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MR BLAKER'S MEETING WITH SIR MURRAY MACLEHOSE:
11.30 AM, FRIDAY, 11 JANUARY
BRIEF NO 6: LONDON/HONG KONG AIR SERVICES
1.
The London/Hong Kong route is a cabotage route (ie one between
two "domestic" points and therefore not subject to international
regulations) on which at present British Airways have a monopoly.
Growing discontent in Hong Kong with the quality of BA's services
has led to pressure for a second airline to be allowed on the route,
to provide passengers with a choice and also in the expectation that
competition would spur BA into improving their services. The view
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in Hong Kong has been that the second airline should be Cathay
Pacific Airways (CPA).
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Early in 1979, the DOT and the Hong Kong Government, with the
cooperation of BA and CPA, initiated studies into the feasibility
of introducing a second carrier on the route. This process was
abruptly halted, however, in June when British Caledonian and
Laker Airways formally applied to the British Civil Aviation
Authority for permission to operate on the route. The DOT then felt
obliged to withdraw from the joint studies. CPA (who, until then,
were by no means convinced that the route was economically attractive
to them) also felt obliged to file a formal application with the CAA.
BA registered their opposition to all three applications.
The
3. Before any airline can operate the route, it also requires a
permit from the Hong Kong Air Transport Licensing Authority.
three airlines therefore applied for ATLA permits. At their hearings
in November, the ATLA decided to issue permits to British Caledonian
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