GXS 699
CONFIDENTIAL
PA PEKING 208137Z JUL 79
KBY 2903002
TO IMMEDIATE FCO
CONFIDENTIAL
TELEGRAM NUMBER 654 OF 20 JULY
INFO IMMEDIATE HONG KONG.
FOLLOWING FROM DELEGATION.
MY TELNO.657:
HKK 184/2
213
23 JUL1979
PA
See Ans
UK/PRC AIR SERVICES NEGOTIATIONS,
ROGERS' SEVERE HANDLING OF LU REPORTED IN TUR EVEIDENTLY
PAID OFF: SINCE LU WAS IN A MUCH MORE SUBDUED AND REASONABLE
FRAME OF MIND AT THE MEETING ON 19 JULY.
2
#
HE DID NOT AT ANY STAGE REVERT TO HIS SUGGESTION THAT THE REGIONAL ROUTES SHOULD BE OPERATED BY A LOCAL CARRIER FORMED SPECIALLY FOR THE PURPOSE TO OPERATE THESE SERVICES ONLY:
5
3000
NOR DID HE RAISE ANY OBJECTIONS TO CATHAY PACIFIC AIRWAYS AS SUCH. C! THE OTHER HAND ALTHOUGH ROGERS DEPLOYED NOT ONLY THE PROPOSAL IN PARA 13 OF YOUR TELNO.399 BUT ALSO A COMBINATION OF PARAS 1A AND 1B AS AUTHORISED IN YOUR PARA 2, LU WAS ADAMANT THAT THE CHINESE VERE NOT PREPARED TO ACCEPT ON THE REGIONAL ROUTES A SUBSIDIARY OF AN AIRLINE WHICH WAS OPERATING BETWEEN LONDON AND HONG KONG. 3. UNDER PRESSURE FROM ROGERS HE EXPLAINED THAT IF THE AIRLINE OPERATING THE REGIONAL SERVICES WERE A SUBSIDIARY OF AN AIRLINE OPERATING ON THE LONDON-HONG KONG ROUTE THERE WAS BOUND TO BE A ''FATHER AND SON RELATIONSHIP BETWEEN THE TWO. THEY WERE CONCERNED NOT ONLY WITH THE PRACTICAL EFFECTS OF THIS (WHICH LU ACCEPTED COULD BE DEALT WITH ON THE LINES OF PARA 1A OF YOUR TELNO.389) BUT ALSO WITH THE IMPRESSION THAT WOULD BE GIVEN. ROGERS CONTENDED THAT THE CHINESE HAD ACCEPTED A DEVICE OF THIS SORT IN THE JAPANESE CONTEXT: BUT LU AVERRED THAT THERE WAS NO UNDERSTANDING ON THE CHINESE SIDE THAT JAA COULD BE A SUBSIDIARY CF JAL. HE ADDED THAT HE HAD NOT PREVIOUSLY BEEN AWARE OF THIS FACT AND THAT IF THE JAPANESE HAD RAISED THE QUESTION WITH THEM AT THE TIME THE CHINESE WOULD CERTAINLY NOT HAVE AGREED. IT DOES APPEAR FROM THIS THAT IN PRESSING FOR OVERT ACCEPTANCE OF A SUB- SIDIARY IN ACCORDANCE WITH YOUR INSTRUCTIONS WE HAVE DIRECTED THE CHINESE ATTENTION TO A POINT WHICH THEY HAD PREVIOUSLY OVERLOOKED.
THE CONCLUSION OF THIS PART OF THE DISCUSSION WAS THAT THE BEST LU WAS PREPARED TO ACCEPT WOULD BE A TEXT WHICH RULED OUT ANY AIRLINE WHICH WAS OPERATING SERVICES BETWEEN LONDON AND HONG KONG, OR A SUBSIDIARY OF SUCH AN AIRLINE: BUT WHICH LEFT ALL OTHER POSSIBILITIES OPEN, PROVIDED THE AIRLINE WE DESIGNATED WAS BASED IN HONG KONG. ESPECIALLY IN VIEW OF THE UNRESOLVED QUESTION OVER GATWICK, ROGERS REFRAINED FROM PROCEEDING AS IN PARA 3 OF YOUR TELNO.399.
/5. PLEASE
CONFIDENTIAL
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