GR 520
CONFIDENTIAL
CONFIDENTIAL
390
MKK 184)
RM JAKARTA 299400Z AUG
TO IMMEDIATE FCO
TELEGRAM NUMBER 273 OF 29 AUGUST
DESK
INDER
INFO IMMEDIATE HONG KONG (FOR GOVERNOR AND BCARFE).
389
MIPT: UK/INDONESIA AIR SERVICES.
A
MY
RI SAKOTTA'S CURRENT DIFFICULTIES DIRECTLY REFLECT WIWEKO'S RASH PURCHASING POLICY OVER THE LAST TWO YEARS. GARUDA HAVE CRDERED FOUR B7475 AND TWO FURTHER DC19S WITH NO THOUGHT GIVEN TO THEIR UTILISATION. THE DESCRIPTION OF GARUDA'S 'REQUIREMENTS’’ CONTAINED IN HONG KONG TEL NO 1175 REFLECTS ONLY ONE SCHOOL OF THOUGHT WITHIN THE COMPANY. CPA'S LOCAL MANAGER BELIEVES THEY ARE STILL EXAMINING WHETHER OR NOT TO COMBINE THE FIFTH FREEDOMS INVOLVING SINGAPORE AND TOKYO WHICH THEY CLEARLY HOPE TO EXTRACT FROM US, AND THEREFORE THEIR FREQUENCY REQUIREMENTS MIGHT NOT BE AS EXTRAVAGANT AS SUGGESTED BY HONG KONG. ON THE OTHER HAND, RISAKOTTA ADMITTED THAT, IN THE LONG TER, A ROUTE TO THE US THROUGH HONG KONG WOULD BE ADVANTAGEOUS''. IT IS UNCLEAR WHETHER GARUDA ARE DELIBERATELY EXAMINING HONG KONG ISSUES SLOWLY TO PRESSURIZE CPA OVER ITS B747S. CPA'S MANAGER THINKS THIS MAY BE THE CASE, BUT GARUDA HAVE NEVERTHELESS SUGGESTED AN AIRLINE-LEVEL DISCUSSION TO TAKE PLACE EARLY IN SEPTEMBER,
2. WE SHOULD BE GRATEFUL FOR MORE BACKGROUND ABOUT CPA'S LIKELY REQUIREMENTS. DURING HIS TALKS HERE IN MARCH, BCARFE SAID IT WAS LIKELY THAT CPA WOULD WITHDRAW FROM THE ROUTE TO PERTH THROUGH JAKARTA BECAUSE OF ICAP AND MAS'S COMMERCIAL PRACTICES. AT A MEETING WITH GARUDA ON 17 MAY, CPA REPRESENTATIVES ALSO INDICATED THAT THEY MIGHT BE OBLIGED TO TERMINATE THE SERVICE BECAUSE OF AUSTRALIAN CONSIDERATIONS. IN THOSE CIRCUMSTANCES, WE HAD UNDERSTOOD THAT A ROUTE HONG KONG/KUALA LUMPUR/JAKARTA WAS UNLIKELY TO BE COMMERCIALLY ATTRACTIVE. WE AND CPA'S JAKARTA MANAGER WERE THEREFORE SURPRISED TO LEARN THAT CPA HOPED TO INCREASE THEIR CAPACITY ON THAT ROUTE SUBSTANTIALLY. MOREOVER WE- UNDERSTAND THERE HAS BEEN NO GROWTH IN HONG KONG/JAKARTA TRAFFIC SINCE INDONESIA'S DEVALUATION OF 15 NOVEMBER 1978 AND CPA'S MANAGER BELIEVES AS MUCH AS 53 PERCENT OF GARUDA'S EARNINGS ARE
/GROUPS
CONFIDENTIAL