by Gavin Young
When C. C. Roberts, Swires’ Taipan in Hong Kong, approached him, Uncle Moe Moss, the friendly Director of Air Services, was encouraging. He knew and approved of Holyman and ANA, and appreciated the desirability of setting up a cheap and unsubsidized British line between Hong Kong and Australia before any Chinese or Americans could push their way in. Aware that Holyman wanted to use Skymaster DC-4s on the proposed route, Uncle Moe confirmed that DC-4s could land at Kai Tak, although they were the largest aircraft able to do so. (Incidentally, Moss also disclosed government plans for an entirely new airport with minimum runways of 3,000 yards ‘capable of accommodating any plane at present in existence or likely to be for some years to come’. The image of this ‘entirely new airport’ will come and go like a mirage as this history progresses. It is an exciting idea and remains one to this day. In 1988, it is still the merest gleam in many an ambitious Hong Kong developer’s eye.)
Jock Swire and John Scott left Sydney for London in a euphoric state of mind that was undiminished by a breakdown in Darwin of the Qantas flying boat, necessitating a twenty-four-hour wait on board in acute discomfort; by a dust storm that forced them to overfly Basra; and by a starboard engine struck by lightning that forced their plane back to Marseilles and delayed their arrival at Poole seadrome by three hours. ‘Rather frightening,’ Jock admitted – but it wasn’t going to put him off Air.
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Nevertheless, government obstruction defeated private enthusiasm. Despite all Holyman’s fighting qualities and Jock Swire’s support, an independent ANA Australia-Hong Kong link was not to be, thanks to the Australian Government’s opposition and the contention of the British Ministry of Civil Aviation and the government-subsidized airline BOAC that this route should be reserved for the Australian Government-owned Qantas, with which BOAC was affiliated. Nor were the efforts of Holyman’s colleague, Ian Grabowsky, to engage CNAC in a China–Australia service any more successful. Thus it was that the aviation ball bounced back, so to speak, to the original exciting idea – that of a Hong Kong-based air company in which B&S might take a leading interest. Was there such a company in existence already, they wondered? Or would it be necessary to create one from scratch?
The following note dictated by Jock Swire in early 1947 gives the first reference to the Roy-Syd combination:
Roy Farrell Export-Import, Hong Kong Ltd. is a serious concern, an American–Australian company with largely American capital, frowned upon by the Ministry of Civil Aviation in view of the American holding. At present they are only tramp owners and therefore able to fly where they like…. Skyways Ltd., a Critchley concern, have sent a Mr Curtis to Hong Kong to investigate the possibilites….
Those possibilities were considerable. Roy, Syd and CPA had come to a crossroads – perhaps the end of a line. Despite the unquestionable success of their operations, the times were changing and with them international attitudes to commercial aviation. Tramps were on the way out; the age of hotly competitive scheduled airline operations had begun. It would be an age, as we all now know, of regulation, of rigid controls, so to launch a scheduled airline meant obtaining franchises – or licences – to use certain routes on a regular basis. The power to bestow the necessary franchise to operate a Hong Kong-based air company lay exclusively in the hands of the Colony’s Government as represented by the DCA – a unique franchise for a single company. As it happened, the Colony’s officials were strongly sympathetic to CPA, yet the fact that it was partly owned by Americans told fatally against it. Furthermore, CPA (and potentially Swires) had a rival: Hong Kong Airways. HKA had been formed just after the war by Swires’ competitor, Jardine Matheson, but still lacked a single aircraft to start operations.
Hankering for its own company in Hong Kong, BOAC, backed by the Ministry of Civil Aviation in London, strongly opposed the enfranchisement of CPA, and now persuaded Jardines to sell them HKA with which to lay claim to the coveted franchise. The Hong Kong Government, however, refused to grant any franchise until CPA had been given a chance to dispose of its American holding. Just then Skyways arrived on the Hong Kong scene. At this dramatic juncture, that company might have seized for itself a great Far Eastern future by buying CPA from Roy and Syd for a reasonable price, making of it a brand new British-owned company (newly christened Cathay Pacific Skyways, or what you will) and thus run away with the Hong Kong franchise. But it didn’t. For Mr Curtis’s ‘investigation’ led to Brigadier General Critchley’s botched bid for Roy and Syd’s pet company – a bid they both had considered outrageously stingy and which Roy had repulsed with his offer to take on the Brigadier at golf, barefoot if necessary. The way was open for Swires to move in, and the lines of destiny guiding John Swire & Sons and CPA finally came together.
CHAPTER 11
Letter from B&S to John Swire & Sons Ltd, London:
Hong Kong, 12th December 1947.
Dear Sirs,
Air
Cathay Pacific Airways. Ian Grabowsky [of ANA] has had conversations with these people. As you know, they were early in the field here following the [Japanese] surrender and Roy Farrell was looked on as the leading spirit. His interest, however, had been withdrawn and the Manager is an Australian – de Kantzow. Grabowsky knew him in Australia and New Guinea and we know something about him also. He appears to have packed a good deal of adventure into his young life but was at one time one of CNAC’s ace pilots. He has, however, married and appears to have settled down here. We had a talk with him and Grabowsky, and de Kantzow struck us as a keen, quiet spoken young Australian of not more than 35.
He expressed himself most interested in coming in to any side ANA and ourselves would lead. There is still American money in the Company but he has been having conversations with the [Hong Kong] Government [which] wants the company to reduce the American holding to 10% so that they can continue to have any privileges as a British Company. Government appear to be keen to give them a helping hand….
Grabowsky is obviously fond of de Kantzow and would welcome him into the fold. Incidentally, de Kantzow made it clear that he wants to retain his holding in the Company….
It might be useful to build a Company to embrace all the various operating interests and co-ordinate policy etc….
To this last sentence, someone at Swires in London (possibly Jock) has added a pencilled note: ‘Let’s form a new company. ANA, Cathay Pacific, Far East Aviation and as far as necessary or advisable, B&S. Skyways?’ (Far East Aviation Co. Ltd owned the Hong Kong Flying Training School, a trio of diminutive and out-of-date aircraft and very little cash, but it was a Hong Kong company.)
‘Let’s form a new company’ – at last it was in writing!
Syd de Kantzow was all for a new company. He wrote to his friend Ivan Holyman that CPA was quite prepared to discuss how ANA, B&S and CPA might merge to ‘undertake and operate an airline service and maintenance overhaul factory in the Far East initially and possibly later elsewhere’. CPA, he added proudly, had by far the largest airline maintenance and overhaul organization, had its own Board of Directors and was subject to direction by its parent organizations on broad policy only. For himself, he wanted membership of that Board and a senior executive or managerial position. And to retain his financial holding in the new company. Jock read his copy of Syd’s letter and scribbled on it, ‘So far so good.’
Indeed, CPA represented Swires’ only immediate hope of getting into the air: it already had the right to operate a Hong Kong–Singapore service, and its airline maintenance station at Kai Tak could become the new Air Repair Depot B&S envisaged. FEA’s main appeal as a partner was that it would bring a little extra local standing in the eyes of the Hong Kong Government; as for ANA, it was Swires’ ‘first love’. Holyman as a character had really bowled Jock over, and more practically speaking could provide all the flying and technical experience that Swires lacked. Apart from that, Holyman thought the world of Syd and could handle him – a most important point, for handling Syd, Jock thought, might well be a knotty problem. Syd
was proud; Syd was touchy. B&S must show him no condescension – indeed should feel none. True, a potential part of that problem was soon resolved. Syd and Roy and everybody else had agreed to accept Ian Grabowsky’s expert evaluation of CPA. There was no ill-natured haggling as with Critchley, so that was one major hurdle virtually overcome.
Yet there was an obvious problem to be faced: just how independent was the new CPA flying or operating company to be from the parent companies Taikoo and ANA? Holyman and Grabowsky seemed to think that the new flying company should maintain a wholly separate identity: an independent organization, they argued, has more drive and energy than one that is ‘lost’ in a large concern. Swires for their part fought shy of giving unfettered control of ‘their’ CPA to de Kantzow. They were an old, successful and experienced firm, extremely cautious and generally conservative, and with Air they felt they were moving into a strange and possibly treacherous world. They did not want to have to rely on de Kantzow’s judgement on all matters of policy that might arise. They wanted a hand on the brake. Furthermore, Taikoo’s object in ‘going into Air’ was to complement its shipping activities, and from this didn’t it follow that both Shipping and Air should both be under Taikoo management? Of course, on the other hand Swires recognized that without CPA they would have no airline to operate and no prospect of getting one; they would have no ground at Kai Tak except the Flying School’s patch, and they would have no equipment. Worse still: if Swires declined to play, CPA could perfectly well turn round and sell out the whole caboodle to the opposition, Jardines, who would no doubt snap it up greedily.
The truth was that the B&S people could not suppress a lurking unease for what one might call ‘the Syd’s Pirates factor’. For instance, it had been alleged (particularly by Skyways) that Syd had allowed CPA to operate without much regard for Certificates of Airworthiness, loadsheets, and such like. Was this true? According to Chic Eather: ‘It was a justifiable criticism. Don’t forget the CPA lot had come up in a hard school. They’d been fighting a war. We were all a bit too young and foolish.’ One can see that, and yet still agree with Swires that any future accident which inquiry showed to be the result of slackness of any kind would have a disastrous effect on the good name of the new operators, with repercussions for Swires. One couldn’t ignore that. Hence the insistence at Taikoo on keeping an eye, though a comradely one, on all flying operations managed by de Kantzow.
At this point Skyways reappeared. Since Skyways had recently abandoned their agents, Jardine Matheson, and moved to B&S, Jock urged Critchley to forget their falling out with Syd and Roy and join the new CPA: perhaps Roy had ‘opened his mouth too wide’ with him. This was not (nor is it now) Farrell’s view. He considered he had opened his mouth just wide enough, considering he ‘hadn’t cared a rat’s ass’ [one of his favourite expressions] whether the Skyways–CPA deal fell through or not. It was no doubt easy for people from London to underestimate the immense pride he and Syd took in the airline they had built up from nothing, and to fail to appreciate how little these tough-minded war veterans were prepared to put up with patronizing attitudes from anyone, particularly ‘Pommie bastards’. It was as simple as that.
Nevertheless the fact was that those talks with Critchley had inflamed Skyways against the character of our heroes. Neither Maurice Curtis nor Captain Ashley, Critchley’s Managing Director, made any bones about their belief that the Cathay Pacific people were a bunch of adventurers living to a large extent on what they earned from carrying gold to Macao, an operation they had started up some time previously. Ashley said quite bluntly that he had no opinion at all of de Kantzow, whose sole value, as he saw it, lay in his influence with Moss, the DCA. Ashley evidently was also deeply jealous of ANA, claiming to believe that the Australian Government would soon ‘see them off’.
How could Skyways possibly become a partner in the merger if that was their attitude? Ashley indeed sounds like a very embittered man, and he cut no ice with Jock Swire, who shrewdly regarded his attempts to belittle de Kantzow as a deliberate effort to wreck the whole merger. For this part, in continuing dealings with Syd, Jock found him quite prepared to cooperate. ‘De Κ.,’ he wrote, ‘is very amenable to advice from ANA and ourselves and regards us as his friends. He cannot see why Skyways should be in the thing at all and is still very sore at the way Critchley treated him last year.’ And to his directors in London Jock repeated a final warning: ‘De Kantzow is no rabbit. He has other buyers waiting at the door and will not hesitate for one moment to tell us to go to hell if he thinks we are treating him unfairly. He has implicit faith in ANA, and the freemasonry of these Australians is extraordinary. David and Jonathan are as nothing compared to Grabowsky and de Κ.’ Of course, Jock admitted, Syd was such an individualist that he might suddenly tire of working in a team and go off on some adventure in some other part of the world. He would be less likely to do so if Swires gave him his head to a reasonable extent on the operating side and made a success of Cathay. Of course, only time would tell: ‘Personally, I’m hopeful.’
Jock found two other sources of hope. The first was a visit to Kai Tak, where CPA had just bought five huts in the centre of the airfield to serve as a repair depot and where he talked with Bill ‘Hokum’ Harris, the No. 1 there, whom he liked enormously. And second, Swires’ people at CNCo were delighted to take Air under their wing, and everyone agreed that Swires’ shipping staff, with their commercial experience and local knowledge, could take care of CPA’s business management side.
The negotiations that led to the new ownership of Cathay Pacific took a long time; letters, cables and memoranda flew back and forth between the interested parties in London, Hong Kong and Melbourne through the early months of 1948, filling a number of fat files. Bridget Swire, Jock’s daughter, was acting as his travelling secretary at this point and still remembers the drama of it all. ‘I remember Grab arriving in Hong Kong with a few dozen Australian oysters for my father. We all had them for lunch out at Shek’O [the Swire Taipan’s house near the south-eastern point of the island]. The long talks afterwards were clearly a success and I was told that the matter was very hush-hush. The whole atmosphere at the time was one of secrecy and suppressed excitement that B&S were “going into Air”.’ There was even a proposal (from someone in London) that the airline should change the wonderful name Roy and his partner had chosen for it:
We ourselves [said a letter with an unreadable signature] should prefer to see a new name as indicative of a newer and bigger venture than Cathay, as to the goodwill value of which there is at least some doubt, although admittedly cast by antipathetic Skyways. We rather like ‘Far East Airways’, though you may be able to improve.
Luckily B&S in Hong Kong spiked this uninspired idea.
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From time to time Jock escaped from this flurry of paper and resumed his travels. His genial, bear-like figure, greying moustache and soft hat were to be seen moving indefatigably about the East – taking ship (and his delicate stomach) once more up to the China coast and to Japan, flying back to Hong Kong, down to Sydney and Melbourne, back again to Hong Kong. Dutifully he filled his diary with the multitudinous problems that he, as Chairman of John Swire & Sons, was required to handle with the aplomb of an expert juggler.
Shipping:
Madness to hang on to the Shasi. She could never be used anywhere but Hankow/Changsha now and who would invest £60,000 in that trade today? … Chunshan very decrepit … Chuchow should definitely be scrapped.
Shanghai: Went on board Hanyang to look at passenger accommodation and found Capt. W. R. blind. However he does not sail until tomorrow noon.
Politics:
Peking: Called on General Li Tseng Ren … now C-in-C of Chiang Kai-shek’s armies. Also General Fu Tso Yi, G.O.C. North China…. Sung the same song that China is fighting Russia not only Communists; that if they lose Manchuria, they lose China and if they do that the world is doomed to Communism…. Edmund Clubb, the American Consul-General, a really good man … says ch
ances of them holding Manchuria are pretty slim. They should pull out of Manchuria and concentrate on the Yangtze Valley…. If they lose 250,000 men in Manchuria they haven’t a hope.
His own health:
Shanghai: Oxford and Cambridge dinner at the Sino–British Club. Cambridge won the Boat Race…. Got badly poisoned somehow and feel like hell…. No lunch tomorrow….
Another aspect of Air:
BOAC have bought 5 Constellations, making 9 with Qantas. Goodbye to the Flying Boats.
Air again:
Hong Kong: Long talk Grabowsky [ANA] and wired London and John [his eldest son]…. Grab values CPA assets at about £170,000 and de K at £180,000 and neither will budge. The answer looks like £175,000 and not a bad bargain at the price…. I like de Κ quite a lot. An Aussie of Aussies but I think straight but very ambitious and a go-getter. CPA made over £200,000 sterling last year.
At one point Jock sighed to himself, ‘This air business is certainly terrifying and they talk the most fantastic figures.’ But after another visit to Melbourne he was more satisfied than ever that ‘ANA are really good people’ – it was a point he had to hammer home again and again to his ultra-cautious colleagues in London.
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.
