CONFIDENTIAL

5.

ROGERS SAID THAT HE WAS STILL AWAITING ADVICE FROM LONDON

AS TO WHETHER AS A MATTER OF POLICY ANY IMBALANCE BETWEEN A

BRITISH OPERATOR CR OPERATORS AND CAAC ON THE REGIONAL ROUTES

WOULD BE ACCEPTABLE. BUT EVEN IF THERE WERE NO POLICY

OBJECTIONS, HE DID NOT THINK THERE WAS MIY POSSIBILITY THAT

WE COULD ACCEPT SO UNBALANCED A DEAL AS LU WAS NOW OFFERING.

IN HIS VIEW THE ABILITY FOR A BRITISH OPERATOR TO RECIPROCATE

CAAC'S SERVICES BETWEEN PEKING AND HONG KONG WOULD BE AN

ESSENTIAL FEATURE OF ANY ARRANGEMENT WE MIGHT ENTER INTO ON

THE REGIONAL ROUTES. IF THE CHINESE WERE NOT WILLING TO ALLOW

A BRITISH CARRIER TO OPERATE ON THIS SECTOR HE DID NOT

SEE HOW WE COULD ALLOW CAAC TO DO SO.

6.

IT EMERGED FROM FURTHER DISCUSSION THAT

A. THE REQUEST FOR RIGHTS BEYOND HONG KONG TO POINTS IN SOUTH EAST ASIA (PARA 7A OF TUR) HAD BEEN MADE FOR

DZRESENTATIONAL REASONS, PRESUMABLY WITHIN THE CHINESE

GOVERNMENT. THE CHINESE DID NOT EXPECT TO GET CORRESPONDING

RIGHTS FORM THE OTHER COUNTRIES CONCERNED, AND

B. THE CHINESE CLAIM TRAFFIC POTENTIAL BETWEEN HONG KONG

AND POINTS OTHER THAN PEKING AND CHANGHAI IS MUCH GREATER

THAN CPA'S ROUGH ASSESSMENT WOULD INDICATE.

7. AS REGARDS THE TRUNK ROUTE LU SAID HIS DELEGATION VERE NOW

PREPARED TO ACCEPT OUR PROPOSED LIST OF INTERMEDIATE POINTS

(OTHER THAN HONG KONG) AS IT STOOD. HE GAVE ROGERS A REVISED

CHINESE LIST WHICH PRESENTS US WITH NO DIFFICULTIES. HE

SAID THAT CAAC WERE THINKING OF OPERATIONS BY BOTH SIDES STARTING

QUOTE AT THE END OF THIS YEAR OR EARLY NEXT YEAR UNQUOTE,

USING B707 OR VC13 EQUIPMENT ON THE BASIS OF ONE OR AT THE

POST TWO SERVICES PER WEEK BY EACH AIRLINE. ROGERS REPLIED

THAT BA'S ONLY VC10S ON THE HONG KONG ROUTE TOOK A LENGTHY ROUTEİNG OVER AFRICA WHICH WOULD BE QUITE UNSUITABLE FOR

SERVICES TO PEKING AND IT WOULD NOW BE IMPRACTICABLE FOR BRITISH

AIRWAYS TO REINTRODUCE B787S INTO THEIR PATTERN OF SERVICES

INTO HONG KONG FROM WHICH THEY HAD NOW BEEN ENTIRELY WITHDRAWN.

LU SHOWED A GOOD UNDERSTANDING OF AIRLINE OPERATIONS AND ECONOMICS, AND UNDERTOOK TO CONSIDER THE FREQUENCY, USE OF BIDE-BODIED EQUIPMENT AND STARTING DATE FURTHER.

18.

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SINCNDIAL,

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