435
GR 575
THEEDIATE
DESKBY 251000Z
HER/CAT A
FM HONG KONG 259915Z
CONFIDENTIAL
CONFIDENTIAL
DESKBY 251200Z
AKKRRY/1. RECOVE
INDEX
25 JUL 1978
OFFLER
PA
ль No las
14
TO IMMEDIATE F.C.0 TELNO.920 OF 25 JULY 78, INFO IMMEDIATE D.O.T (FOR ROGERS, CAIR),
PRIORITY PEKING.
PEKING TELNO.452 : AIR SERVICES AGREEMENT.
$
2
HESE
Agreed with fres that we accept Abe panis 14,5+6. They
passię auš
DOT.
کا
PA G25/
See (439
рабаў
1. OUR GENERAL VIEWS ON THE AIR SERVICES AGREEMENT QUESTION
WERE PUT ON RECORD IN HONG KONG SAVING TELEGRAM NO.42 OF 7 APRIL,
FOLLOWING THE VISIT HERE EARLIER THIS YEAR OF ROGERS(D.0.T), THE FOINTS IN THAT TELEGRAM REMAIN VALID. HOWEVER, WE SEE NO OBJECTION TO MR DELL RAISING THE SUBJECT WITH THE CHINESE PARTICULARLY IF, AS SUGGESTED IN PEKING'S TEL UNDER REF, THERE ARE NEW SIGNS OF FLEXIBILITY IN THE CHINESE POSITION.
2. AS POINTED OUT IN OUR SAVING TELEGRAM, CPA'S EARNINGS FROM THE TAIWAN ROUTE ARE VERY SUBSTANTIAL. (THE FIGURE FOR TWELVE
MONTHS TO 31 MARCH THIS YEAR WAS ES DOLLARS EIGHTY MILLION.
1.E ABOUT TWENTY SEVEN PERCENT OF THEIR TOTAL CARNINGS). IT IS
NOT EASY TO ASSESS PRECISELY WHAT MOVES BY H.M.G WOULD PUT THESE
EARNINGS AT RISK. WE WOULD PREFER NOT TO MAKE A JUDGEMENT ON SUCH AN IMPORTANT ISSUE UNTIL WE CAN WEIGH ALL THE FACTORS. WE ARE DOUBTFUL, INCIDENTALLY, WHETHER THE 1976 SUGGESTION REFERRED TO IN PEKING'S TEL UNDER REF WOULD ACTUALLY HOLD WATER. A NUMBER OF AIRLINES HERE, WHICH ARE CLEARLY NATIONAL'', ARE REGISTERED AS LIMITED COMPANIES.
3. ONE POINT WHICH WE WILL NEED TO KEEP FIRMLY IN MIND IS THE
GAIN TO BE SET AGAINST THE RISK TO CPA. IT WOULD BE USEFUL TO KNOW WHETHER BRITISH AIRWAYS ARE MORE KEEN THAN PREVIOUSLY ON A ROUTE TO PEKING AND WHAT EARNINGS THEY HOPE TO MAKE FROM IT. ANOTHER FACTOR IN THE ASSESSMENT IS THAT CURRENT DEVELOPMENTS IN CHINA AIRLINES (CAL), COUPLED WITH THE EXPANSION OF THEIR FLEET, SUGGEST THAT HONG KONG IS NOW ECONOMICALLY LESS IMPORTANT
TO THEN THAN IT WAS. IF SO THIS INCREASES THE POTENTIAL RISK
CONFIDENTIAL
/TO CPA.