Second, because a Hong Kong based carrier is operating into London, UK-based airlines might feel less inhibited about competing on the regional routes. BA already duplicates many of the regional points served by the Hong Kong carrier. Examples can be found in respect of BA's services to Malaysia, Thailand, Japan and Bahrain. However, such BA services have been marked by a conspicuous lack of success. CPA has never objected to BA operating along any of their present routes as part of BA's trunk operations and has no worry if this were to increase in the future.
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Third, there is the possibility that HMG may deliberately hold back the development of Hong Kong based airlines in the region in order to make room for a UK-based carrier to exploit regional traffic as part of its trunk operation. But given a reasonable and fair-minded approach by HMG this is unlikely to be a real possibility because:
(a)
(b)
(c)
it makes no aviation sense to serve regional traffic at the end of a long trunk route when time -keeping and convenience are such prime considerations;
in air services negotiations it is normal to balance rights exchanged region for region and trunk for trunk, and other countries in normal circumstances would not agree to merge the two;
even if such a shift in established policy were to be pursued, it could cut both ways because it would then be open to the Hong Kong based carrier to argue that UK-based airlines should be held back on regional routes out of London so that it could develop those services at the end of its trunk route.
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Fourth, UK aviation interests may decide in conjunction with local Hong Kong interests to establish another Hong Kong based airline to compete with CPA on regional routes. This would present the Hong Kong Government with some difficult decisions, which would have to be dealt with in the light of the circumstances prevailing at the time. It is doubtful, for a start, whether Kai Tak Airport has the hanger and other facilities to accommodate physically another Hong Kong based airline. The ability of a competing airline to provide maintenance is problematical. From the point of view of the size and resources of Hong Kong it is impractical to have more than one scheduled carrier based here.
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Generally, the reaction of the Hong Kong Government to suggestions that Hong Kong should somehow or another "pay a price" on the region for its services to London, would be that the need for a Hong Kong based carrier to operate on the route stemmed basically from BA's inability to run an efficient service. In the se circumstances it would be inequitable for Hong Kong to pay any price.
CONFIDENTIAL