On 8 February 1966 when Freddie Laker formed Laker Airways, he already had an established reputation as an aviation entrepreneur, having already established his name with the maintenance and overhaul company Aviation Traders and with the independent airline British United Airways (BUA). In the very beginning, using loans and financing, Laker bought a pair of used Bristol Britannias from BOAC and three brand-new BAC One-Elevens and started flying services in July 1966 under a contract with Air France while entering the package holiday market. By the following year Laker introduced time-charters which committed tour operators to contacts with Laker that guaranteed him a fixed number of flying hours per year to carry tour operators' customers to holiday destinations in the Mediterranean. His innovative contracts allowed him to sell seats on his One-Elevens two years before he took delivery of the aircraft. In 1969 Laker purchased two used Boeing 707s and with other European independent carriers, began trans-Atlantic services at low prices to travel groups.
At the time these travel groups were set up for a variety of reasons that often were simply to evade the high prices on established airlines across the Atlantic. At the time there were strict rules governing the carriage of such passengers and the charter airlines were held legally responsible to verify the authenticity of a group's operation. Since the fares were strictly regulated between the United States and the UK at the time, an airline that sold seats to non-members of such groups could face heavy fines. Despite Laker employing lawyers to take sworn statements from his passengers, he still was accused of circumventing the rules and was threatened with heavy fines that could have shut down his airline.
Laker became an outspoken critic of what he felt was a protected market with the implicit collusion of the regulatory authorities. He decided to do away with advance booking and the need for groups to fly between the US and the UK for reasonable prices. The Skytrain was born- all a passenger had to do was show up at the airport with a valid passport, buy a ticket and board the aircraft. Laker's inaugural prices were set at approximately US$60, about 25% of the lowest advance fare on an IATA carrier. When Laker applied to the British Air Transport Licensing Board (ATLB) in 1971 for the rights to operate services between New York and London, both the British and US governments along with IATA and its member airlines immediately protested. In 1971 14 million passengers a year were crossing the Atlantic by air and Laker believed he could grow the market by another 2 million easily with his pricing structure and no-frills service.
The ATLB rejected his application and also rejected his subsequent appeal. However, Laker's efforts at launching service caught the attention of the newly-formed Civil Aviation Authority (CAA) which was established in 1972 to regulate all aspects of UK civil aviation. The CAA was empowered to take over several regulatory areas that were previously the responsibility of the ATLB and one of its first acts was to overturn the rejection of Laker's application and offered him traffic rights at London Stansted. Laker wanted to operate out of London Gatwick which had rail connections to central London where Laker's main ticket offices were located. In 1972, Stansted was a small airport that lacked good ground transport links to central London. Despite this, however, the CAA designated Laker as a national flag carrier so that the airline could not be blocked by the US government.
Laker went ahead and ordered two McDonnell Douglas DC-10s which he first put into service on his Mediterranean holiday services with the intent of using them on his innovative Skytrain services. However, in 1973, the US Civil Aeronautics Board (CAB) refused to grant Laker traffic rights for the United States on the basis that he was still in violation of the old rule regarding travel groups flying across the Atlantic. Laker was fined despite a lack of proof that he had violated the rules back in 1969. After a lengthy series of discussions, by 1974 the CAB decided to retract the fines and approved his applications for services to the United States. However, under pressure from the US airlines that held a significant share of the trans-Atlantic market (led by TWA and Pan Am), President Nixon refused to approve the application. Laker responded by threatening lawsuits against the US and UK airlines that were lobbying the refusal of his application. Under pressure from BOAC, the CAA eventually canceled the license for Laker Skytrain.
This started a long public debate that by 1976 the UK Parliament's House of Lords called on the government to approve the Laker license on the basis that it was in line with public opinion of the day. The UK courts agreed with the House of Lords after Laker proved that the British government and the CAA were violating their own regulations in rejecting his license application. In the United States, though, Laker found an ally in President Jimmy Carter who was an advocate of deregulation (Carter would later sign the Airline Deregulation Act in 1978) and readily signed off on the US regulatory application to allow the Laker Skytrain to begin services. With victory in the UK courts in hand and victory in the United States with the help of President Carter, the first Laker Skytrain flight departed London Gatwick for New York JFK on 26 September 1977. Freddie Laker himself was aboard that aircraft which had been christened "Eastern Belle". His second DC-10 was christened "Western Belle".
Source: Airliner Classics (in association with Airliner World), November 2009. "Sir Freddie Laker: The Man Who Gave Us Skytrain" by Bob Bluffield, p81-83.