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3. BA BELIEVES THAT DIRECTIVES ARE RESULT OF PRESSURE FROM CONSUMERS ANNOYED AT EXISTING RULES REQUIRING USE OF ARTIFICIAL IATA EXCHANGE RATES. THE USE OF CURRENT LOCAL DOLLAR CONVERSION RATE IS ATTRACTIVE TO CONSUMERS IN THAT IT RESULTS IN A REDUCTION ON THE IATA FARE CONSTRUCTED ON IATA CONVERSION RATES WHERE LOCAL CURRENCIES HAVE STRENGTHENED AGAINST POUND STERLING AND DOLLAR.
4. WE UNDERSTAND THAT FOREIGN AIRLINES OPERATING FROM SINGAPORE ARE TO OBJECT TO DCA ABOUT LACK OF PRIOR CONSULTATION. POLICY OF BA AND SOME OTHER AIRLINES IS TO REFUSE CARGO FOR USA IF CONSIGNMENT
RATE IS LESS THAN US DOLLARS 2 PER KILO.
5. WE ARE CONSIDERING IMPLICATIONS FOR OUR BILATERAL TARIFF ARRANGEMENTS WITH SINGAPORE AND MALAYSIA. IN ADDITION HONG KONG HAVE ASKED IF SIMILAR ARRANGEMENTS CAN BE APPLIED THERE AND WE ARE ALSO CONSIDERING WITH THE CAA THE IMPLICATIONS OF THIS FOR HONG
KONG'S CURRENCY PROBLEMS.
6. GRATEFUL IF YOU WOULD ESTABLISH HOW CAB HAVE REACTED OR ARE LIKELY TO REACT TO THE ACTION BY MALAYSIA AND SINGAPORE.
OWEN
FILES
MAED
NAD
SEAD
HK & GD
MISS BROWN
MR HALL
MR MURRAY
[COPIES PASS TO CAD/DOT]
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