CONFIDENTIAL
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earnings are in excess of £6 million per year, and are virtually unrequited by corresponding earnings by BA between India and points to the East. Since the pool is a 50:50 one without limitation transfers of earnings the cost to BA could thus be said to be effectively something in the region of £3 million per annum.
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48. There hs been no indication of any Indian attempt to obtain some similar off-setting recompense for CPA' s overflight of India on its services to the Gulf. It appears that the Indians regard the price paid by 'BA which is indeed a very heavy one as covering overflight by all British carriers. BA has not SO far sought any recompense from CPA in recognition of the fact that BA could be paying the price for the latter's overflight of India en route to the Gulf. However, if there were significant competing : British services overflying or transiting India for which BA were effectively paving an overflight price, it is arguable that the second carrier should make an appropriate contribution to BA. This would apply equally to all forms of competing services.
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49. It is possible that if BCAL were authorised to operate trunk route between London and Hong Kong they might wish to have an intermediate stop at Bombay, with traffic rights both to London. and to Hong Kong. This would have considerable implications for our relations with India, and for both British Airways and CPA, which would need to be studied in depth.
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50. If A service by CPA or any other competing airline were make only a technical stop at Bahrain, we would not expect any difficulties. However, Paper No 3 indicates that if CPA were permitted to operate between London and Hong Kong, they might need rights between Bahrain and London when they switched to B7475, in order to make the London-Hong Kong service viable by wide-bodied aircraft. This would raise difficult problems as indicated below.
51. The designation of CPA for the route between Hong Kong and Bahrain in 1975 gave rise to much greater international and inter- airline complications than had been expected, The consequences of introducing CFA to the Bahrain-London sector would therefore need to be thoroughly worked out and the necessary negotiations conducted
Means would also need 10 be
with the Gulf States in advance. found for CPA to recompense British Airways, since in the light of our arrangements with the Gulf States and of the BA/Gulf Air Commercial Agreement the cost of buying rights for them yould effectively fall on British Airways.
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52. However, since the Hong Kong Government's objective; is to i mprove the end-to-end service, and sined one of Hong Kong criticisms
HA has been that the carriage of intermediate has impaired the quality of the end-to-end service there seems policy justification for desiguating CLA for services between Bahrain and London, If three services a week by 87471
" *T** 1.7)
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CONFIDENTIM