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cc Secretary
Mr Kerry Sol
Mr Salmon Sol A Mr Dick CAP Mr Rogers CATR Mr Bryant CAIR1 Mr Whitaker CAP2 Mr Colegate CAA
MR TEBBIT
PUSS(T)
through Mr KERRY Sol
AIR SERVICES UK-11ONG KONG
1
We have a procedural problem over air services to Hong Kong, a solution to which involves giving a direction to the Civil Aviation. Authority.
2
At present the only scheduled service between this country and Hong Kong is provided by British Airways. The Hong Kong Government has for some time complained about the quality of the service provided and although A claim to have put much effort into improving it, the complaints persist. The government of Hong Kong considers that service would probably be improved by the introduction of competition; and has provosed discussions with HG on the subicct. They have in mind the introduction of a service by the Hong Kong based airline Cathay Pacific Airways (CPA). At the same time we know that Laker are interested in overaling a Skytrain-type service as part of an (ultimately) envisaged London-Hong Kong-Los Angeles- London service.
3
The traffic rights to and from Hong Kong are reserved to the UK and are of great importance to us in our bilateral negotiations with foreign governments. In these negotiations we are responsible for safeguarding the interests of Hong Kong and CPA but the net benefit to the UK is considerable. The long Kung Government are very sensitive about this; and it is important to retain their confidence that we do not unduly subvert their interests to those of the UK.
4 The legal situation is as follows. Any British or Hong Kong. airline needs a licence from the Civil Aviation Authority (CAA) to operate between the UK and Hong Kong. Any such airline other than BA, which is exempt, needs a licence from the Hong Kong licensing authority (HKLA). The CAA has duties under section 3 of the Civil Aviation Act 1971 in effect to further the interests of UK based airlines. There is a right of appeal from the CAA to the Secretary of State. There is no right of appeal against a decision of the HKLA.
5
The normal procedure would be for CPA to apply to the CAA for a licence and for the CAA to sort out the conflicting interests of BA, CPA and Laker (and anyone else) in the usual way. The Hong Kong Government feel with some justice
with some justice - that because of the bias of S.3 of the Act, this procedure would load the dice against CPA. It is also likely that it would lead to conflicting decisions by the CAA and the LA which somehow or other the Secretary of State would have to sort out with the Hong Kong Government when