CODE 18-77
Mr McLaren
CONFIDENTIAL
Reference..
fridi Jal
RECEIVED IN RPG Q`RY NG.
1 1 MAY 1979
OFFICER
Sig
INDEX
PA
AIR SERVICES: HONG KONG/AUSTRALIA
1.
As you are probably aware, the Australians have recently adopted a radical new approach to air services, under which all services between Australia and other countries are to be on an end-to-end basis, with traffic limited to Qantas and the carrier of the country concerned in each case. Agreement was reached
on this basis with the UK and has made possible a very substantial reduction in UK/Australia fares since February.
2. Such an agreement however rules out stops at points in between. Since such a substantial proportion of the traffic to and from Australia is with the UK, the UK/Australia agreement has parti- cularly hit countries in between: the fact that they can have their own end-to-end agreements is no compensation since the volume of traffic involved in much less than the stop-over traffic on the Australia/UK route. Singapore has been worst hit, and has enlisted the support of the other ASEAN countries in protesting strongly. As I understand the situation (our file on the subject, although voluminous, is by no means complete), the Singaporeans are now trying to negotiate Singapore/Australia and Singapore/UK fares at a level that, although involving some penalty compared with the direct Australia/UK fare, will still be low enough to attract reasonable stop-over business.
3.
Hong Kong, in theory, is in the same boat, but is not so badly off because there is a reasonable amount of end-to-end traffic. In January, they reached agreement with the Australians on a new fares package for Hong Kong/Australia flights, involving substantial reductions. It was agreed with the Australians that the details should not be published pending agreement between Australia and the ASEAN countries. But the Australians compounded their own problems by leaking the new Hong Kong fares themselves. As far as I can make out, however, this does not create any problem for Hong Kong except that, now that details of the new fares are known, they are understandably anxious to bring them into effect.
11 April 1979
!).&. Chaill
W E Quantrill
Hong Kong and General Department
CONFIDENTIAL