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LOAD FACTOR FROM 88% IN 1978 TO 71% IN 1979. WE FULLY UNDERSTOOD THE POLITICAL PRESSURES ON THE US AND SAID OUR MAJOR PROBLEM WAS TRANSFER OF EXISTING SERVICES TO GATWICK AND WE WERE DISAPPOINTED THAT THEY HAD NOT RESPONDED TO THE OFFER TO CONSIDER THEIR REQUEST IN RETURN FOR A PACKAGE FOR TRANSFER OF US EXISTING SERVICES TO GATWICK. FOR THE FIRST TIME THE US SIDE SEEMED TO APPRECIATE FULLY OUR INSISTENCE ON THIS AND BOTH STATE AND CAB SEEMED TO
SHOW A GENUINE WILLINGNESS TO SEE WHETHER A PACKAGE COULD BE FOUND. WE STRESSED FLEXIBILITY BUT THE NEED FOR A CORE OF GATWICK SERVICES.
AT A MASSPORT RECEPTION ON CAPITOL HILL ON TUESDAY EVENING MR C'NEILL
AND OTHER MASSACHUSETTS POLITICAL FIGURES PRESSED THE UK DELEGATION FURTHER BUT WITHOUT TOO MUCH HEAT. WE EMPLOYED THE SAME ARGUMENTS AS IN THE DELEGATION MEETING: AND IN PARTICULAR EXPRESSED OUR WILLING-
NESS TO CONDSIDER A REASONABLE DEAL.
4. OTHER ITEMS
(A) THE US ASKED US TO RE-CONSIDER THE PROHIBITION THAT US AIRLINE FLIGHTS SERVING HONG KONG SHOULD NOT MAKE A STOP FOR ANY PURPOSE
IN THE PRC (ANNEX 2 SECTION 5 NCTE 8). WE SAID THAT WE WOULD CONSULT THE HONG KONG GOVERNMENT AND WOULD HOPE TO GIVE AN ANSWER AS SOON
AS POSSIBLE.
(B) UNDER THE PROVISIONS OF ARTICLE 2(5) THE US ASKED FOR PAN AM'S RTW SERVICE TO HAVE TRAFFIC RIGHTS AT BOMBAY IN VIEW OF THE PROBLEMS
AT TEHERAN. WE DISCUSSED THIS WITH BA REPRESENTATIVES AND CONCLUDED THAT WE HAD A COMMITMENT TO GIVE SUCH ADDITIONAL TRAFFIC RIGHTS
AS WOULD KEEP THE SERVICE VIABLE FOR SO LONG AS OPERATIONS AT
TEHERAN WERE PHYSICALLY IMPOSSIBLE. WE SAID PAN AM COULD THEREFORE
HAVE TRAFFIC RIGHTS BETWEEN LONDON AND BOMBAY WITH IMMEDIATE
EFFECT UNTIL 31 MARCH 1979, BUT THAT IN THE MEANTIME PAN AM SHOULD REVIEW THE POSSIBILITIES OF SERVING ONE OR MORE OF THE FIFTH FREEDOM POINTS ALREADY AVAILABLE (EG KARACHI, ISTANBUL). WE DID NOT ACCEPT THAT WE HAD ANY OBLIGATION TO COMPENSATE PAN AM FOR DIPLOMATIC
OR ECONOMIC ACTION AGAINST THE AIRLINE BY THE IRANIAN GOVERNMENT
.CR BY A DOWNTURN IN THE TRAFFIC AT TEHERAN.
(C) IAS EXEMPTION SHOULD BE ISSUED 20 FEBRUARY BY CAB: MEANWHILE WAIVERS FOR GENERAL. CARGO CHARTERS WILL BE DEALT WITH BY FARMER ON THE TELEPHONE.
(D) LAKER AIR TRAVEL'S VERTICAL INTEGRATION WITH LAKER AIRWAYS PRODUCED THE EXPECTED QUOTE DUE PROCESS UNQUOTE REACTION. WE PRESSED HARD FOR AN EARLY FAVOURABLE DECISION IN THE LIGHT OF THE RECENT CAB
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