10 HONG KONG
GR 380
CONFIDENTIAL
FM DTI 111340Z MAY 79
TO IMMEDIATE HONG KONG (GOVERNOR)
TELNO ALLOT 49 OF 11 MAY
INFO HONG KONG (BCARFE) KUALA LUMPUR
UK/MALAYSIA AIR SERVICES
MIPT
HKEK 184/1 RECEIVED WA #CALERY NO. 51 14 MAY 1979
DESK Ser
INDEX
по
No Jos
239
QUOTE
POSSIBLE GUIDELINES TO BE GIVEN BY THE GOVERNMENTS TO THE AIRLINES
ON BOTH SIDES
1. THE OPERATION OF SERVICES ON THE ROUTES BOTH BETWEEN THE UK
AND MALAYSIA AND BETWEEN HONG KONG AND MALAYSIA SHOULD BE REGARDED
AS A CO-OPERATIVE COMMERCIAL EFFORT ON THE PART OF THE AIRLINES
CONCERNED TO MEET THE NEEDS OF THE TRAVELLING PUBLIC AT THE LOWEST PRICE CONSISTENT WITH AIRLINE PROFITABILITY. NEEDS OF THE CARGO
MARKETS WILL ALSO BE TAKEN INTO ACCOUNT.
2. THE AIRLINES SHOULD AMEND THEIR COMMERCIAL AGREEMENTS WITH
THIS IN MIND.
3. AN ESSENTIAL FEATURE OF THESE COMMERCIAL AGREEMENTS SHOULD BE
THE ARRANGEMENT OF SCHEDULES IN SUCH A WAY AS TO MAXIMISE THE
SPREAD OF THE SERVICES PROVIDED TO THE PUBLIC.
4. ANOTHER ESSENTIAL FEATURE IS THAT THE EFFECTIVE CAPACITY
(1.E. THE SEATS AVAILABLE FOR PASSENGERS TRAVELLING ON A TOD
BASIS BETWEEN LONDON AND KUALA LUMPUR AND BETWEEN HONG KONG
AND KUALA LUMPUR) SHOULD BE CLOSELY RELATED TO THE DEMANDS FOR 3RD/4TH FREEDOM TRAVEL BETWEEN THE POINTS CONCERNED. TRAFFIC
PREDICTIONS SHOULD BE REVIEWED AT REGULAR INTERVALS BY THE AIRLINES JOINTLY AND A JOINT FORECAST OF REQUIREMENTS ESTABLISHED.
5. IN CONVERTING THESE TRAFFIC FORECASTS INTO THE CAPACITY TO
BE MOUNTED, THE PRINCIPLES TO BE OBSERVED SHOULD BE:-
A. AN EQUALITY OF EFFECTIVE CAPACITY BY BOTH PARTNERS:
B. THE SEAT FACTORS TO BE ASSUMED FOR RELATING CAPACITY TO
DEMAND SHOULD BE THE SAME AS THOSE USED FOR FARE CALCULATIONS (SEE PARA 6 BELOW).
6. IN RECOMMENDING FARES TO THEIR GOVERNMENTS THE AIRLINES SHOULD SO FAR AS PRACTICABLE RELATE EACH FARE TO THE RELEVANT COST. THUS, FOR EXAMPLE, FARES OFFERED ON CHARTER TYPE CONDITIONS AT HIGH SEAT FACTORS SHOULD BE SUBSTANTIALLY LOWER THAN THE CORRESPONDING QUOTE ON DEMAND UNQUOTE FARES. UNLESS THERE ARE GOOD REASONS TO THE CONTRARY, THE FORMER SHOULD BE BASED ON THE SAME SORT OF SEAT