269
CONFIDENTIAL
IR 565
PRIORITY
CYPHER CAT A
FM HONG KONG 080705Z
CONFIDENTIAL
TO PRIORITY F C O TELNO 704 OF 8 JUNE 1978
INFO HONG KONG GOVERNMENT OFFICE LONDON.
UK/PAPUA NEW GUINEA AIR SERVICES.
Red
PA
HKCK 1841
O JUN 1978
319
MO. 51
INDE
PA
Nolal
RE
FURTHER TO MY TELNO 622 OF 16 MAY, CPA HAVE SET CUT TWO POSSIBLE
FORMS OF PROFIT SHARING ARRANGEMENTS FOR CONSIDERATION:-
A. A PROFIT/LOSS SYSTEM.
B. THE CPA/JAL FIXED FORMULA.
PROFIT/LOSS SYSTEM.
RY
Taken
2. LEVEL OF OPERATING COSTS, INCLUDING APPROPRIATE SHARE OF
DEPRECIATION AND OVERHEADS, WOULD BE AGREED BETWEEN THE AIRLINES
AT THE OUTSET. IN THE CASE OF THE HKG/MNL/POM VV ROUTE, CPA CALCULE TOTAL COST AT HK DOLLARS 282,502 PER ROUND TRIP. THIS FIGURE INCLUDES COSTS ASSOCIATED WITH CALLING AT MANILA: IF THESE ARE EXCLUDED THE TOTAL COSTS FOR THE HKG/POM VV ROUTE ARE HK DOLLARS 240,000 PER ROUND TRIP.
3. CUTTING ANG INTO THIS TYPE OF POOL COULD TAKE THE FORM OF BOTH
CPA AND ANG SHARING 50/50 ANY REVENUE SURPLUS OR SHORTFALL IN ANY MONTH, COMPARED WITH THE AVERAGE COSTS PER ROUND TRIP OF HK DOLLARS 240,000. THIS WOULD LEAVE CPA TO RECOUP THE HK DOLLARS 42,500 FROM HKG/MNL VV TRAFFIC.
4: INCREASES IN ANY COST, INGREDIENTS WOULD BE NOTIFIED BY CPA
TO ANG PRIOR TO TAKING EFFECT. REVENUE WOULD BE THE ACTUAL NET INCOME TO CPA FROM PASSENGERS, CARGO, MAIL AND EXCESS BAGGAGE.
5. TO ILLUSTRATE THE POINT, CPA WOULD NEED TO CARRY 205 ONE-WAY PASSENGERS (IGNORING OTHER LOAD) TO COVER THE TOTAL COSTS.
CONFIDENTIAL
| CPA/TAL