The newly created company's output measured in available capacity tonne kilometres[nb 8] was greater than that of some of the smaller, contemporary European flag carriers, such as Aer Lingus, Air India,[20] Sabena, or Swissair.

To compensate for this loss of competitiveness, Sir Freddie Laker, BUA's managing director from 1960 to 1965, had come up with the idea of designing a cargo door to be installed on the left-hand side of the forward fuselage of that airline's long-haul VC10s, where the first class cabin was normally located.

[87][88] To further extend the network's reach and improve its connectivity, BCal agreed to host Dan-Air's new, twice daily Gatwick—Newcastle flights, which began on 20 April 1974, in its computer reservation system (CRS) as part of a combined marketing effort.

[8][98][99][100] It also resulted in organisational changes that saw Adam Thomson become the airline's chief executive in addition to continuing in his role as chairman of a reconstituted board,[4] and the transfer of all aircraft leasing, purchase and sale activities to a new subsidiary.

Another aircraft was stationed at West Berlin's Tegel Airport during the month of July of that year to fulfill a short-term charter contract to carry Turkish migrant workers to and from Istanbul on behalf of a local tour operator.

[122][123][124] In addition, BCal obtained a licence and sole UK flag carrier status to commence scheduled all cargo flights between Gatwick and Houston — including an optional stop at Manchester or Prestwick in either direction.

[119][121][125] At British insistence, Bermuda II furthermore contained clauses that made it illegal for any airline operating scheduled flights between the UK and the US to resort to predatory pricing or capacity dumping.

[125] Following an exhaustive, three-week evaluation of the Boeing 747, the McDonnell Douglas DC-10 and the Lockheed L-1011 Tristar during the early summer of 1976, BCal chose the DC-10 as the wide-bodied aircraft best suited to serve its expanding long-haul route network.

Although the introduction of the DC-10 resulted in a huge increase in BCal's long-haul passenger and cargo capacity, the actual loads exceeded the airline's forecasts and helped it grow its traffic volumes on its scheduled services to West Africa and South America.

[144] BCal was keen to expand its limited short-haul European network beyond the existing four routes linking London Gatwick with Paris Charles de Gaulle, Amsterdam Schiphol, Brussels National and Genoa.

[152] The airline needed to develop its connecting traffic at Gatwick by growing the European network to include destinations in Germany, Switzerland, Scandinavia and southern Europe to help it increase load factors on its long-haul flights to Africa, South America and the US as well as to improve the profitability of these services.

[199][200] BCal's 10th anniversary on 30 November 1980 coincided with the completion of its new corporate headquarters — aptly named Caledonian House — in Crawley's Lowfield Heath area close to the airline's Gatwick base.

[212][failed verification] BCal's application did not succeed, mainly because of British Airways's and Qantas's determined opposition to any move by the authorities in the UK and Australia to dilute the lucrative BA-Qantas duopoly on the "kangaroo route".

[195][222][223][224] BCal had proposed running a conventional scheduled service from Gatwick to Hong Kong via Dubai utilising its rapidly growing fleet of McDonnell Douglas DC-10-30 widebodies in a three-class configuration featuring a first and an executive class in addition to an economy cabin.

Cathay Pacific immediately began a back-door lobbying campaign in the Crown Colony as well as in London, stressing that it had invested millions of pounds in the British economy at a time of high unemployment in the UK by placing large orders for Rolls-Royce RB211-powered Boeing 747s.

Airbus knew that the major US carriers would be suspicious of the new aircraft's commercial credentials if only state-owned (and at the time subsidised) airlines (Air France and Lufthansa) of countries, whose aerospace industries benefitted from orders, as launch customers.

[citation needed] In 1984, the UK Government began to prepare then wholly state-owned BA for privatisation in earnest by appointing a new board of directors with several years' experience in private industry and by changing its legal status from a Crown Corporation to a public limited company.

[251][257] BCal's senior management told the Government that the only alternatives to this proposal were shifting its existing scheduled operation from Gatwick to Heathrow's then new Terminal 4,[251][258] which it expected to produce an additional annual profit of at least £20 million in the first year itself,[251][259] or to merge with BA.

[234] These profits were the result of improvements in the British economy, which had recovered from the severe recession of the early 1980s, and BCal beginning to reap the benefits of the new industrial relations strategy it had begun implementing the year before.

[278] A second 747 wearing BCal's full livery joined the fleet permitting the resumption of a daily service between Gatwick and New York's John F. Kennedy Airport (JFK) during the summer of 1985, after the airline's absence from that route for over a decade.

[292] The purpose of this meeting was to begin exploring ways of combining BCal's and Air Europe's separate short-haul operations in a new joint venture that would have enabled both airlines to acquire the economies of scale to compete with a privatised BA on a level playing field.

The study also envisaged adding services from Gatwick to Zürich, Dublin, Madrid and Lisbon at a later stage to enable the joint venture to acquire sufficient economies of scale to become a viable entity in the long term.

[298][299][300] included The first two events almost emptied the cabins of BCal's widebodied planes plying the transatlantic routes linking Gatwick with Houston, Dallas/Fort Worth, Atlanta, New York JFK and Los Angeles because of a sudden surge in cancellations, especially from passengers based in the US.

[301][302] The third had a serious impact on BCal's finances at a time of crisis as it denied the airline speedy access to a substantial amount of money derived from passenger and cargo sales in its most important and most profitable overseas market.

[247][307] As a result of the problems it was facing during that time, BCal announced 1,000 job losses out of a total worldwide workforce of 7,700[216][234][306] which given there was no overall reduction in services Flight International described as suggesting "that the slim down was overdue"[308] It also needed to make adjustments to its schedule to take account of the expected changes in traffic patterns.

[323] Given a combined BA-BCal's superior financial strength, considerably lower borrowing costs and far greater economies of scale, Air Europe's management felt that it would be imprudent to launch these new routes if it had to compete with BA out of Heathrow and Gatwick as well.

This combination of more non-stop flights and higher frequencies to prime long-haul destinations would have resulted in a more attractive product for high-yield business travellers, thereby enabling the revamped BCal to become profitable again within a short period of time.

[234][320] The October 1987 stock market crash and ILG's successful referral of the original BA-BCal merger proposal to the MMC resulted in BA tabling a revised bid to take over BCal.

[337] SAS thought that BCal's Gatwick base would give it access to a centrally located hub in the world's biggest international air travel market, thereby helping it to overcome its geographic isolation on the margins of Northern Europe.

These included limiting BA's presence at Gatwick to a maximum of 25% of all available slots, relinquishing BCal's unused route licences and to not oppose Air Europe's designation as an additional UK flag carrier on Gatwick—Rome.