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The support in Hong Kong for Cathay had been expected from the start but this was not the only reason for BCAL's subsequent support of the 3/4 carrier regime. With Cathay operating from Hong Kong, a market in which they had considerable experience, and with B.Cal operating at Gatwick with their expertise and knowledge of Europe it was expected that there would be a more rapid growth in the total market. Although Hong Kong was seen as a base for a future limited route network in the Far East, the present application stood on its own and the possibility of further extensions would only be explored if the Hong Kong application was granted.
Mr Thomson said that he would be happy if the CAA granted similar licences to those granted by the ATIA. B.Cal would not be dependent on Cathay for servicing and maintenance facilities at Hong Kong airport, although it was realised that the handling company they proposed to use and Cathay were both members of the Swire Group of companies. It was expected that discussions would take place between both airlines regarding possible mutual assistance.
Mr Thomson agreed that B.Cal would prefer the CAA not to impose any capacity restrictions or any directions as to frequency in its decision, and to rely on the operators to regulate themselves, with the Authority reserving its regulatory powers to counter any abuses that might occur. The actual frequency operated by B. Cal and CPA would ultimately be dependent on the demands of the market.
A two carrier regime of CPA and BA whilst providing a carrier specialised in the development of traffic at both ends of the route would not provide the necessary element of competition to stimulate growth especially in the Hong Kong market that would be present if B.Cal was to be licensed instead of Cathay.
Mr Bebchick said that, although there was a possibility that BCAL might apply for one further point, at the moment Manila was the only additional point beyond Hong Kong not served by BA that seemed likely to be commercially rewarding, and was being studied in the context of through traffic London-Manila as opposed to Hong Kong-Manila. The application that had been submitted was for variation of an existing licence so that Manila and Hong Kong would be added as optional/ alternative terminal stops and Kuwait, Dhahran and Dubai would be added as optional stops. The projected service to Manila would increase the revenue from long haul traffic and would in the intermediate three to five year term enable the frequency and available capacity over the Hong Kong-London route to be increased more rapidly. He thought it likely that seat availability to Hong Kong would remain constant and that any reductions which resulted from the Manila service would be offset by a corresponding reduction in seat availability to Middle East originating traffic.
If B.Cal was operating in competition with Cathay and BA, it was expected that the fares offered would be competitive although it would be open to the CAA to approve any innovative fares that were filed by the carriers. If Laker were also licensed B.Cal would be able to compete with Lakers £309 economy fare by filling the aircraft with one class of passenger which, whilst providing an effective response to Laker, would only emulate the limited service they proposed and would not serve all sectors of the market.
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