CONFIDENTIAL
We would like to use this dispute to further our aim to
improve the balance in air services between Hong Kong
and China whether we decide to withdraw from the
regional CMU or not. This decision may not be taken
before 30 April. If we do so decide the process of
consultation on this matter could be swept up in the
wider negotiations to replace the regional CMU.
If no such step is taken we may at least be able to
make some limited progress on this narrower front.
Grateful your advice and that of Hong Kong on the
action proposed and on likely reaction from CAAC.
We have tried to pitch our action at a level which would bring significant pressure to bear on CAAC but
would not justify them in acting against Cathay's
Shanghai services. If they did we should of course have
to make a corresponding response.