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(F) THE CHINESE ARE PREPARED TO ALLOW A TRANSITIONAL PERIOD
BA OPERATING VIA HONG KONG) OF FIVE YEARS OR IF NEED BE A
PERIOD DETERMINED SIMPLY BY TRAFFIC NUMBERS. BUT THEY ARE NOW
PREPARED TO CONCEDE A REVIEW OF THE WHOLE SITUATION AFTER A PERIOD OF ONE TO TWO YEARS (PARA 2 OF MIFT)138
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THERE ARE THREE MAIN DIFFICULTIES IN THE ABOVE PACKAGE:
(A) THERE IS BOUND TO BE SOME IMBALANCE IN BRITISH AND CHINESE
SERVICES BETWEEN HONG KONG AND POINTS IN CHINA. WE ARE PREPARED
TO ACCEPT A DEGREE OF IMBALANCE ON THESE REGIONAL SERVICES IN
FAVOUR OF THE CHINESE EITHER BY ALLOWING THEM MORE OPERATING POINTS, AS IN 2(D) AND (E) ACOVE, OR MORE CAPACITY, THOUGH NOT BOTH.
(B) PRESENT CHINESE PROPOSALS ENVISAGE CONSIDERABLE RESTRICTIONS GI BRITISH AIRWAYS PASSENGER RIGHTS FOR THE SECTOR HONG KONG/ PEKING. ORIGINALLY THE CHINESE PROPOSED INTERNATIONAL STOP-OVER
RIGHTS BUT HAVE SINCE BEEN TRYING TO BACKTRACK. WE ARE LIKELY TO FACE CRITICISM IF BA HAVE TO OPERATE THE HONG KONG/PEKING
SECTOR WITH HALF-EMPTY 747'S.
KC) PERHAPS MOST DIFFICULT OF ALL, THE PACKAGE BRINGS OUT THE
POTENTIAL CONFLICT OF INTEREST BETWEEN HONG KONG CARRIERS AND
BA AND COULD BE OPEN TO THE COMPLAINT THAT HONG KONG IS BEING
USED IN ORDER TO OBTAIN RIGHTS FOR BA WITHOUT CORRESPONDING
BENEFITS BEING ACHIEVED FOR A HONG KONG BASED CARRIER.
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AFTER DISCUSSION WITH ROGERS AND HIS DELEGATION WE HAVE AGREED
OUR NEXT STEP SHOULD BE TO PRESS HARD FOR AS FULL RIGHTS AS PNIS-
IBLE FOR BA ON THE HONG KONG/PEKING SECTOR. IT IS JUST POSSIBLE
THAT THE CHINESE MAY BE READY TO GRANT FULL RIGHTS IN RETURN FOR
A COMMERCAUL ARRANGEMENT BY WHICH THEY WOULD BE GUARANTEED A
CERTAIN SHARE OF THE PROFITS. WE ALSO SEE MERIT IN THE IDEA OF
AN EARLY REVIEW, SAY BETWEEN ONE AND TWO YEARS, SINCE BY THEN
THE CHINESE MAY HAVE LEARNED THAT THEIR FEARS OF BEING EATEN ALIVE
BY BRITISH OPERATORS WERE EXAGGERATED.
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