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CONFIDENTIAL
FM WELLINGTON 012330Z FEB 79
TO IMMEDIATE CANBERRA
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CONFIDENTIALKK (84!!.
TELEGRAM NUMBER 4 OF 2 FEBRUARY
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INFO F C O KUALA LUMPUR, SINGAPORE, MANILA, JAKARTA, BANGKOK, HONG KONG (FOR GOVERNOR AND BCARFE).
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YOUR TELNO 75 TO FCO: UK/AUSTRALIA AIR SERVICES DISCUSSIONS,
1. AT THEIR MEETING IN CANBERRA LAST WEEK THE BRITISH AND AUSTRALIAN TEAMS AGREED ON A PREFERRED SOLUTION TO THE ASEAN STOPOVER PROBLEM: BUT THERE WAS INSUFFICIENT TIME TO AGREE HOW BEST TO PLAY THE HAND AND IT WAS IN ANY CASE IMPOSSIBLE TO JUDGE WHERE, WHEN AND BY WHOM THE HAND SHOULD BE PLAYED.
2. AS THE AUSTRALIANS KNOW, WE HAVE FOR SOME TIME BEEN COMMITTED TO TALKS WITH MALAYSIA IN KUALA LUMPUR COMMENCING 5 FEBRUARY.
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IN THE ABSENCE OF A RESPONSE SO FAR TO THE INVITATION IN MR PEACOCK'S REPLY TO DR MOCHTAR, THIS WILL NOW CLEARLY BE THE FIRST MEETING BETWEEN EITHER PARTY AND AN ASEAN COUNTRY. THESE TALKS WILL, EMBRACE A FULL-SCALE REVIEW OF UK/MALAYSIAN AIR SERVICES ARRANGEMENTS. THE IMPACT OF CAP ON TRAFFIC FLOWS TO, FROM, AND THROUGH MALAYSIA IS BOUND TO BE A VERY IMPORTANT FACTOR, AND SINCE THE FULL IMPLEMENTATION OF I CAP WILL RE-ACT IN MALAYSIA'S FAVOUR SO FAR AS MAS TRAFFIC BETWEEN KUALA LUMPUR AND LONDON IS CONCERNED IT SEEMS LIKELY THAT THE MALAYSIANS WILL BE KEEN TO NEGOTIATE WITH US ON
THAT BASIS.
36 THE MAJOR FACTORS AFFECTING MAS'S UK/MALAYSIA TRAFFIC WILL OF
COURSE BE THE REDUCTION OF SIA'S FREQUENCIES BETWEEN SINGAPORE AND LONDON AND THE WITHDRAWAL OF QANTAS FROM THE KUALA LUMPUR/LONDON SECTOR BUT THE LEVEL OF THE STOPOVER FARE BETWEEN AUSTRALIA AND THE UK AND ITS EFFECT ON THE AMOUNT OF STOPOVER TRAFFIC WILL ALSO BE A FACTOR WHICH MUST BE TAKEN ACCOUNT OF. ROGERS FEELS IT WOULD BE DIFFICULT NOT TO GIVE THE MALAYSIANS SOME INDICATION OF THE QUOTE IDEAS UNQUOTE REFERRED TO IN THE JOINT PRESS STATEMENT. (YOUR TELNO 74), HE HAS IT IN MIND TO EXPLAIN TO THEM THE ALTERNATIVE BASES WHICH MIGHT BE ADOPTED AND THE SORT OF FIGURES TO WHICH THESE WOULD LEAD. THE PREFERRED ALTERNATIVE MIGHT THEN BE ADOPTED AS A QUOTE WORKING HYPOTHESIS UNQUOTE WHICH WOULD ENABLE THE MALAYSIANS TO SEE FOR THEMSELVES ITS BENEFIT TO THEM.
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4. ROGERS