306)
CONFIDENTIAL
DEPARTMENT OF TRADE
1 VICTORIA STREET
LONDON SW1H DET
Telephone Direct Lina
Switchboard
3229
01-215 01-215 7877
J Northover Esq
MEAD
Foreign & Commonwealth Offide
Ct George Street
London SW1
184
HKK 184
Dean The,
5 July 1979
DESK OFFICER
MIDEX
PA
302
As I told you on the telephone last night, our Parliamentary Secretary, Hr Tebbit, is prepared to conduct air services discussions with the Malaysian Minister of Transport on: 16 July, as requested in Kuala Lumpur telegram no.241 of 3 July, My Secretary of State will also be glad to receive the Malaysian Minister for a short introductory meeting at the beginning of the morning. I should be grateful if a telegram on the lines of the enclosed draft could go off to Kuala Lumpur as soon as possible: I leave it to you to decide whether it should be repeated to any other posts if your Secretary of State is not yet back in London.
2 If the issue were purely one of civil aviation policy, our preference would be to stand firm on what has already been offered to the Malaysians and risk a row, But in view of the approach made by the Malaysian Prime Minister to your Secretary of State we accept that the issues may have to be looked at in a wider perspective. If you feel that, because of the importance of our relations with Malaysia in other contexts, we should move further still towards the Malaysian position on air services, we are prepared to look again at allowing MAS to retain their present fifth freedom rights in terms of existing capacity (ie up to 1048 seats a week) beyond Hong Kong to Taipeh and Tokyo. But at the same time one has to recognise that this would be very unwelcome in Hong Kong. Hong Kong seem unlikely to agree voluntarily: the concession would have to be imposed on them, and they could be expected to go on grumbling for some time. However, if the Malaysians are prepared to be reasonable in other ways, I think that there is a fair chance that this concession could achieve a settlement. We see no justification for improving our offer on frequencies on the trunk route,
3 I am holding a meeting here at 11.15 a.m. next Monday morning, 9 July, to consider our approach further, and should be glad if representatives of MEAD, SEAD and your Hong Kong and Ceneral Department could attend. I envisage that after this meeting ve would put a submission to our Ministers in time for Hong Kong to be warned in advance if we intended to make any concession to the Malaysians at their expense.
CONFIDENTIAL.