CONFIDENTIAL #32

Economic Services Branch Progress Report

1 August 1981 - 31 October 1981

Part I

Subject

Air Services

1. UK/China Air

Services Agreement

Purpose

To implement the ASA and Regional Routes CMU.

Progress made and present position

Next quarter target

(i) At the talks in early August in London, it was agreed that :

(a) CPA's twice weekly B707 flights

to Shanghai would continue for 6 months w.e.f. 1 November 1981, with full 154-seat capacity for each flight (which would also give CAAC additional capacity on their 6 Trident services) being considered monthly in the light of demand;

(b) in exchange for CPA being

allowed to continue its Shanghai service (sub-para. (a) above), CAAC would be permitted to mount services to HK from two or three more cities in addition to those already

allowed under the RR CMU; and

(c) a review of trunk and regional

air services arrangements would be held in Peking in March or April 1982.

To determine, in conjunction with DoT, what the British strategy and tactics at the review talks should be.

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CONFIDENTIAL #Z

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