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4. IN DISCUSSION ABOUT THE REVIEW ARRANGEMENTS, LU REAFFIRMED HIS UNDERSTANDING THAT THE GENERAL REVIEW AFTER ONE YEAR'S OPERATION WAS DIFFERENT FROM THE NEGOTIATION OF ARRANGEMENTS FOR SOME OTHER BRITISH CARRIER TO TAKE OVER FROM BA ON THE HONG KONG - PEKING SECTOR, WHICH HE ENVISAGED AS BEING SOME FIVE YEARS OFF, AS REGARDS THE LATTER HE AGREED (AGAIN WITH CONSIDERABLE RELUCTANCE) THAT THE CMU SHOULD INCLUDE A CLAUSE TO THE EFFECT THAT WHEN BA CEASE TO OPERATE THE TRUNK ROUTE OVER HONG KONG THE UK MAY DESIGNATE AN- OTHER BRITISH CARRIER ON THAT SECTOR UNDER ARRANGEMENTS TO BE MADE AT THE TIME. LU ACCEPTED THAT THIS WOULD BOTH LEAVE THE TIMING OF BA'S WITHDRAWAL ENTIRELY AT THE UK'S DISCRETION AND GUARANTEE OUR ABILITY TO BRING ANOTHER CARRIER ON TO THE ROUTE IN BA'S
STEAD.
5.
AS REGARDS THE NUMBER OF POINTS TO DE AVAILABLE TO THE TWO SIDES ON THE REGIONAL ROUTES (PARA 2 OF TUR) ROGERS ASKED LU TO GIVE FURTHER CONSIDERATION TO A SUGGESTION HE HAD MADE SOME TIME AGO NAMELY THAT WE SHOULD HAVE THE OPTION OF TWO MORE POINTS BUT THAT THEY SHOULD NOT BE AVAILABLE FOR, SAY, TWO YEARS. LU THOUGHT IT VERY UNLIKELY THAT HE WOULD BE ABLE TO AGREE THIS
BUT HAS UNDERTAKEN TO GIVE A FINAL ANSWER TOMORROW.
6.
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LU ALSO RAISED THE QUESTION OF THE CAPACITY TO BE OPERATED
BY THE DESIGNATED BRITISH CIQRIER AND BY CAAC ON THE HONG KONG ·
SHANGHAI ROUTE. HIS OPENING BID ON THIS WAS THAT CAAC SHOULD
HAVE A FREQUENCY ADVANTAGE OF 4-1. UNDER PRESSURE HE REDUCED THIS TO 3-1 AND POSSIBLY 2-1. ROGERS SAID THAT EVEN THE LAST
OF THESE WAS TOO HIGH. LU HAS PROMISED TO REVIEW THIS ALSO OVER-
NIGHT AND TO GIVE HIS ANSWER TOMORROW.
7. ROGERS OBTAINED LU'S REAFFIRMATION THAT OPTION 4B IN CUR
TELNO.526 WAS STILL OPEN.
8. SEPARATELY FROM THESE DISCUSSIONS THE EMBASSY REMINDED THE MFA ABOUT BA'S APPLICATION FOR PERMISSION TO USE THE KUNMING ROUTE. DESPITE SHEN TU'S WITHDRAWAL ON THIS POINT (PARA 5 OF OUR TELNO.492) IT HAD BEGUN TO LOOK AS IF THIS WAS BEING WITHHELD AS A BARGAINING CARD IN THE NEGOTIATIONS. HOWEVER, THE MFA REPLIED ORALLY THAT BA'S APPLICATION HAD BEEN APPROVED AND THAT CAAC WOULD BE CONFIRMING THIS IN WRITING.
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19. all DID NOT