CODE 18-77
SS 8/78
18A)
Mr Willenn
солити
Mr Williams 24.3
J24.3
again
CONFIDENTIAL
Mr Morrice (on return)
UK/HONG KONG AIR SERVICES
Reference
HKKI8HG
DERBY NO. ST
25 MAR 1990
INDEX
PA
Mu
Jiss
1. I have discussed further with Mr Murray ways in which we might prepare ourselves for possible supporting action for CPA and the Hong Kong Government. Mr Murray would like us to concentrate on
two areas.
Technical Questions
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(23
2. It is not of course for the FCO to get involved in the argumentation of operational questions. On the other hand, we need to know as precisely as possible what are the arguments on both sides so that we can see how good a case Hong Kong have. Two elements are:-
a) Flexibility.
The CAA said that DC 10s would be more flexible than 747s. CPA (in the form of Mr Adrian Swire) are complaining that they were persuaded to buy Tristars to help sales of Rolls Royce engines. On the face of it the latter argument would appear irrelevant since CPA had proposed to use 747s for the London route. Would it in fact make them more flexible if they were to offer to use Tristars? I realise that such a change of approach may be technically ruled out in the appeal to Mr Nott but it could be a reasonable argument which could be put separately and which indeed the FCO might wish to refer to. But we need to have our facts about flexibility clear first.
b) Capacity. The CAA appear to have decided that there is only
room for one extra airline besides BA. In this they differ ATLA. Would there be a sharp difference in capacity between 7 flights a week run by one airline and 3 by CPA and 4 by BCAL? Indeed, will BCAL have to confine themselves to 4 flights a week for the present under the ATLA decision? Will they put a new application to ATLA?
Political Questions
3. We should begin to put together the political arguments which we may need to use with the DOT, whether these are put by Ministers or in another form. Some ideas are:
card a) "Reciprocity". The UK does well out of the "Hong Kong
in worldwide air services negotiations. Of course CPA do not do badly either but for this purpose we do treat Hong Kong ́ as UK territory. In the current case, however, the situation is more akin to that of an air services negotiation with a foreign country. In equity therefore (though not in law) there is a good deal to be said for Hong Kong's "own" airline being given a share of the services.
CONFIDENTIAL
/b)