CONFIDENTIAL
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Hong Kong, that BA would cease to route their Peking
services over Hong Kong after four years so as to clear
the way for Cathay to operate between Hong Kong and Peking.
ine months notice has to be given and if BA are to meet
this undertaking they should have given notice last month.
We have not obliged them to do so because there would be
no benefit to British aviation interests or the travelling
public if BA came off the route, and consequently had to
cease London-Peking services altogether, while Cathay
might very well not be allowed to commence services
between Hong Kong and Peking after all.
10 It is against this background that we have to choose
between two possible approaches to the forthcoming
negotiations:
(i) we could insist that the review of the current
arrangements should lead to unqualified Chinese
acceptance of our designation of Cathay Pacific
for services to Shanghai and Peking, and a
reasonable share of such services; and if the
Chinese refuse to grant this, we should threaten
and at a second round early next year be
prepared to give notice of withdrawal from the
Memorandum of Understanding governing regional
services; BA might have to cease routeing their
Peking service over Hong Kong, but in a full
Ce inuation Sheet No
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CCIDENTIAL