254
า
DEPARTMENT OF TRADE
1 VICTORIA STREET
LONDON SW1H OET
By
Восы
Tovary
Telephone Direct Line
Switchboard
cuments pl
MG 2714
01-215 5612
01-215 7877
26 April 1978
Civil Aviation Department
HKK184/1
Our Ref:
EB 22/45
MY NO. 51 1 1 MAY 1978
N Latham Esq
DESK OFFICER
RE
PA
Action Teen
me
99 Queensway
RECEIVED
Be. 69
27 APR 978
..W
DESK OFF
INDER
PA
New Rodney Block
HONG KONG
iform
UK/SWITZERLAND TALKS
ken
As you know, the second round of the above discussions is due to take place in Berne from 6-8 June.
We have been giving some further thought to our aims in these talks and to priorities within them. As you know, we have one principal objective, which is to rectify the severe imbalance in earnings as between UK and Swiss airlines. Although, as I told you before the first round, we are open to any proposals by the Swiss authorities to bring about a rapid and effective change in this unacceptable situation, I also emphasised that we were much concerned about the low load factors being achieved by Swissair on the Zurich-Hong Kong route and the excess capacity over that required for genuine 3rd/4th traffic which this represents. This was a main theme of my discussions with the Swiss.
Switzerland has five wide-bodied services per week to Hong Kong, as
four for Italy, against six for the Federal Republic of Germany, three for France and one for the Netherlands. The only other European pretenders to a route, the Scandinavian countries, have at present no services. Switzerland, therefore, in relation to the size of its population and its relative significance, has far and away, in fact something approaching ten times, more capacity on the Hong Kong route than other European countries. If, contrary to what one might have thought from the size of its population and its trading links, the Swissair flights were nevertheless substantially filled with 3rd/4th freedom traffic, then the perpetuation of this anomaly might be acceptable, but this is not so. As you know, the 3rd/4th freedom load factors achieved on Swissair's five services.
Even with the addition of fifth- have recently averaged only 16%. freedom passengers (on routes where Swissair frequently competes directly with the two British airlines) the load factor amounts to only just over 30%.
In addition to the general objections in principle to the mounting of excessive capacity, it usually leads to undesirable market What practices and, we have clear evidence, in this case, to damaging
competition with British Airways.