CONFIDENTIAL
E.
6.
IF CAAC'S ESTIMATE OF 29.003 PROVED CORRECT CAAC COULD OPERATE TWO B707 SERVICES PER WEEK ON A PROFITABLE BASIS (AFTEK TAKING ACCOUNT OF POOL PAYMENTS BY BA). IF, ON THE OTHER HAND, OUR FORECAST OF 80,000 WAS BORNE OUT BY EXPERIENCE, CAAC WOULD NEED TO OPERATE 4 X 3797'S A WEEK. IN EACH CASE, DA WOULD USE THE SURPLUS OF CAPACITY OVER WHAT WAS NEEDED FOR THE THROUGH TRAFFIC ON THE TRUNK ROUTE.
SUMMING UP, ROGERS SAID OUR PROPOSALS WOULD PROVIDE THE MAXIMUM BENEFIT TO THE TRAVELLING PUBLIC (SEMI COLON) BUT AT THE SAME TIME THEY WOULD PROTECT CAAC'S POSITION.
7.
ROGERS STRESSED THAT THESE PROPOSALS WERE PUT FORWARD ON THE BASIS THAT BOTH BA AND CAAC WOULD BE ABLE TO CARRY ALL TYPES OF TRAFFIC ON THE HONG KONG-PEKING SECTOR.
3. LU UNDERTOOK TO HAVE OUR PROPOSALS STUDIED IN DETAIL AND TO HE ALSO LET US HAVE ANY COMMENTS OR CUGGESTIONS FOR AMENDMENT. AGREED TO REVIEW HIS POSITION IN THE LIGHT OF THESE PROPOSALS BUT GAVE NO GROUNDS FOR OPTIMISM THAT HE WOULD SHIFT FROM THE EXTREMELY HARD LINE HE HAD NOW TAKEN UP.
9. IN ORDER TO ALLOW TIME FOR THE ACTION IN PARA 8 IT WAS PROV- ISIONALLY AGREED THAT THE NEXT MEETING SHOULD BE HELD IN THE LATTER PART OF MONDAY AFTERNOON (4 JUNE):
17. COMMENT. WE NOW SEEM TO BE FURTHER AVAY FROM AGREEMENT THAN BEFORE THE DINNER PARTY WITH SHEN TU ON 25 MAY (OUR TELNO 492). IT REMAINS TO BE SEEN WHETHER THE POSITION LU HAS NOW ADOPTED IS AN EXTREME BARGAINING POSITION ADOPTED IN ORDER TO SHIFT US FROM WHAT THE CHINESE REGARD AS AN EXTREME POSITION ON OUR SIDE OR WHETHER IT REPRESENTS THEIR FINAL OFFER. ROGERS HAD THE FEELING THAT FOR THE FIRST TIME LU WAS NOT NEGOTIATING WITH HIM BUT MAKING DEBATING POINTS.
11.
THERE WAS NO REFERENCE TO THE PROPOSED REVIEW AND NO SUGG ESTION THAT THE CHINESE WISHED TO BACK TRACK ON THIS.
HOWEVER,
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CONFIDENTIAL
| JUDGING