CODE 18-77
14/12 fift
Mr Clift
CONFIDENTIAL
LONDON/HONG KONG AIR SERVICES
Reference.
HKK 18H S
KA
88
SK OFICE.
PA
2
1/80
1. Mr Williamson and I discussed the Hong Kong Government's approach to the CAA Hearings this week with Mr David Wong, the Deputy Secretary for Economic Services with special responsibilities for civil aviation matters. Mr Wong is in London as a member of the Hong Kong Government's team attending the Hearings. He told us that the Hong Kong Government had in fact been perplexed by the outcome of the ATLA Hearings. The Hong Kong Government's attitude was governed by two main considerations:
2.
i) They believed that the interests of the Hong Kong
public required the introduction of a second daily service, to provide competition for British Airways:
ii) They felt they had to support the local feeling in Hong Kong that CPA, as Hong Kong's "domestic" airline, had a natural right to be the designated second carrier.
The Hong Kong Government had therefore argued strongly before ATLA in favour of CPA. The airline however had made their position more difficult by not putting forward proposals that really met the requirements. They only wanted to fly three times a week using bigger aircraft (747's) than were initially required.
Mr Wong admitted that in civil aviation terms, British Caledonian's proposal for a daily DC10 service came much nearer to meeting the immediate requirement.
3. The compromise reached by ATLA was unsatisfactory for a number of reasons - for example, although it allowed the three airlines between them to mount fourteen services a week, there was no stipulation that this should mean two flights a day. It is likely that all three airlines will want to fly on certain days, leaving would-be passengers with no alternative but British Airways on other days.
4. At the time we spoke to Mr Wong, the Hong Kong Government had not decided what policy they should adopt at the CAA Hearings. Since then, we have learnt that a meeting was subsequently held between Mr Wong, Mr Haddon-Cave and Mr Griffiths (the Hong Kong Attorney- General) at which they decided that Hong Kong's best tactic would be to press the CAA to reach the same conclusion as ATLA. It was felt that if the Hong Kong Government were to press for CPA to be given exclusive rights, the CAA might instead decide in favour of British Caledonian. It would then be very difficult to persuade Mr Nott to overrule the decision, particularly since the British Caledonian proposal was undoubtedly superior in civil aviation terms.
5. It is still not absolutely certain that this policy will be endorsed by the acting Governor. The Secretary for Economic Services, Mr Jeaffreson, is known to be in favour of all-out support for CPA. But it does seem unlikely that his view will prevail in the face of contrary advice from Mr Haddon-cave, Mr Griffiths and Mr Wong.
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CONFIDENTIAL