CODE 18-77
SS 8/78
SECRET 2
Reference
Annex N : Aviation and Shipping
AVIATION
-
(1)
(2)
(3)
if we lost grant of air traffic rights to Hong Kong:
What concessions might the Chinese seek to permit us to maintain our London/Hong Kong services (all three airlines) as they presently are? to permit us to maintain services that transit Hong Kong (eg BA's Tokyo/Hong Kong/Johannesburg service) and all CPA's services? Could we realistically make these concessions?
How would it affect the services of other airlines to Hong Kong? At present many airlines fly into Hong Kong and there are therefore many opportunities for services by British airlines from Hong Kong. Might the Chinese find themselves in a position where they cannot take the full commercial advantage that we presently do? Might this offer us some room for manoeuvre?
If the Chinese equire a substantial holding in CPA might they be prepared to designate it under their Air Services Agreements in order to benefit from its competitiveness?
if we retained the grant of air traffic rights to Hong Kong :
(4) What concessions (in aviation terms) might the
Chinese seek? Royalty payments? Joint ventures? Could we meet them?
5.
The Chinese are likely to take a hard line on this, given the central importance of sovereignty in determining the grant of air traffic rights.
6.
Our best hope might be to argue that if it is the who grant air traffic rights after 1997 then services to Hong Kong will suffer (with consequent ill effects for CAAC), eg because they do not have agreements with other governments whose airlines currently serve Hong Kong, and in those cases where there are agreements, CAAC will be uncompetitive. We should argue that they will benefit by retaining elements of the existing set up. This argument would need to be supported by firm answers to the above questions, in particular questions (2) and (3).
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