CONFIDENTIAL
meeting with the Australians should not take place
before the Australians have approached certain third
countries about their proposals. I submit a draft.
Arguments
4.
What answer should be given to the Australians?
A
The joint paper sets out the arguments in detail. The
Australian proposal is mainly influenced by domestic pressure for
reduced air fares, particularly on the UK/Australia route.
charter solution would not suit Australian interests, since it
would make it harder to maintain viable and regular scheduled ser-
vices to any but the few` biggest cities. The Australians have
concluded that their needs can best be met by restricting UK/Australia traffic to BA and Qantas and by cutting out diversion to other car-
riers at-stop-over points en route. The estimated economic and
social advantage of such a scheme for the UK would be a reduction
in the lowest return fare from about £500 to £300 (but 70% of the
passengers are Australian) and a possible net increase in profit
by BA of some £5-6 million. The main difficulty lies in the effect
on other countries en route. We anticipate that all the countries
of South and South East Asia adversely affected would oppose the
scheme: they would consider joining together in opposition to it.
If several of them were prepared to do so they could even block
it. There may also be trouble from the Americans, and from the
French and the Dutch.
CONFIDENTIAL
15.