(iii)
(iv)
(v)
Australians as an addition rather than an integral part of the air service arrangements.
The possibility of criticism from the Americans. There is a sharp difference in concept between the Australian proposals and the more liberal line adopted by the Americans. The Australians do not think that the Americans will accept their proposals for similar arrangements on the Australia/USA route. There is little or no risk of loss of traffic by American carriers through diversion from Australia/USA/UK to the direct Australia/UK route because the number of passengers who travel by the former is very small; they do so for their own reasons and price is not the major consideration. We could come in for some criticism from the Americans if we accepted the proposals, even if it is no business of theirs, but HM Embassy in Washington see no serious implications for bilateral UK/USA air service relations. The Embassy believe that the US's primary concern will probably be to use its own considerable bargaining power to resist the introduction of similar restrictive regimes in its own bilateral air services agreements.
We have considered with BA the possibility that this kind of arrangement may spread elsewhere in the world. Having accepted it on one route, we could be faced with demands from other countries for similar arrangements. We doubt however whether this would happen on a significant scale. content to take this risk, even though they earn 6% of their revenue (£40m) from 5th freedom traffic, i.e. traffic which does not begin or end its journey in the UK or its dependencies.
BA are
The most serious possible disadvantage if we accept the Australian scheme is if third countries react adversely. All the mid-point countries in SE Asia and India would be affected in varying degrees. Except for Singapore, the Australians argue that the scheme will bring compensating advantages to offset any loss of passengers, of tourist revenue and of frequency of flights to Australia and to the UK, which result from the exclusion of 5th/6th freedom traffic rights and reductions of services. Intermediate countries reaction however will depend on how seriously they think they will be affected and how responsive they are to appeals eg to ASEAN solidarity, to North/South considerations from those genuinely affected above all, from Singapore.