A ERSE EFFECT UPON SALES.
6. LATHAM AND MCARTHUR (WHO HAVE NOT SEEN THE FIGURES IN PARAS 3 TO 5 ABOVE) WILL HAVE RAISED THE SUBJECT OF HONG KONG/PRC SERVICES WITH STEVENS ON 21 SEPTENDER. LATHAM HAS FIGURES SHOWING CURRENT HIGH LOAD FACTORS ON BOTH SHANGHAI AND PEKING SERVICES. THESE FIGURES INDICATE CLEARLY THAT THE CAPACITY PROPOSED BY CAAC WILL NOT SATISFY DEMAND.
(B) TACTICAL:
7. THESE OBSERVATIONS, HOWEVER, MAY PROVE ACADEMIC, AS
WE SUSPECT A MORE SINISTER HOTIVE BEHIND CAAC'S FILING. IN THEIR FIRST LETTER TO DCA HERE (SEE (A) IN PARA 1 ABOVE) COVERING THE FILING OF THE PROPOSED WINTER SCHEDULE CAAC REFER SPECIFICALLY TO THE 1979 CMU AND TO NO SUBSEQUENT ARRANGEMENT. THE SCHEDULES PROPOSED FALL WITHIN THE TERMS OF THE 1979 CHU IE HKG-PEK, HKG-SHA PLUS 4 OTHER CITIES IN CHINA. WE SUSPECT THEREFORE THAT THEY WILL SEEK TO USE THIS FILING TO REMOVE CPA FROM HKG-SHA ALTOGETHER MAINTAINING ALL THE WHILE THAT THEY ARE MERELY TRYING TO AVOID WASTEFUL OVER-CAPACITY. AS AN INDICATION OF GOOD FAITH, CAAC WOULD NOW NO DOUBT CITE THE PERMISSION GIVEN TO CPA TO UPGRADE ITS HKG/SHA V V SERVICES ON 2 AND 9 OCTOBER FROM 3707 TO L1011.
8. AS REGARDS TACTICS, OUR AND CPA'S VIEW IS THAT THE PRICE PAID TO OBTAIN CPA'S CURRENT CAPACITY LEVELS WAS SO HIGH THAT WE WOULD NOT NOW WISH TO CONCEDE ANYTHING.
HADDON-CAVE
CCH'S PARA 1 (B) ..AS IN (A) ABOVE PARA 5 ... (AND SEE NO REAXON TO DISAGREE) PARA 6...THE SUBJECT OF HONG KONG/PRC PARA 7 ...THAT THEY WILL SEEK TO USE
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