersonic jet program. This joint Anglo French project is now more than 15 years old and the first production planes are under construction at factories in Bristol and Toulouse. But Michael is one of many in Britain who sees the project as an economic disaster. It's over budget and behind schedule. But that doesn't matter now. Since the British government has funded the program, Michael has to act as a salesman to try to earn back as much of the money invested as possible. Michael looks up as one of his aides, opens the office door and shows Kenneth Keith in. Kenneth is a negotiator representing British Airways, a newly formed airline created by a merger between two state owned companies. One of those firms, boac, made an early commitment to buy several Concorde jets, but now British Airways is threatening to cancel that order. Michael smiles and stretches out his hand. Pleasure to see you again, Kenneth. Well, is it? Of course it is. Please take a seat. Michael guides Kenneth over to some comfortable chairs and Kenneth gives a ride. Look, I suppose you're going to try to convince me that Concorde is a good deal for British Airways. It's the world's first ever supersonic passenger jet. This is the future of aviation, Kenneth. In 10 years time, supersonic air travel will be the standard. Passing up an opportunity to get in on the ground floor would be madness. Michael, please, you can spare me the sales pitch. We've run our own analysis and Concorde is simply not going to be profitable. Oh, now, I think it's far too early to draw any firm conclusions about economic performance. I disagree. Raising his hand, Canis starts counting off the problems on his fingers, one by one. First, Concorde is fuel hungry. Second, it requires frequent and specialized maintenance. Third, and worst of all, it only has 100 seats. By our estimates, it will be roughly 40% more expensive to operate per passenger than the Boeing 707. Michael forces a grin, but it's hard to counter an argument that he fundamentally agrees with. Well, what would it take for British Airways to feel good about this order? Michael, do you believe Concorde can be a success? Of course. That's the view of the British Government, is it? I can speak for the Prime Minister on this. All right, so put your money where your mouth is. As the saying goes, we want a guarantee that if Concorde ends up being a loss maker for British Airways, then the company will be made whole. Michael stares at Kenneth for a moment. You're proposing that the government underwrite any future losses on Concorde? Yes. And for how long? Kenneth shrugs. For however long. You want to point to Concorde as a stirring success of British industry, right? Of course, if we make a profit on the plane, we'll be happy to let the government claim back a percentage to help recoup its outlay on the project. Michael sits back in his chair. And if we agree to this, you'll confirm the order? Oh, that's right. I have to say, even for you, Kenneth, this is savage. Kenneth smiles wolfishly. If the government is as confident in Concorde as you claim, then what's the problem? You just have to sit back and wait for the profits to roll in, won't you? Reluctantly, Michael Heseltine agreed to the deal. In return for buying Concorde, British Airways was given a vast open ended commitment by the government. In time, Michael would come to see this as the most humiliating negotiation of his long career. But he'd made a sale and in 1972 that was all that mattered. Britain's flagship airline was on board, and now Michael just had to convince the rest of the world.
- [04:22]
Lindsey Graham
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- [05:45]
Michael Heseltine
From wondering. I'm Lindsey Graham and this is business members. If the Concorde supersonic jet had been a pure business proposition, it would never have made it into the air. The project survived for so long because it was different things at different times to different people. To some, it was a symbol of renewed British ingenuity and industrial might. To others, it was the creator of high quality jobs. But most of all, it was a political bargaining chip that meant the British government could never follow through on its threats to pull out of the project. During the 1960s, and despite ever spiraling costs, Concord's diplomatic value was always higher. This would remain the case in the early 1970s. At the beginning of the decade, the United Kingdom's application to join the European Common Market was finally accepted. But final terms were still being negotiated. So Britain had no intention of antagonizing the French by threatening their joint supersonic jet program. As a result, Concorde continued its journey into service. And as the date of its first commercial flight neared, the sky seemed to become a little clearer for the project. In 1971, America canceled its supersonic passenger jet program, having concluded it was uneconomical. That left the Soviet Union's TU144 as Concorde's only international rival. But during the Concorde's long development period, the airline industry had changed. An era of mass travel had begun, thanks to a new generation of wide body jumbo jets that could carry hundreds of passengers at a time. The makers of Concorde had banked on the plane's unparalleled speed to attract buyers. But as it turned out, what airlines really wanted was capacity. Faced with an increasingly uninterested market, British ministers like Michael Heseltine resorted to desperate measures to make sales. But it wasn't just the airlines that were skeptical about Concorde. After almost two decades of hard work and political maneuvering, the supersonic jet was finally ready to welcome paying passengers into the sky. But there were forces on the ground still rooting for its downfall. This is the third episode in our four part series on the rise and fall of Concorde. Take off. It's June 1973 in Paris, one year after Michael Heseltine agreed to the worst deal of his career with British Airways. Michael is hunched over a table in a busy cafe, nursing his third coffee of the morning. He's barely slept, too haunted by the horror of what he saw yesterday at the Paris Air Show Concorde went head to head with its Soviet rival, the Tu144. Both airplanes demonstrated their capabilities in front of a crowd of industry experts and aviation enthusiasts. Concorde's turn went perfectly. But barely an hour later, the TU144 crashed in the middle of its demonstration, killing six crew members and eight civilians. On the ground, Michael is ruminating over these tragic events and barely sees James Hamilton walking across the cafe towards him. James is the government's newest go to aviation expert, and Michael is hoping he can shed light on yesterday's disaster. Well, Michael, you look dreadful. I feel it. Be thankful you weren't there. I know watching the footage was bad enough. Haven't seen a nosedive like that in years. Are you able to tell what happened from the video? The plane seemed to break apart in midair. Well, you're right. The wings broke clear off. Those maneuvers they were doing created aerodynamic pressures way outside the plane's limits. Why on earth would they risk that? Those twists and turns. Well, at the risk of speaking ill of the dead, I think they got cocky. They knew they had to follow Concorde, so the pilots had been told to show off, put on a display and steal the limelight. Well, according to one of our boys, there was some verbal sparring going on ahead of the demonstration. One of the Russian pilots says something like, just wait until you see us fly. Then you'll really see something. Well, it wasn't wrong, was he? The two men sit in heavy silence for a moment. Then Michael broaches the real reason he's asked to speak with James today. What do you think this means for Concord? In theory, it should mean nothing. The two aircraft were developed independently. They have nothing to do with each other. Well, I know that, you know that. But the press has been calling the Russian plane Concordsky for years now, and we've done nothing to dispel the idea that it's essentially a copy. It's an inferior copy. That's what you need to get across. They cut corners and rushed their development. This was the tragic result. I certainly will make that point. But having enough trouble selling the damn thing as it is, I'm concerned people are going to look at what happened yesterday and just conclude that supersonic jets aren't safe across the board. Well, what do you need from me, Michael? How can I help? I mean, I can provide you with some talking points, some specific differences between the two planes. The Tu144 had some peculiarities that might have contributed to the crash. Well, those would be helpful. Please get them to me as soon as you can, along with a summary of your best guess as to what actually happened. There's a large contingent in parliament who are out for Concord's blood, and they're going to run riot with this. All right, I will. But try to look on the bright side. Yesterday we had a competitor. Today we don't. Back in London, Michael Heseltine appeared before parliament to answer questions about the TU144 crash. He tried to project confidence, pointing out that the Soviet plane was known to be a flawed design While Concorde was being subjected to rigorous safety tests. He insisted that the incident should have no impact on the prospects of Concorde. If anything, this was a win for the Anglo French project, as no international buyers would now be interested in the Russian plane. But privately, Michael wasn't so sure. He feared that the crash of the Soviet jet might just take concorde with it. 1973 seemed to bring nothing but bad news for Michael Heseltine and Concord. When the project was first revealed to the public a decade earlier, many of the world's biggest airlines had quickly placed sales orders. There had been some estimates that more than 200 Concordes would be sold worldwide. But now such predictions seemed hopelessly optimistic. And it wasn't just the TU144 crash that soured Concorde's prospects. After the United States canceled its own supersonic passenger jet program in 1971, Michael had hoped that America's airlines would turn to the Anglo French Concorde. But instead, American firms shun supersonic jets altogether. At the beginning of 1973, Pan American canceled its Concorde sales option. Other US buyers quickly followed suit, including TWA, American Airlines, and eastern. They all rejected Concorde in favor of a far slower but far larger plane. In just a few short years, the Boeing 747 had transformed the aviation industry. It was a huge workhorse of a plane, capable of carrying more passengers more cheaply than any aircraft before it. American companies ordered dozens. And this rejection of Concorde by US Air carriers didn't just rob the supersonic jet of a lucrative market. It damaged sales prospects in other nations as well. The United States was the dominant force in aviation, and where they went, other countries would likely follow. But Michael Heseltine couldn't give up. He wanted to be prime minister one day and didn't want the failure of Concorde to stain his record. So despite the snub by America and the unfortunate backdrop of the TU144 crash, Michael rolled up his sleeves and got to work. He recognized that Concorde Was swimming against the tide in an era of mass travel. It was a low capacity plane, and at a time when prices were falling in the industry. Concorde's high running costs meant tickets would be expensive. The Concorde was therefore going to have to be a luxury product. A first class only plane that was inaccessible to the vast majority of ordinary people. But rather than view this as a liability, Michael decided to lean into it. If Concorde had to be reserved for the upper classes and super rich, that could work in Britain's favor. After all, Britain was home to the most elite family in the world. The British royals already had a history with Concord. Prince Philip was a trained pilot and he had taken a turn at the controls during one of the plane's many test flights. Michael Heseltine decided to make more of this connection. He arranged for a series of royals to be photographed on tours of the Concorde, Including Princess Anne, Princess Margaret, and eventually Queen Elizabeth herself. He then used this royal seal of approval to court other international elites by sending a Concorde prototype on a tour of global destinations. The supersonic jet drew admirers in Iran, Singapore, Japan, India and Australia. And then in September 1973, Concorde made its first non stop crossing of the Atlantic ocean. As expected, this test flight shattered records, Landing in Paris just three and a half hours after taking off from Washington D.C. as a publicity stunt. It was a wild success. Concorde's unfamiliar but elegant design created real excitement whenever it was demonstrated in front of a crowd. And passenger flight at twice the speed of sound was a headline friendly selling point. But as a sales campaign, the results were mixed. By the autumn of 1973, Michael had secured commitments from two additional countries, Iran and China. They weren't firm orders yet, but Michael still had faith. He could turn commitments into sales and convince other nations to follow Iran and China's lead. But then 1973 delivered more bad news. In October of that year, Arab oil producing countries imposed an embargo against the United States and other western countries that supported Israel. This triggered a dramatic spike in crude oil prices which quadrupled over the next few months from around $3 a barrel to almost 12. Today that would be a jump from $19 to 76. Michael instantly saw the devastating effect this would have on Concorde. Every form of transportation would be affected by the rise in prices. But for the fuel hungry Concorde, this turn of events was especially damaging. Even before the oil embargo, Concorde had high running costs. Now it risked becoming completely unaffordable. Projected sales of Concorde had already been Cut from the lofty early predictions of 200 aircraft, by the time Michael began his campaign, the estimate was closer to 50. And despite all the obstacles, he'd been determined to hit that target. As the world economy slumped, Concorde's projected sales were officially lowered to just 20 planes. Far from ushering in a bold new era of faster than sound travel, Concorde was now set to become a niche product that looked to Michael like it was increasingly out of step with the times. But very soon, the supersonic jet would be someone else's problem. The economic shock brought on by the oil crisis helped bring down the Conservative government Michael Heseltine was part of. And in 1974, the Labour Party returned to power after a four year absence. But this time, the new minister in charge of the Concorde project wouldn't have to spend weeks familiarizing himself with a plane as Michael had done. Instead, former technology minister Tony Benn reclaimed his leading role on Concorde, now as Britain's Secretary of State for Industry. As he departed office, Michael Heseltine couldn't help but feel a sense of relief to be handing over the reins. Despite his role as salesman for Concord, he'd always believed the plane was a disaster. Now he could stop pretending otherwise. As for incoming minister Tony Benn, after getting to grips with the latest updates on the project, he felt he had to deliver some grim news to parliament. By 1974, the British government had spent 600 million pounds on Concorde, over US$9 billion today, and it seemed unlikely that it would recover any of that money. Every Concorde plane was being sold at a financial loss, and British Airways had only agreed to buy the jet in return for ongoing government subsidies. Hearing this, many voices in Parliament and far beyond called for an end to the expensive project. But once again, politics came to Concord's rescue. The new government had only been elected with a narrow majority. It was unstable and simply could not afford to alienate the unions by threatening the thousands of jobs tied up in the manufacturing of Concorde. So despite dismal sales prospects and ever increasing costs, the government announced that the Concorde program would continue. However, it scaled back production targets yet again. Now only a total of 16 Concordes would be built. This was the bad news. But the good news was that after years of rigorous testing, Concorde had finally received its certifications of airworthiness. It was almost ready to enter commercial service. But just when it seemed like there was a light at the end of the long, dark tunnel, a new and unexpected threat would emerge. Even though America no longer had a supersonic plane to rival Concorde. It was still a superpower capable of destroying the prospects of Britain and France's new jet. And at the end of 1975, it would move to do just that.
- [20:00]
Lindsey Graham
Business Movers is sponsored by Monarch how much did you spend on groceries this month? I have to admit, if you ask me, I do not know the answer to that. Certainly not off the top of my head. And a month ago, if I were to try to find out, I'd have to scour statements from like three different credit cards plus my checking account.
- [20:17]
Michael Heseltine
It's a lot of work, but there is a better way.
- [20:19]
Lindsey Graham
Monarch is the top rated all in one personal finance app. You get a comprehensive view of all your accounts, investments, transactions and more, create custom budgets, track progress toward financial goals, and collaborate with your partner. Plus, Monarch helps you make smart money moves to get you closer to your goals. And now get an extended 30 day free trial when you go to monarchmoney.commovers I love the Monarch Dashboard.
- [20:43]
Michael Heseltine
A quick at a glance financial check.
- [20:45]
Lindsey Graham
In how much did I spend on groceries? Well, it's right there. Categorized automatically. After trying out Monarch for myself, I understand why it's the top rated personal finance app. And right now, listeners of this show will get an extended 30 day free trial when you go to monarchmoney.commovers. that's M O N A R C H M o n e y.com movers for your extended 30 day free trial. Business Movers is sponsored by the Walker Webcast. If you're looking to learn more about commercial real estate, entrepreneurship, leadership and the economy, where would you turn? Well, a good start might be the CEO of one of the largest commercial real estate, finance and advisory services firms in the nation. But how are you ever going to.
- [21:28]
Michael Heseltine
Get on their calendar?
- [21:29]
Lindsey Graham
Ah, you don't have to tune into the Walker Webcast, hosted by Willie Walker, CEO of Walker and Dunlap, an unparalleled leader in commercial real estate. Listen in on conversations with guests like a Rod economist Dr. Peter Linneman, and Walker and Dunlap experts. Learn more@walkerdunlup.com podcast and be sure to follow Walker and Dunlap on all your favorite social media channels. That's WalkerDunlap.com podcast. The Walker webcast insights for life.
- [22:11]
Michael Heseltine
It'S February 1976 at the United States Department of Transportation in Washington, D.C. three months after Concorde received its safety certification from British and French authorities. Tony Benn, Britain's Secretary of State for Industry, walks briskly down an echoing hall. He's on his way to an important meeting with U.S. transportation Secretary William Coleman. Two months ago, the House of Representatives voted to ban Concord from landing on American soil, based in part on a study by the Environmental Protection Agency, or epa. The ban was an unexpected and devastating blow. Concorde's sales pitch focused entirely on luxury transatlantic travel. And there is simply no future for Concorde without America. So Tony has come to Washington to plead the jets case. For two decades, Concorde has relied entirely on state funding from Britain and France. But now it's at the mercy of a different government, one that has no vested interest in keeping the project alive. Ah, Mr. Ben, come on in. Sorry to keep you waiting. Not at all. Coleman directs Tony to a chair. How's your flight? Rather slow. At least compared to Concord. Not bad. Now, I understand you have some concerns about the language in the EPA study and the vote in the House. Tony takes a deep breath. He's expecting an argument. I'm afraid I do have concerns, Mr. Secretary. Yes. For a start, there's a comparison in the report between the noise produced by Concorde and the noise of downtown traffic, which doesn't make any sense at all. The noise from a Concorde taking off or landing lasts less than two minutes. It's not continuous like traffic. Well, I agree. Tony pauses, surprised by this admission. You do? Yeah. That entire section is nonsense. In fact, a lot of the arguments in the report don't make sense to me. They are either demonstrable, untrue, or at least unproven. Tony had come to Washington expecting a fight. So now he doesn't know what to say. Well, yes. Look, I've only been in this job 10 months, and I'm not privy to all the history. But I don't want you to think of this as just sour grapes that were blocking Concord out of spite or something. That's exactly what Tony does think. But he doesn't want to start an unnecessary argument. No, of course, but I appreciate your transparency. I just hope we can find some sort of solution. Well, here's what I can tell you. I'm going to overturn the ban temporarily. I'll grant Concorde a trial period, a year or so, for us to monitor noise levels and the environmental impact. That'll give us the data we need to make a real decision. Well, this is excellent news. Thank you. And the trial period will allow us to fly into both Washington Dulles and New York Kennedy? Well, that's not entirely up to me. Dulles is under federal authority. That won't be a problem. But Kennedy, that's operated by the Port Authority. It's out of my control. Right. Okay. So there's still a chance that New York could refuse landing rights. Yep. And to be honest, JFK has been a problem for a while. The neighborhoods around the airport have grown a lot. New Yorkers aren't shy about speaking up. There's been a lot of noise complaints, a lot of special interest groups, you know, politicians getting involved. Adding Concord to the mix. I'm. I'm just not sure it's going to fly right now. No pun intended. I see. You think you can live without New York for now? Well, from the sounds of it, I think we'll have to. When Tony Benn returned to London, he knew he should be feeling triumphant. His visit to Washington had been the culmination of weeks of intense lobbying by both the British and French governments, and it seemed they had gotten what they wanted. But just as Transportation secretary William Coleman had predicted, not all US Airports would welcome a supersonic jet. Concorde was coming to America, but it would have to fight its way into New York. After close to two decades in development, Concorde was finally ready to enter commercial service on January 21, 1976. Two flights with paying passengers set off the same day. British Airways fleet from London to the small island country of Bahrain, while Air France departed Paris for Rio de Janeiro in Brazil. These two takeoffs were simultaneous, timed down to the second. That way, the British and the French would share the honor of Concorde's first commercial flight. But for British Airways in particular, its inaugural route felt like a placeholder. There was limited demand for travel to and from Bahrain, and flights often took off less than half full. Paris to Rio was a more popular route, but Air France was also waiting anxiously from word from the United States. So as soon as Secretary Coleman granted Concorde its clearance to land in Washington, D.C. both British Airways and Air France began planning their first scheduled flights across the Atlantic. But though it was no longer barred by federal authorities, Concorde remained controversial in the United States. There was vocal opposition in Congress, and officials from the states of Virginia and New York went all the way to the Supreme Court to try and reinstate the national ban on Concorde. To Tony Benn, it seemed that the Anglo French plane had become a scapegoat for wider concerns about noise and pollution related to air travel. He was convinced that the noise supposedly made by Concorde had been wildly overstated by activists and the press. But he hoped that once the planes began flying in and out of Washington, people would see they had nothing to worry about. And on May 24, 1976, two concords took off from London and Paris, both bound for Washington, D.C. this time it was their landings that were carefully synchronized. After roughly three and a half hours in flight, the planes touched down with within a minute of one another at Dulles airport. They taxied ceremonially around the Runway before parking nose to nose in a triumphant kiss. Despite rumors that protesters would try to disrupt these landings, there was a festival atmosphere at Dulles. Thousands of people gathered to watch the Concorde swoop down. Afterwards, the captains of the two planes presented their flight plans to the National Air and Space Museum. And France's Minister of transportation declared that on this date the distance separating the European continent and North America has in a single step been cut in half. At long last, Concorde's transatlantic operation was up and running. To begin with, air France operated three flights a week between Paris and DC. One way tickets cost $827, around $4,600 today. British Airways ran two flights a week from London, charging slightly less but still well over $4,000 in modern money. These prices were more than 20% higher than first class fares on other planes. But both airlines did all they could to make sure no one felt shortchanged. Concorde had its own separate departure lounges at London Heathrow, Paris, Charles de Gaulle and Washington Dulles airports. These had the atmosphere of a luxury hotel with expensive furnishings and an open bar car on board the jets. Passengers were then served caviar, gourmet food and vintage wines. And any worries that breaking through the sound barrier would be an alarming experience were soon dispelled. Concorde was just as smooth as any other flight, only much, much faster. Its first passengers were thrilled by the experience, and ticket sales reflected that excitement. After spending the equivalent of almost half a million dollars on advertising Concorde in America, British Airways reported that its first month of flights had sold out. Tickets on Air France were soon similarly hard to come by. But there was a hole in the Concorde operation. London to New York was among the most popular international flight paths in the world, especially for business travelers, one of British Airways key demographics. But Concorde still couldn't fly into the city, and at this point, the interests of business and government diverged. The airlines wanted to challenge New York's ban in the courts, but Tony Benn didn't want to risk a diplomatic spat with the Americans. He instead tried to convince British Airways and Air France to be patient. He believed that once New York officials saw how smoothly Concord was operating out of Washington, they Would drop their opposition. But in 1977, the New York port authority indefinitely extended its ban on supersonic jets landing at John f. Kennedy international airport. And with hopes of concorde flying into new york seeming to vanish, the airlines weren't willing to wait any longer. In the summer of 1977, British Airways and air france filed a lawsuit against the port authority. The airlines claimed that the ban was discriminatory and placed an unreasonable burden on commerce. An american judge agreed with them. Two months later, concorde touched down at JFK for the first time. There were no paying passengers on board, though. This was the first of several court ordered test flights designed to prove that concorde could meet the airport's noise pollution rules. Sensors were set up around the Runway to measure the volume, but they proved unnecessary. Concorde made no more noise when landing than a regular plane, and it was so far below the expected levels that the sound didn't even set off the official monitoring devices. Clearly, it was well within the legal noise limits at jfk. So now even the port authority had to admit that reports of concorde's deafening loudness had been greatly exaggerated. It had no choice but to give the supersonic jet the all clear. British airways and air france wasted no time. Only months after the lawsuit, in November 1977, Concorde began service to new York from europe. Demand was strong, and in 1978, the airlines planned to bring in daily flights across the atlantic. The transatlantic supersonic dream was finally a reality. The work of ministers like Tony benn and Michael heseltine seemed to bear fruit. And now it was time for the airlines for business to take the lead. But despite promising passenger numbers, Concorde's financial picture remained bleak. The high ticket prices still didn't cover the jet's running costs, and it would once again fall to the british and french governments to make up the difference. But in 1979, the United Kingdom would elect a new prime minister, One who would fundamentally reshape the relationship between business and government in britain. All of the country's industry industries would change, including aviation. Concorde had always relied on the largesse of the state to survive, but now, for the first time, it would be forced to fend for itself.
- [32:59]
C
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- [33:42]
Michael Heseltine
It's early summer 1981 at Heathrow Airport in London, two years after the election of Conservative Prime Minister Margaret Thatcher. In the United Kingdom. British Airways Chairman Sir John King stands in the aisle of an empty Concorde jet. He looks pensively around the dark interior. The narrow fuselage means there's room for just four seats across the plane. But although Concorde is cramped as the world's only supersonic passenger jet, it still has undeniable mystique. John has enjoyed flying on it himself, but he won't hesitate to kill it if necessary. John became chairman of the state owned British Airways at the beginning of the year, having been appointed personally by the Prime Minister. Margaret Thatcher is a fervent capitalist who wants to sell off nationalized companies. Companies like British Airways. The firm is struggling, though. In the last fiscal year it lost $254 million, almost a billion dollars. Today, a huge chunk of that is down to Concord. Sir John. British Airways General Manager Brian Walpole ducks nervously into the jet. John can't blame Brian for looking nervous. Privatization of British Airways will mean huge changes, many of them likely to be painful for employees. But John is still determined to see them through. Brian? Yeah, here I am. Come on in. Have you seen the year end figures? Yeah, it's grim. Grimmer than we'd anticipated. We're losing £2 million a week. There are a lot of reasons for it. I know. Some of them beyond our control, but many of them are not. So it'll be layoffs then? Yes, although we can't reduce the workforce as much as I'd like. The unions will make sure of that. We have to find savings elsewhere. Where? There's talk about trimming unprofitable routes. What about an unprofitable fleet? John looks around. We're losing £15 million a year on Concorde alone. Yes, but surely that shouldn't be counted. The government effectively underwrites our losses from Concord. That was the Heseltine deal. Not anymore. Mrs. Thatcher is cutting the purse strings. Brian looks stunned. The government is ending financial support for Concord. Well, can you blame them? They've taken a long hard look at the numbers and the billions of pounds in RD money. They're never going to recover. And after losing that much blood, I'd be trying to patch up the wound too. Well. Good Lord. What does this mean for our Concorde operation? We'd add millions of pounds in running costs to our budget. Yes. Yeah, but there is an upside. The Heseltine agreement sounded Like a good deal. But it only encouraged a defeatist mindset. With losses underwritten and gains split with the government, what motive was there to even try to turn a profit? But could Concord actually. Brian stops himself mid sentence, as if realizing he shouldn't say this out loud. No, go on, spit it out. Well, could Concorde be profitable? Well, we're going to have to give it a damn good try. British Airways chairman Sir John King gave Brian Walpole and the rest of his management team an ultimatum. They had two years to turn Concorde around. If they failed to make money by then, John would retire the fleet. As far as he was concerned, the days were gone when politics took precedence over profit. From now on, Concorde would have to fly solo or not at all. By 1981, production of Concorde jets at the factories in Bristol and Toulouse had come to an end. Sixteen planes had been built in all. Two of them were used only for development and testing. That left 14 aircraft in service. Seven for British Airways and seven for Air France. In the end, they were the only companies to purchase the planes. No other airline seemed to believe that Concorde could be profitable. It was now up to Sir John King and his management team at British Airways to prove those doubters wrong. And between 1981 and in 1983, Concord's operations were radically overhauled. Fares were increased and transatlantic operations were expanded with routes to Miami and Barbados. These changes worked almost immediately. In 1983, Concord recorded its first year in the black, earning £14 million for British Airways after taxes. John King was thrilled. His high stakes gamble had paid off. And to him it was a sign that the entire business could be transformed with the right management and the right attitude. For years, British Airways had been infamous for delays and subpar service. But John was determined to change that. The customer experience became a top priority, and it needed to be, because British Airways was about to have some new competition. In 1984, the entrepreneur Richard Branson founded Virgin Atlantic. It styled its itself as a modern airline, an upstart challenging the old establishment represented by British Airways. Virgin prided itself on its service. But there was one arena where the new airline could not compete. It did not have Concorde. Supersonic travel finally seemed to be paying off, giving British Airways a vital advantage in an increasingly competitive industry. And with costs cut and profits increasing, in 1990, in 1987, Margaret Thatcher's government sold off the publicly owned airline. John King had done what was asked of him. He had taken British Airways into the private sector. That same year was Concorde's Most profitable yet, it made an operating profit of £54 million, $240 million today. But the supersonic jet still had problems. Costs remained high and revenues weren't resilient. Although Concorde never made an outright loss during the 1980s, there were still good years and bad years. Its niche market remained a limitation. Even on the most popular transatlantic routes, planes often flew at half capacity, only just enough to cover the cost of the trip. By 1987, a one way ticket from London to New York cost just under $3,000. Concorde's average passenger was an executive from one of Britain or America's top firms. Other seats on board were filled by wealthy jet setters or by the biggest stars of stage and screen. So the base of customers who were able and willing to pay for tickets on Concorde was small and unlikely to grow that much. John King and the British Airways management team came up with a solution, however. They allowed Concorde to be chartered. By 1987, Concorde was carrying over 30,000 charter passengers a year on flights from 135 different airports across the world. It was a lucrative new market for British Airways, contributing an extra 10% to Concorde's revenues. These flights allowed companies to offer day trips to Egypt to see the pyramids, or to Finland to meet Santa Claus at Christmas. There were even round the world charter flights on Concorde, which were essentially cruises in the sky. Passengers would spend three weeks traveling across the globe on the same plane, staying in five star hotels and glamorous locations while zipping through the air at supersonic speeds. Concorde had opened up a whole new world of possibilities in air travel. By the time John King stepped down as chairman of British Airways in 1992, the supersonic jet had helped the airline increase revenues to more than £4 billion. And over the period he was in charge of the company, a billion dollar loss in 1981 was turned into a profit of 1.8 billion in 1992. By then, in both Britain and France, Concorde had become a source of intense national pride. It had shaken off the doubters who dismissed it as a flying white elephant, instead having been transformed into an instantly recognizable icon of aviation, famous the world over. And as the new millennium approached, Concorde entered its third decade of service in style. But behind the glamorous facade of champagne and movie stars, the jet's business model was still fragile. And when a horrifying tragedy dimmed that glow, Concorde went into a spiral it would not recover from. The age of supersonic passenger travel was about to come. To an From Wondery. This is episode three of Sonic Boom and Bust for business members. On the next episode, Concord's profits continue to soar until a deadly accident paves the way for its downfall.
- [42:06]
Lindsey Graham
If you like Business Movers, you can unlock exclusive episodes found nowhere else on Wondery plus and access new episodes early and ad free. Join Wondery plus in the Wondery app or on Apple Podcasts Prime. Members can listen ad free on Amazon Music and before before you go, tell us about yourself by filling out a survey@wondery.com survey.
- [42:29]
Michael Heseltine
If you'd like to learn more about Concord, we recommend Flying the Full Story by Brian Calvert, the BBC documentary A Supersonic Story and the Retreat from High Technology in Post war Britain. A 2023 article in the English Historical Review by Tom Kelsey. A quick note about our dramatizations in most cases we can't know everything that happened, but all our reenactments are based on historical research. Business Movers is hosted, edited and executive produced by me, Lindsey Graham for Airship Audio editing by Mohammad Shazid Sound design by Gabriel Gould Music by Lindsey Graham. This episode is written and researched by Emma Dibdin. Executive producers are William Simpson for airship and Aaron O'Flaherty, Jenny Lauer Beckman and Marshall Louis for Wondering Dracula, the ancient vampire who terrorizes Victorian London. Blood and garlic, bats and crucifixes. Even if you haven't read the book.
- [43:31]
Lindsey Graham
You think you know the story.
- [43:33]
Michael Heseltine
One of the incredible things about Dracula is that not only is it this wonderful, wonderful snapshot of the 19th century, but it also has so much resonance today. The vampire doesn't cast a reflection in a mirror, so when we look in the mirror, the only thing we see is our own monstrous abilities. From the host and producer of American History Tellers and History Daily comes the new podcast the Real History of Dracula. We'll reveal how author Bram Stoker rated ancient folklore explorer Victorian fears around sex, science and religion, and how even today we remain enthralled to his strange creatures of the night. You can binge all episodes of the Real History of Dracula exclusively with Wondery plus join WonderyPlus and the Wonder App, Apple Podcasts or Spotify.