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CONFIDENTIAL
4. FUNDAMENTALLY, IT WOULD CERTAINLY NOT SERVE HONG KONG'S INTERESTS
TO HAVE ONLY CITY-PAIR SERVICES BY 3/4TH FREEDOM AIRLINES OPERAT AT HIGH SEAT FACTORS CARRYING LOW FARE PASSENGERS. HONG KONG NEEDS A BROAD SPECTRUM OF SERVICE STANDARDS OPRATING AT REASONABLE SEAT FACTORS AND APPROPRIATE FREQUENCIES ALSO TO PROVIDE FOR THE
NEEDS OF THE BUSINESS TRAVELLERS.
5. WITH REGARD TO THE HONG KONG/PERTH ROUTE, CPA HVE BEEN ASKED
TO CARRY OUT THE WORK REQUIRED BY YOUR TELNO 567 9% 20 JULY. OTHERWISE THEY HOLD TO THE VIEW THAT WITHOUT 5TH FREEDOM RIGHTS THEY COULD NOT VIABLY CONTINUE THE SERVICES. THIS WOULD MEAN THAT
AN IMPORTANT AVIATION LINK WOULD BE SEVERED FOR PURELY DOCTRINAIRE REASONS TO THE DETRIMENT OF THE HONG KONG AND WEST AUSTRALIAN
ECONOMIES.
6. WITH REGARD TO THE HONG KONG/EAST AUSTRALIA ROUTE, AN IMPORTANT NEW POINT WAS RAISED AT THE MEETING AND THIS CONCERNS TRAFFIC VARIATIONS, THE ROUTE IS SUSCEPTIBLE TO VERY LARGE SHORT TERM
PEAKS AND DIPS ON A DIRECTIONAL BASIS. THE AUSTRALIAN PROPOSALS WOULD RESULT IN PERIODS WHEN CAPACITY WOULD NOT BE AVAILABLE TO MEET DEMAND AND WOULD NOT THEREFORE BE IN THE BEST INTERESTS OF THE TRAVELLING PUBLIC,
7. ON THE QUESTION OF AIR FARES, WE AND CPA ARE KEEN TO ESTABLISH PROMOTIONAL FARES AND HOPE THAT THESE WILL GENERATE INCREASED TRAFFIC. HOWEVER, WE FAIL TO SEE WHY IT 13 NECESSARY TO ELIMINATE 5TH FREEDOM RIGHTS IN ORDER TO LOWER FARES AND INDEED, IT CAN BE ARGUED THAT THE REVERSE IS THE CASE. SO FAR AS EAST AUSTRALIA SERVICES ARE CONCERNED, CPA ALREADY OPERATE WITHOUT 5TH FREEDOM RIGHTS AND WOULD NATURALLY EXPECT TO OPERATE INCREASED
(NOT LESS) CAPACITY TO COPE WITH THE INCREASED TRAFFIC.
8. WITH REGARD TO THE AUSTRALIAN FARES PROPOSALS, WE SEE THAT THIS AS NOTHING MORE THAN AN OPENING BID WITHOUT ANY SUPPORTING
ANALYSIS AND, SINCE CPA HAVE ALREADY PUT THEIR PROPOSALS TO THE AUSTRALIANS IN CONNECTION WITH THE POLICY REVIEW, WE WOULD EXPECT THAT AIRLINE DISCUSSIONS WOULD HAVE TO BE HELD BEFORE FINAL PROPOSALS ARE MADE TO GOVERNMENTS, AT THIS STAGE, OUR INITIAL REACTIONS TO THE AUSTRALIAN FARES PROPOSALS ARE THAT 1
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