SECRET AND PERSONAL
British Embassy PEKING
29 March 1982
Ann 040/1
RJT McLaren Esq CMG HONG KONG
film 2011
See 235
UK/PRC AIR SERVICES AND THE FUTURE OF HONG KONG
Hier (8411 MONA
LONG
1. I should like to add one further thought as a postscript to my teleletter of 23 March to Michael Burton. I argued in that teleletter that if the UK/Hong Kong Governments are perceived to be either unable or unwilling to exact even a modestly reasonable quid pro quo for CAAC's rapidly growing and enormously valuable network of Services to and from Hong Kong, the implications for 1997 were ominous. I was referring then to the wider context of the future of the territory. But it occurs to me that the Swire Group might begin to wonder what the future holds for Cathay Pacific.
2. Weakness in support of Hong Kong's aviation interests in 1982 does not augur well for the UK's competence in air services matters involving Hong Kong after 1997. Indeed the speed with which CAAC has already placed a very large foot in the Hong Kong door, and the knowledge that CAAC will certainly be seeking to operate services through Hong Kong (and thereby duplicate parts of CPA's network) long before 1997 might lead Swires to decide that the long or even medium term future of Cathay Pacific is a risk they would prefer not to take. They might decide to seithe airline within the next few years, while they could still expect to get a good price.
3. The foregoing is, I stress, just speculative, and I have no evidence that Swires are yet thinking in such terms. But the potential danger is I think very real. The sale of Hong Kong's "hational" airline would of course be very damaging indeed to confidence in the future of the territory.
cc :
R D Clift Esq, HKGD, FCO
R_D_Clift
Elliott Esq, FED, FCO
Reg
M W Atkinson
614
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SECRET AND PERSONAI.
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