Bab
CPS 500
RIORITY
CYPHER/CAT A
FM FCO 011709Z
CONFIDENTIAL
CONFIDENTIAL
301
HKK 184 11.- fK
TADEX
No
-5.19 973
OFFICI
RE TRY
Action Taken
See 315
TO PRIORITY HONG KONG (GOVERNOR AND BCARFE) TELEGRAM NUMBER 430 OF 1 JUNE 1978
INFO BERNE AND OSLO (FOR ROGERS)
YOUR TELNO 658 : UK/SWITZERLAND AIR SERVICES TALKS
1. WE HAVE CAREFULLY CONSIDERED THE COMMENTS IN YOUR TELEGRAM UNDER REFERENCE ON OUR PROPOSALS FOR RECTIFYING THE PRESENT IMBALANCE IN UK/SWISS EARNINGS UNDER THE ASA, BUT WE REMAIN CONVINCED THAT OUR PRIMARY CONCERN MUST BE TO SEEK TO CORRECT SERIOUS IMBALANCES OF EARNINGS WHEREVER THEY ARISE. INDEED, THIS SELF-SAME OBJECTIVE CLEARLY GOVERNED THE APPROACH YOU ADVOCATED IN YOUR TEL NO 661 FOR DEALING WITH THE NOT DISSIMILAR PROBLEM OF THE REGIONAL CPA/SIA EARNINGS IMBALANCE.
2. IN THE UK/SWITZERLAND CASE, IT IS QUITE CLEAR THAT WITH A 3RD/4TH FREEDOM LOAD FACTOR OF ONLY 16 PERCENT, THE VOLUME OF SWISSAIR SERVICES TO HONG KONG IS FAR OUT OF LINE WITH THE REQUIREMENTS OF THE ASA THAT THE FACILITIES AVAILABLE ON THE AGREED SERVICES TO THE PUBLIC SHOULD BEAR A CLOSE RELATIONSHIP TO TRAFFIC REQUIREMENTS'', AND THAT ''THE AGREED SERVICES SHALL HAVE AS THEIR PRIMARY OBJECTIVE THE PROVISION OF CAPACITY ADEQUATE FOR THE CARRIAGE OF TRAFFIC DESTINED FOR OR COMING FROM THE TERRITORY OF THE CONTRACTING PARTY WHICH HAS DESIGNATED THE AIRLINE". (ARTICLE 3.1 AND 3.3 OF THE ASA). THIS WOULD BE THE CASE EVEN IF THERE WERE A BALANCE OF EARNINGS, BUT WITH THE SEVERE IMBALANCE (SWITZERLAND OUT-EARNING THE UK BY 2: 1), CONTINUATION OF THE PRESENT SITUATION WITHOUT SOME ADJUSTMENT IS OBVIOUSLY UNACCEPTABLE.
3. AS YOU WELL KNOW, SINCE THE TRAFFIC ON MANY ROUTES TO HONG KONG AND ESPECIALLY THOSE OF SWISSAIR, AS SO MUCH LESS THAN AVAILABLE CAPACITY, CUT-THROAT-COMPETITION HAS DEVELOPED,
CONFIDENTIAL
LEADING