that, following the introduction of cheaper fares between Australia and Singapore, suggest that Singapore's net loss on tourism from Australia could be as low as £2m per year. The comparable loss on tourism from Europe is not quantifiable but it could be significant. Of the other countries, in air service terms, Malaysia should actually improve her present position, largely at the expense of Singapore, but she will need convincing of this. Her first reaction based on the immediately apparent loss resulting from MAS's exclusion from the through Australia-London traffic is likely to be sharp; and this could prejudice our chances, at least for the time being, of getting agreement on Concorde supersonic overflight of their territorial waters. She will probably see the Australian scheme as a deliberate attempt to inhibit her ambitions for MAS's expansion which she explained to a UK delegation in London in May. We hope however that when the full implications of the proposals are explained to her that she will realise the benefits, both real and potential. Singaporean dissatisfaction might lead them (however unfairly) to vent their disappointment on the United Kingdom. Bilateral relations are close and cordial at the highest level and Singapore is our best market in South East Asia. The Singapore Government have been
Any helpful to us in commercial (non-aviation) matters. temporary loss of goodwill could affect the local prospects for British business. Similar commercial considerations would apply in respect of Malaysia if her reaction was adverse.
(b) ASEAN solidarity and North/South considerations
The Australians played down the risk that, irrespective of their separate air service/tourist interest, the countries concerned would gang up to block the scheme by a total refusal to cooperate eg by denying overflying and landing rights (the ability to overfly Indonesia is particularly important). They stressed the overriding domestic political importance of low fares (they estimate that around 10 million Australians have relatives in the UK) and their belief that third countries could be brought to recognise the benefits that could accrue to them under the scheme. They also argued that the interests in this context of the individual members of ASEAN are so divergent that ASEAN will not be able to maintain a common position. The Australians may well turn out to be right but there is some risk that those most affected (Singapore) or those that think they stand to lose will win support against the scheme by appeals to ASEAN solidarity or North/South considerations. Mr Lee Kuan Yew has already taken the line in public: "If the developed world chooses to bypass the undeveloped parts of the world I can only see it accentuating the divide (between them).