CONFIDENTIAL
LOSS OF 5TH FREEDOM REVENUES.
(1)
THE REDUCTION OF CPA 5TH FREEDOM OPERATIONS THROUGH INDONESIA AND MALAYSIA WOULD GREATLY EXACERBATE AN ALREADY UNSATISFACTORY 5TH FREEDOM BALANCE BETWEEN CPA AND MAS.
(1) THEY HOPE THAT THE EFFECT ON THE CPA/GARUDA EARNINGS BALANCE WOULD BE SUFFICIENTLY FAVOURABLE AS TO ALLOW THE RELAXATION OR COMPLETE WITHDRAWAL OF THE PRESENT SEAT LIMITATION-
SIN/JKT. V.V.
E. FARES.
CPA ARE STILL AWAITING NEWS FROM QANTAS AS TO WHEN THEY WILL
BE READY TO HOLD AN EXPERTS MEETING TO CONSIDER THE FINE DETAILS OF THE FARE PACKAGE. HOWEVER, THEY HAVE NO FUNDAMENTAL QUARREL WITH THE FARES AS PRESENTLY TABLED.
3. HONG KONG GOVERNMENT VIEWS.
A. GENERAL.
WITH REGARD TO CPA'S FEAR OF ASEAN REACTION, INDICATIONS SO FAR HAVE NOT GIVEN CAUSE FOR CONCERN. WE CONSIDER IT UNLIKELY THAT
ACCEPTANCE OF A 3/4TH FREEDOM REGIME WOULD AFFECT THE ATTITUDE OF THIRD NATIONS OTHER THAN SINGAPORE. SINGAPORE WOULD BE A DIFFICULTY IN THAT ATTEMPTS TO CUT SIA BACK TO REDRESS EXISTING AND FUTURE IMBALANCE (PARA.2.A(111) ABOVE) COULD THREATEN THE WHOLE VIABILITY OF SIA. ADDITIONALLY, THE POSSIBILITY CANNOT BE
DISCOUNTED OF ASEAN NATIONS GANGING-UP TO PRESENT A UNITED FRONT. IN THIS EVENT, WE ARE CONCERNED TO PRESERVE OVERFLYING RIGHTS IN
RESPECT OF INDONESIA IN PARTICULAR.
B. HONG KONG-EAST AUSTRALIA ROUTE.
(1) WE CONSIDER THAT A REDUCTION OF FREQUENCIES ON THE ROUTE WOULD NOT HAVE ANY DRAMATIC EFFECT ON CPA AS IT IS UNDERSTOOD THAT THEY WOULD HAVE SWITCHED TO B747 SERVICES ANYWAY AND OPERATED 3 X B747 PLUS 2 OR 3 X B707, NOTWITHSTANDING THE ICAP PROPOSALS. THERE SHOULD NOT BE A DIVERSION OF TRAFFIC TO 6TH FREEDOM CARRIERS IF THE QANTAS ESTIMATE OF FIFTY EIGHT PERCENT SEAT FACTOR IS CORRECT, BUT WE SERIOUSLY DOUBT THE ABILITY OF AIRLINES TO ESTIMATE.
TRAFFIC SO ACCURATELY IN A VERY CHANGED ENVIRONMENT.
3 - CONFIDENTIAL
(II) ALTHOUGH