Beyond Lion Rock: The Story of Cathay Pacific Airways (15 page)

At last a Basis of Agreement was arrived at, and initialled on 5 May 1948 by John Swire & Sons, ANA, CPA, Skyways and Far Eastern Aviation Company, for the formation of a new company to be called Cathay Pacific Airways (1948) Ltd. By the terms of this draft Agreement, Syd de Kantzow got what he wanted: the management of the flying company, a seat on the Board and a 10 per cent holding. Roy and his partners, too, retained a joint 10 per cent holding. B&S were to hold the booking agency and John Swire & Sons and CNCo were to have the right to appoint the Chairman and Managing Director.

Before this Agreement was finally ratified, to nobody’s surprise or great regret Skyways and FEAC dropped out. Jock’s diary at this point reads: ‘Heard from London that Skyways are going to double-cross us and go in with Jardines and H.K. Airways…. I think the immediate step is to get our own show set up under our management.’ Wasting no more time, the new partners ratified the Agreement on 1 June, and the new company began operations in July. It was registered on 16 October with a nominal capital of HK$10 million: CNCo and ANA both held 35 per cent of the shares, John Swire & Sons 10 per cent, Syd de Kantzow 10 per cent, and Cathay Holdings Ltd (representing Roy Farrell and his American friends) 10 per cent. Its Chairman was C. C. Roberts and its Managing Director M. S. ‘Steve’ Cumming, while the other directors were Jock Swire, Ivan Holyman, Ian Grabowsky and Sydney de Kantzow. (Skyways, after a series of ups and downs, ceased to exist in 1962.)

By now, the Cathay fleet consisted of six DC-3s (including Betsy) and one Catalina that Syd wanted to keep ‘for general purposes’.

As for CPA’s Macao gold runs, a decision was urgently needed: whether to take them over or drop them. Ashley had been slighting, but the fact was that certain of the consignees in Macao, China and elsewhere had dubious reputations. ‘The profits,’ C. C. Roberts of B&S admitted to Jock, ‘are enough to make anybody’s mouth water but we ourselves would not feel disposed to have our name associated with that trade.’ MacDougall, Hong Kong’s Colonial Secretary, privately encouraged Roberts in this view: ‘The trade has a pretty nasty reputation even in smuggling hardened Hong Kong. We would not like any such smell to attach to us.’

So the Macao option was not taken up while, in another parting of the ways, Syd dropped his connection with the Roy Farrell Export-Import enterprise.

Everybody in the Swire empire, in London as much as in Hong Kong, was now keenly aware of the importance of good relations with Syd. As Jock had patiently pointed out to one and all, this did
not
mean giving him a free hand to run wild. What it did mean was that Syd must be allowed first word in all technical matters, on questions of air politics or on air operations, while B&S looked after commercial matters, matters of common sense, China politics, finance etc.

‘Start by wholehearted faith in de Κ backed by ANA,’ was Jock’s instruction to C. C. Roberts, the first Chairman. ‘Do everything you can to increase his sense of responsibility. If you are not satisfied, appeal to Melbourne [i.e. Holyman].’ To make him feel ‘one of the team’ Syd was encouraged to move his office from P. J. Lobo’s at Chater Road to one in the imposing B&S office on Connaught Road between the cricket ground and the harbour; while, as a physical symbol of ANA’s participation, Grabowsky was to remain in Hong Kong for a few months to see things on their feet. Jock Swire, back in London, winged a cheering cable to C. C. Roberts: ‘Good luck to new Cathay welcome Kantzow and old Cathay staff.’ Swires were in Air at last.

*

And what of Roy? In his room at La Quinta Motor Inn on the Dallas–Fort Worth highway, where he had told me the early part – how he’d slipped the case of Black Label to the friendly sergeant at Bush Field and how he’d flown Betsy all the way to Shanghai across a world strewn with the wreckage of war – he said, ‘Syd did all the negotiating with Jock. I had no say in it, but I had great faith in Jock, having seen him. Syd bargained in good faith, I’ve no quarrel with that. And Grab did a good job too, and got a fair market
price for our equipment and spare parts. Only thing, I think we should have gotten something for goodwill.’

An interesting observation. Later I read part of one of Jock’s letters of those days that said, ‘Syd might well have asked to be given a 20 per cent holding free in return for goodwill, but he has accepted our somewhat doubtful contention that he has in fact no goodwill to sell….’ I hadn’t read that when I talked to Roy. But evidently goodwill or its absence wasn’t something the old adventurer had lain awake grinding his teeth about in 1948. The fact was that his first wife had developed health problems so serious that he was obliged to wind up his affairs in the Far East quite soon after the Swire takeover of CPA. Roy sold the American 10 per cent in Cathay Pacific Airways and headed back to Texas, where he has been in successful business of one sort or another ever since. He is very much a family man; his two sons are successful and he has several grandchildren. As for his former partners, Bob Russell and Geddes Brown followed him home and so, later, did Millard Nasholds, after a spot of trouble (a smuggling charge) with the Taiwanese authorities. Roy had fired Neil Buchanan some time earlier.

About Roy himself, Ross Tattam summed up for me what most people thought. An Australian who was with him in his export-import company and who, with Eric Kirkby, took over the Sydney office when Roy returned to the United States, he talked to me not in the States, not in Farrell’s
home-from
-home Hong Kong or in Manila, but in the aggressively
ultra-Australian
atmosphere of the Rand wick Rugby Football Club near Sydney, where Poms are not automatically very highly considered and Yanks run them a close second. There in a bar hung with historic rugby sweaters, among large men gripping cans of Foster’s lager, Tattam told me: ‘He was the best boss I ever had. A great guy to work with. A big bloke. Thought big. One of his secrets – he was courteous; he’d listen.’ A pause for a swig, and he added, ‘Look, I’ll tell you one thing – those Hump pilots who came to Burma and Hong Kong never had a bad word for him.’

Roy himself seems to have no regrets. ‘I wanted an empire out East – oooh, yes. Perhaps I could have done things differently. I could have changed my nationality, I suppose. And if it hadn’t been for my first wife’s illness….’ He shrugged, and I thought he was going to brush that bit of the past impatiently away. But he went on, ‘You know, I didn’t want to sell Cathay Pacific. I actually cried when my last plane – not Betsy, but a DC-3 – took off from Manila at three in the morning. Well, there are ups and downs in life.’ He flashed me his big, warm, cowboy smile. ‘And, oh, the ups are wa-a-a-a-y ahead.’

The fact that Cathay Pacific was now a 90 per cent British company in strong local hands certainly did not mean that Jock’s, Syd’s and Ivan Holyman’s troubles were at an end. On the contrary. The next few years were a period of extreme difficulty, reflected in a multitude of anxious letters and memoranda. In some ways ‘getting into Air’ turned out to be more of a problem than the London-based directors of John Swire had bargained for – something like graduating in one bound from a provincial tennis club to Wimbledon. ‘We here,’ Jock in London admitted to Eric Price in Hong Kong, ‘readily appreciate how very much quicker the ball goes backwards and forwards over the net in this air business than it does in anything else to which we have been accustomed.’

There were some oddly bouncing balls to cope with. Hong Kong Airways, for example. Although wholly owned by BOAC, HKA was still pressing its claim to be given the Hong Kong franchise – for BOAC continued to dicker with the idea of being a regional and an international long-haul carrier at the same time. Over many months, the parties concerned dragged out their claims like doubles partners engaged in a protracted contest on a waterlogged Centre Court.

Holyman had early on stated his view that Hong Kong could not support two air companies: he was attracted by the idea of a CPA amalgamated with HKA into a single Hong Kong line, especially when it appeared that BOAC was moving away from regional ambitions and intended to sell the local company back to Jardine Matheson. Jock, however, was not so sure. He argued, from Swires’ experience of the region as shipowners, that Cathay had the advantage of catering (in the main) for a different kind of passenger from BOAC and HKA.

The secret of Cathay’s success, he maintained, lay with the small Chinese trader who had previously used Swires’ ships and who, now that they flew,
did not call for all the ‘expensive paraphernalia’ either in the air or on the ground that BOAC was (and HKA would be) obliged to provide for European travellers with greater expectations of comfort. These people knew Cathay already, trusted it and would use it. There were a great many Chinese, after all: ‘China being one of the most thickly populated countries in the world and having adjacent territories at handy air operating distances which are much less thickly populated, there is a constant coming and going. Take, for instance, movement between Amoy, Swatow, Hong Kong and the Straits Settlements….’ This, of course, would soon prove quite unrealistic; very shortly the Communists would take over in China and there would be no such traffic for about a quarter of a century.

Yet Jock’s basic conviction that Cathay was – and should remain – a regional airline was sound. ‘I know little of the intricacies of international politics,’ he said, ‘but I cannot help feeling that the trunk routes of the world, with all their political implications, will always be covered by nationalised airlines, but that governments will be compelled before so very long to live and let live, and leave what corresponds to the local coasting and short-sea trades to private enterprise.’ Concentrate, he urged, on the region. ‘It will be time enough, when that has been done, to consider spreading our wings further afield.’ This was to be his belief for years to come.

In the event, the Government of Hong Kong in the person of the Governor, Sir Alexander Grantham (egged on by Uncle Moe Moss), proposed that all regional routes should be divided between the two companies in a way that appeared to give HKA by far the worst of the bargain – they were allotted the region north of Hong Kong, and Cathay Pacific the routes south of it. The proposal meant that HKA would be handed the doubtful gift of permission to fly to and from a Japan still in the straitjacket of American military occupation and a China about to go communist. Naturally, Holyman, quick on the uptake, dashed off a letter to Jock saying in effect, ‘For God’s sake, we must accept.’ Dreaming perhaps of all those potential passengers in and out of China, Jock at first marked the margin of the letter with a large question mark; but on second thoughts he agreed with Holyman. The question now was: would HKA accept Grantham’s lopsided proposal? Would any airline with its head screwed on voluntarily confine itself to those northern routes of such doubtful immediate benefit? Yes: HKA would.

On 13 May 1949 an agreement was signed by Cathay Pacific (Jock’s hand holding the pen) and BOAC (on behalf of Hong Kong Airways) along Grantham’s lines of allocation. Cathay secured the valuable routes to and from Bangkok, Singapore, Manila, Haiphong, Saigon, Sandakan, Jesselton
(now Kota Kinabalu) and Labuan, and Rangoon (with an extension possible later to Calcutta). That left HKA with Canton, Macao, Shanghai and Tientsin, not, after all, Japan.

The ‘Battle of Hong Kong Airways’, as Jock called it, did not end here. It dragged on for another ten years. In November 1949 BOAC sold HKA back to Jardines, but it soon ran for cover to another ‘big brother’, in a charter association with the American company Northwest Airlines on the Taipei and Tokyo services. Absurdly, HKA was still an airline without planes of its own. Then, in 1953, the British Government attempted to bring about a merger between Cathay, BOAC and HKA to form a single regional airline. This came to nothing for two reasons: first, disaster hit BOAC in the quick succession of two Comet jets and a Constellation, and, secondly, HKA was doomed to be a dead loss in anyone’s hands. Later still, BOAC came back having decided to try once more to bring HKA to profitable life. Two new short-range Viscounts arrived in Hong Kong in an attempt to make something of the Tokyo route. But there was still no profit in that, and finally Lord Rennell of BOAC meekly approached Jock Swire to ask if he would be willing to swap HKA for a parcel of Cathay shares. Jock said he considered HKA worthless and a liability, but nevertheless, as of 1 July 1959, Cathay took over HKA – though spurning the two Viscounts – and BOAC got 15 per cent of Cathay’s shares and a seat on the Board.

Bill Knowles, Cathay’s Chairman at the time, told his directors that he hoped this absorption of HKA as a wholly owned subsidiary ‘would enable us to inaugurate a properly rational service with the arrival of the Electras’ (the Lockheed turbo-prop aircraft the company had just decided to buy). Cathay now absorbed HKA’s northern routes, which later were to become immensely profitable; and indeed went on to make an international airport of Osaka after Japan’s miraculous revival. At long last the battle was won, but, as we shall see, there had been important casualties.

*

Syd’s operations continued throughout this period. Burma showed a good profit; of other routes, the Hong Kong–Manila service did best, with 95 per cent of all the Company’s passengers, the majority of them Chinese going to or coming from Amoy.

Now that the CPA office had moved to the impressive Butterfield & Swire building overlooking the harbour behind the Hong Kong Club (where the Furama Hotel is now), Syd, with Marie Bok, set up a grander sort of shop on the first floor there, only separated from the Private Office (the Swire Taipan’s sanctum) by what Marie describes as ‘a little balustrade thing’.
The CPA ticket office remained in the lobby of the Pen (located left of the front door, where today you find Van Cleef & Arpels). There Cathay’s Sales Manager, Tommy Bax, the convivial Australian successor to Bob Frost (lost in Miss Macao), held bibulous and occasionally uproarious court – a popular man who by repute seems to have become a legend in his lunchtime and possibly a legend at breakfast, mid-morning, mid-afternoon and much of the night as well.

Syd’s habit of command at once seemed reinforced by the new ambience. He was moved to issue a stern decree: ‘As the Company has now entered the stage where it has to a large extent left pioneering behind, stricter discipline and a greater respect for recognized systems and procedures are necessary. For some time past, it has been constantly apparent to me that definite action has to be taken.’

Ian Grabowsky agreed with him, announcing his own unhappiness with CPA’s cavalier approach to accounting up to now – it was so hit-or-miss, he said, that it was sometimes impossible to tell profit from loss. Even more radical, he began agitating for a change in the pay and flying hours of Cathay’s pilots. It had been the habit to pay captains a basic salary plus so much per flying hour. Consequently pilots had been flying up to 170 hours a month (over 2,000 hours a year) to earn big money. ‘This is a bad principle,’ Grabowsky said, ‘as pilots fly to the point where fatigue is not recognized or given way to.’ To the Cathay Board he proposed a fixed limit of 100 flying hours per month. Since, according to Ivan Holyman, the secret of ANA’s success was a very high utilization of aircraft – up to 4,000 hours a year each – an increase in the number of Cathay pilots seemed called for, and perhaps more aircraft too.

The era of ‘Syd’s Pirates’ was approaching its end. It was tragically ironic, therefore, that, only eleven months after the Miss Macao piracy, disaster struck Cathay for the second time. In the left-hand seat this time was Captain Johnnie Paish, the man who had flown Bob Smith down to Moulmein to confirm Smith’s contention that Kipling had turned the old pagoda there to face in the wrong direction. The front page headline in the
China Mail
of 25 February 1949 said:

Below were photographs of the plane burning on the edge of the Braemar (Taikoo) Reservoir, five miles from the centre of Hong Kong. The paper
listed the crew – Captain J. C. Paish; First Officer A. Campbell; Radio Officer N. W. F. Moore; and Flight Hostess O. Batley. Olive Batley, aged twenty-four, was Vera Rosario’s friend, educated partly in Shanghai, partly at the Italian convent in Hong Kong. She had been a dance band singer and, as Vera told me many years later, she was a new girl, only six months with Cathay. The nineteen passengers were Chinese, all of them on their way to Swatow. There were no survivors.

Eric Price in Hong Kong flashed a telegram to Jock as soon as he heard the terrible news: ‘Aircraft from Manila crashed here foggy hillside above harbour circling after sighting airfield subject enquiry apparently human error details later.’ Next day, after consultation with Mr Moss, he made a fuller report:

Having read this preliminary report (many years later of course) I decided to visit the site of the tragedy, and on a foggy February day very like that of the accident I drove there with Captain Martin Willing, a Cathay-747 pilot and amateur aviation historian. We both wanted to try to understand how an experienced flying man like Johnnie Paish, an ex-RAF pilot with 2,500 hours on DC-3 types of aircraft and a CPA Burma veteran, could have made such a mistake. We took with us a copy of the official report of the disaster.

Fog had closed Kai Tak earlier in the morning and it was now 10 a.m. Even down at sea level on the harbour front, under the flyover to Causeway Bay and Chai Wan, there were dense swirls of mist, and foghorns sounded balefully across the water. I could make out a green and white trans-harbour ferry cautiously feeling its way, some sort of freighter at anchor 200 yards
away was a dark grey blob, and the high-rise buildings of Kowloon on the other side of the bay were a mere smudge.

Pointing at the smudge, Martin Willing said, ‘That’s where the Hung Horn beacon was. See how close – how quickly a plane would reach here.’ Descending to land over Stonecutters Island, Johnnie Paish had been cautioned by the Kai Tak Air Controller, Roy Downing, that the moment he could not see at least three miles in front of him he was to turn to the right, swing over to Hung Horn beacon and climb away to a safe height in order to try again. This instruction Paish acknowledged. And then, as Eric Price had reported, he suddenly asked for (and received) permission to divert from his present approach, to circle and try another runway – a manoeuvre that would bring him over the Hung Hom beacon on the Kowloon side of the harbour: evidently he had lost the three-mile forward visibility. From the Hung Hom beacon to where we stood on Hong Kong Island was close, as Martin Willing had just pointed out. ‘You see, over the beacon he should have turned east-south-east and headed for the Lei Yue Mun Gap, then turned left again for the other runway. But he crossed the beacon – and turned south. Into the hill behind us.’

We drove up a twisting but well tarmaced road to the site of the former reservoir. It is under development now, like almost everywhere else in the Territory of Hong Kong, but beside a narrow ravine full of rubble you can still see part of the reservoir’s walls. Behind and to the left is a brand-new supermarket and beside that white high-rise apartments. The hillside lifts sharply here, a grim rock-face of granite slabs and yellowish sandstone, scrub-covered. It was towards this rising hillside that an eyewitness had seen the DC-3 VR-HDG heading, dangerously low, bursting out of one cloud bank over Kowloon and roaring into another, the one which masked the all too solid hills of the island.