388
900 CYPHER CAT A
FM OTTAWA 211215Z
CONFIDENTIAL
CONFIDENTIAL IAL
PA
Akk184/1
INDEX
TO ROUTINE FCO TELNO 640 OF 21 OCTOBER 1978 N INFO HONG KONG (FOR GOVERNOR AND BCARFE).
MY TELNO 633 UK/CANADA AIR SERVICES NEGOTIATIONS.
TRO. 51
OFFICER
PA
REGISTRY
Action Taken
1. THE SECOND ROUND OF TALKS TOOK PLACE HERE FROM 16 TO 19 OCTOBER. THE ATMOSPHERE HAS BEEN FRIENDLY AND CONSTRUCTIVE. DESPITE THE DISCOURAGING ATTITUDE ADOPTED BY THE CANADIAN MINISTER OF TRANSPORT AT HIS MEETING WITH THE SECRETARY OF STATE FOR TRADE ON 11 OCTOBER THE CANADIAN TEAM HAVE SHOWN A WILLINGNESS TO CONSIDER REASONED
ARGUMENTS FROM OUR SIDE AND TO WORK TOWARDS AGREED SOLUTIONS OF THE PROBLEMS OUTSTANDING.
2. ON THE QUESTION OF BRITISH AIRWAYS' ACCESS TO WESTERN CANADA, DISCUSSION CENTRED ROUND THE JOINT STUDY BY BA AND AIR CANADA OF THE RESULTS OF PROJECTING THE EXISTING AIR SERVICES ARRANGEMENTS FORWARD TO 1981/2 WITHOUT ANY CHANGE IN THE ROUTE STRUCTURE. THE UK TEAM WAS ABLE TO DEMONSTRATE THAT THE RESULTS
INCLUDED POOR SERVICE TO THE TRAVELLING PUBLIC (WITH A LARGE NUMBER OF PASSENGERS BETWEEN THE UK AND WESTERN CANADA FORCED TO INTERLINE IN EASTERN CANADA), EXTRA COSTS TO THE AIRLINES (INCLUDING A LARGE ADDITIONAL CAPITAL OUTLAY BY AIR CANADA CN NEW AIRCRAFT) AND POLITICAL DIFFICULTIES IN EASTERN CANADA (WHERE AIR CANADA WOULD BE FORCED TO REDUCE CAPACITY OPERATED TO MINIMAL LEVELS). THE CANADIAN TEAM WERE TAKEN ABACK BY THIS ANALYSIS AND HAD NO EFFECTIVE COUNTER-ARGUMENTS. THEY WERE FURTHER DISCOMFITED WHEN ROGERS POINTED OUT, TO THEIR EVIDENT SURPRISE, THAT EVEN IN THE SUMMER OF 1979 AIR CANADA WOULD HAVE TO REDUCE FREQUENCY ON MONTREAL-LONDON
TO 1 PER WEEK OR ON TORONTO-LONDON TO LESS THAN A DAILY IF THEY
WERE TO MOUNT ADEQUATE CAPACITY FROM WESTERN CANADA WHILE KEEPING
WITHIN THE EXISTING CAPACITY--SHARING ARRANGEMENTS.
CONFIDENTIAL
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