GGRS 1080
CONFIDENTIAL
FM HONG KONG 228515Z JULY 82
TO PRIORITY F C O
TELEGRAM NUMBER 786 OF 22 JULY
CONFIDENTIAL
M Mons
YOUR TELNO 220 OF 11 MAY TO BANGKOK: UK/THAILAND AIR SERVICES
CPA HHAVE REPORTED ON THEIR DISCUSSION WITH THAI INTERNATIONAL
ON POSSIBLE FIFTH FREEDOM RIGHTS BKK/FRA, BKK/ZRH AND BKK/PAR V V TO THE EFFECT THAT NONE OF THEIR OBJECTIVES
WAS ACHIEVED.
2. THAI DISCUSSED CPA'S REQUEST AT BOARD LEVEL AND WITH
THEIR MINISTRY OF COMMUNICATIONS AND DECIDED THAT THEY DID
NOT WISH TO EXPAND THE EXISTING EXCHANGE OF FIFTH FREEDOM RIGHTS.
3. THAI'S DECISION WAS BASED ON THE FOLLOWING CONSIDERATIONS:-
A. THE CURRENT EARNINGS BALANCE IS VERY SATISFACTORY. THAI HAVE NO NEW FIFTH FREEDOM REQUIREMENTS AND CPA BKK/EUROPE RIGHTS WOULD GREATLY IMBALANCE THE CURRENT ARRANGEMENTS. INDEED THEY ARE LIKELY TO REDUCE THEIR FIFTH FREEDOM SERVICES THROUGH HONG KONG, BY WITHDRAWING FROM THE HKG/TYO V V SECTOR THIS WINTER. THE REASONS FOR THE WITHDRAWAL ARE PARTLY FOR COMPETITIVE REASONS (THEY WISH TO OPERATE A DAILY B747/DC-18
BKK/TYO V V TO MATCH THE JAL DAILY SERVICE) AND PARTLY TO USE THEIR LIMITED RIGHTS AT TOKYO TO OBTAIN ADDITIONAL TYO/SEA V V SERVICES.
B. THE ELEVEN WEEKLY BANGKOK/EUROPE SERVICES OPERATED BY THAI ARE APPARENTLY NOT PROFITABLE AT PRESENT DUE TO LOW YIELDS CAUSED BY REBATING, THIS IS SAID TO RESULT FROM OVERCAPACITY AND THE THAI GOVERNMENT WILL BE TAKING STEPS TO REDUCE SOME OPERATORS' FREQUENCY/CAPACITY AND FREEZE OTHER CARRIERS (SWISSAIR HAS BEEN THE FIRST TO BE AFFECTED).
C. WHEN CPA SAID THAT UNDER THE TERMS OF INTER-LAIRLINE FIFTH FREEDOM AGREEMENT, IT WAS OPEN TO CPA TO TAKE ITS FIFTH FREEDOM ENTITLEMENT ON BKK/EUROPE SERVICES BY CANCELLING OPERATIONS BKK/SIN AND BKK/BOM/UAE. THAI REPLIED THAT THEY
WOULD THEN BE FORCED TO WITHDRAW ALL THEIR EXISITING FIFTH
FREEDOM OPERATIONS BEYOND HONG KONG.
CONFIDENTIAL
/ D. THAI