CONFIDENTIAL
Easth
route to London. They might react in various ways. For example, they might press for additional fifth freedom rights on
on the trunk route, at BA's expense, or they might try to get the right to operate more capacity on the trunk route than BA. It must be assumed that either of these would be refused. Alternatively, they might insist on રી reduction in CPA's capacity on the Hong Kong-Manila route or on some changes in their favour in the CPA/PAL pool. The cost of these would fall on CPA. In any of these events, there is likely to be a significant disturbance of our relations with the Philippines.
1.2
•
On the other hand, it is unlikely that our relations with the
the Philippines would be significantly affected if competition on London-Hong Kong route were provided by BCAL, Skytrain, or whole- plane charters although if Skytrain or charters were to increase the attractions of Hong Kong as a collecting point for low fare traffic (thus undermining the economics of PAL's trunk route services) the Filipinos might object.
13. It would be particularly undesirable to get into a dispute with
in the the Philippines. They have shown themselves temperamental
and in view of their geographic location a closure past;
of their air space would severely hamper CPA's operations on the important route to Australia.
Korea
14.
a
to
BA and K★L both aim to start services between Seoul and London in 1980. It is assumed that each airline would operate two services a week. CPA already operate between Hong Kong and Seoul at
KAL have five flights. If CPA frequency of seven flights a week. started to operate between London and Hong Kong, much the same implications and consequences would arise as with the Philippines.
in effect The Koreans would be likely to think that KAL was
competing on the trunk route with two British airlines and might well seek reduce CPA's capacity on the regional routes or to unbalance the CPA/KAL pool. Or they might try to extract other concessions from US. An example of this would be additional fifth freedom rights
AS A major new sixth beyond Hong Kong to balance what they would see freedom operation by CPA. If such fifth freedom rights would affect
In RA'S interests it must be assumed that they would be refused. any of these events, our oquable relations with Korea are likely to be disturbed.
•
▸
on
our relations 15. * There could also be important indirect effects with Korea arising from a;breakdown of the "spheres of interest" policy between British Airways and Cathay Pacific Airways. will be discussed in a separate paper.
These
relations with Korea
the London-Hong
16.
On the other hand, it is unlikely that our would be significantly affected if competition on Kong route were provided by BCAL, Skytrain, or whole-plane charters,
charters were to increase although if Skytrain or
the attractiveness of Hong Kong as A collecting point for low fare traffic (thus mining the economics of KAL's trunk route services) they might object.
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