CONFIDENTIAL
quantity of equipment was purchased from the UK rather than Japan.
Another is in the field of generating equipment, where Lawrence
Kadoorie has continued to favour our interests. Much remains at
stake. We are approaching a critical stage in the decision on further equipment for the Castle Peak Power Station and there are
other opportunities for the sale of rolling stock and buses and the
provision of consultancy and financial services.
6.
The feeling on the commercial side is the stronger because
CPA maintain, with reason, that their decision to purchase Tristars
with Rolls-Royce engines was to a great extent the result of
pressure from HMG and led to their subsequent purchase of 747s also
powered by Rolls-Royce. This point in turn is relevant to the CAA's
opinion that a service run by BCAL DC10s would be more suited to
the traffic on the route than one by CPA's 747s, because in 1974
CPA had been seriously considering buying DC10s. I understand that
already Rolls-Royce have expressed concern about the possible effect
of the CAA's decision on the timing of future purchases by CPA. This problem is really for Keith Joseph.
7.
Commercial considerations such as those outlined above are
an important element in the UK's relations with Hong Kong. Because
of the position of Hong Kong in the commercial life of the Far East
and the political significance of Hong Kong's commercial activity,
the UK's commercial and trading links with Hong Kong have a
significance beyond the purely financial interests of UK producers.
8.
There is a combination of very unusual, perhaps even unique, circumstances in this affair, complicated by the dual air licensing
procedures in the UK and Hong Kong. It is not for me to comment on the technical aspects. However, the problem which might be caused
if CPA were denied a share of the route, are so serious that I think
we must consider how the situation can be remedied. Obviously from
the Hong Kong point of view the best solution would be for the
route to be shared by British Airways and CPA. But given the earlier decision of the Hong Kong Air Transport Licensing Authority
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