-.2-
(3)
(4)
We published an article, entitled "Britain's Interests in Hong Kong and the Fight for HK-London Air Route", on
November 14, 1979. In the article we pointed out that
Kaitak airport was a prerogative of Britain. Britain has now approved the UK-based British Caledonian Airways to operate on the HK-London air route. Suppose British
Caledonian Airways makes huge profits from the route,
this means that the British government is exchanging
the landing right of Kaitak airport for the taxes payable
by British Caledonian Airways. On the other hand, if the
British government approved CPA to operate on the route, it would not be benefited at all (apart from receiving an amount of landing fees for its airports). On the contrary
this would cause an aversion among the businessmen who are supporters of the Conservative Party. If you were the
decision-making officials of the British government, what
would you do? The answer is obvious.
Bearing the above-mentioned points in mind, we should not attach
too much importance to the claim of both companies to "provide better scrvices". As a matter of fact, when there
are more airline companies to compete on the same route, consumers are undoubtedly better served than when there
was only one airline company.
We feel that if CPA sets up a subsidiary company in Britain for the purpose of operating an air service between Britain and Hong Kong, its application will most probably be approved. But then CPA will have to pay a profit tax two or three times higher than what it would have to pay to Hong Kong. Obviously, those businessmen who are accustomed to doing business at a lower tax rate are not too willing to run the risk of paying higher
taxes.