RECIPROCITY
Politically, it is impossible to explain to the public in Hong Kong why the United Kongdom should allow Singapore and other Asian Nations the right to fly to London on a reciprocal basis whilst at the same time denying the Hong Kong airline, Cathay, the same privilege. It is seen by local people as cynical exploitation of Hong Kong's status as a colony by the parent country. This, politically, is a most unfortunate impression to revive and have vociferously expressed.
VALUE OF HONG KONG TRAFFIC RIGHTS
It is well known to the people of Hong Kong that over the past decades British Airways have benefitted substantially from the granting of traffic rights to foreign carriers to serve Hong Kong. They contrast this with the present decision by the CAA which has prevented the Hong Kong airline from participation on a cabotage route to which it is clearly entitled in their opinion. The former position was just supportable: but the present position with a UK-based duopoly on the route, is not. An additional point is that CPA has suffered in terms of traffic rights in the East Asian Region (Singapore, Malaysia and China for instance) so that B.A. can benefit.
It is also to be noted that Hong Kong in unique among dependent territories in having a major airline of its own and an economy sufficiently developed to generate a substantial proportion of the traffic on the route. It is very doubtful if such a situation was in mind when the Civil Aviation Act 1971 was enacted.
THE POLITICAL SITUATION
The Hong Kong Government accepts that it would be politically difficult for the Secretary of State to replace BCAL by Cathay on appeal. But the problem would be solved by following the decision of the Hong Kong ATLA and licensing both BCAL and Cathay. There is no doubt that such a decision would satisfy public opinion in Hong Kong and resolve the political problem.
So far as the viability of a three-carrier regime is concerned, the Hong Kong Government made its position clear in its submission on appeal (page 6 of letter dated 9 April, 1980 from Hewitt, Woollacott and Chown) i.e. that in its view there is no reason why a 3-carrier regime should not be viable.
Hong Kong Government,
21 May, 1980