CONFIDENTIAL
Because Hong Kong is UK territory, HIG is responsible for
Hong Kong civil aviation matters in the International Civil
Aviation Organisation (ICAO). We dispose of traffic rights at
Kai Tak. Those rights are a major card in our hands in the
complex of air services negotiations with all countries having
major civil aviation interests Their value is estimated at
£20 million per annum in terms of gross passenger revenue; rights
of approximately equivalent value have been obtained for British
airlines elsewhere in the world. We consult Hong Kong about the
disposal of rights at Kai Tak and take as full account as we can
of their wishes and needs; but we are not always able to meet
them since we look to get equivalent advantage for our aviation
interests elsewhore and this is not always available or, in some
cases, required. For example, KLM and SAS seck rights in Hong
Kong and the Hong Kong Government would welcome their services;
but there is nothing of equivalent value in the aviation field
the Dutch and Scandinavians can offer in return and their
requests have therefore been refused. An additi onal factor to
which Hong Kong quite naturally does not attach the same weight
as we do is that we cannot allow the value of the rights in
Hong Kong to be debased by over-saturation of the routes through
the Colony.
6. Hong Kong's dissatisfaction with our "exploitation" of local
rights can only be answered by the general argument that from the
nexus of relations which bind a dependent territory to the
metropolitan country both derive benefits which we do not
normally try to set out in any balance shoet. Over the years the
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CONFIDENTIAL