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Mr
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CONFIDENTIAL
Santhy
Byford Private Secretary. leller to
State
llue, /HICK
HICK 184/6
RECEIVED IN REGISTRY NO. 51
/s 03 JUN 1980
HONG KONG/UK AIR ROUTE: CIVIL AVIATION AUTHORITY DECISION
Problem
INDEX
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PA
3.6
REGISTRY Action Taken
Aw 3/0
1. Whether to support the Hong Kong Government's submission to the Secretary of State for Trade on the appeal by Cathay Pacific Airways (CPA) against the decision of the Civil Aviation Authority (CAA) not to license CPA to fly the Hong Kong/UK air route, in addition to British Airways (BA); CAA awarded the licence to British Caledonian Airways (BCal) and both CPA and Laker Airways were disappointed.
Recommendation
2. I recommend that the Secretary of State writes to Mr Nott along
the lines of the attached draft. MAED concur.
Background
3. For over 30 years BA and its predecessors have had a monopoly on
the Hong Kong/UK air route. BA's service has in recent years been increasingly criticised and last summer CPA, and subsequently BCal and Laker Airways, applied both in Hong Kong and here for licences to fly
the route.
This
4. The applications were considered first by the Hong Kong Air Traffic Licensing Authority (ATLA), which last November licensed both CPA and
BCal to fly the route, three and four times a week respectively. decision caused considerable surprise in Hong Kong where most people had assumed that CPA, considered to be the local flag carrier as it is the only Hong Kong based airline (although registered in the UK), would get the sole licence to compete with BA.
5.
The CAA started its hearing on the applications last December and announced in March that it had awarded a licence to BCal, but not CPA and Laker Airways, to fly on the route. The CAA's argument, in a nut- shell, was that BCal's proposal for a daily service using the smaller DC10 aircraft was more likely to meet the needs of the travelling public than a less frequent service, using the larger B747, proposed by CPA. This decision nevertheless caused an uproar in Hong Kong, which is fully documented in the Hong Kong Government's submission to Mr Nott, 70)
of which you need read only the first three pages, and on which the
CONFIDENTIAL
/Governor