VED V
AKK 184/1.
? 8 JUN 1978
368
NAD
SWPD
SEAD FED
SAD
MISS BROWN
MED
MR BUTLER
HK & GD
✓ WED
SED
MR MURRAY
REA
UNITED KINGDOM/AUSTRALIA AIR SERVICES
CONFIDENTIAL MEMORANDUM OF DISCUSSIONS
INDEX
No
RY
PA
Action Taken
s
Representatives of the Australian and UK Governments met in London from 12 to 23 June 1978. Both delegations had very much in mind their Governments' desire for cheaper air fares between Australia and the UK, consistent with the viable operations of carriers. The delegations had the benefit of advice from the Australian and British airlines concerned.
The delegations considered an Australian Government proposal for revised air services arrangements between the two countries, based on the exchange of the first four freedoms of the air. This proposal arose from a comprehensive review of international civil aviation policy by the Australian Government. The basis of the proposal was outlined by the Australian delegation.
An opening statement and an explanation of the economic rationale of the third/fourth freedom regime were tabled by the Australian delegation. These showed that it was possible to achieve a significant reduction in fares and a substantial improvement in consumer welfare as a whole.
•
A most extensive and useful exchange of views took place in a cordial and open atmosphere.
The UK delegation accepted the validity of the underlying economic rationale of the proposed arrangements. Agreement was also reached on traffic statistics, anticipated demand and the economic basis of the proposed fares structure for the trunk route.
The Australian delegation tabled indicative fare levels for the trunk route. No decision was reached on precise fare levels. However both delegations agreed that a third/fourth freedom regime, based as it was on the provision of total capacity closely related to total true origin/destination market demand which enabled the achievement of high seat factors, would permit carriers to offer new fares at significantly reduced levels. These would be of the order tabled by the Australian delegation and would be consistent with commercially viable carrier operations.
The delegations agreed that the proposed regime offered a more rational and efficient means of meeting the requirements for both low cost fares and on demand services than the present arrangements or than any other arrangements which had so far been formally proposed.
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