CONFIDENTIAL
SIT OF THE PUS TO HONG KONG: CATHAY PACIFIC AIRLINES
BACKGROUND
a
1. We understand that Swires have told the PUS of Cathay Pacific
Airlines' (CPAs) wish to remain the only Hong Kong based airline.
Until recently CPA occupied this position. However in mid-April the
Air Transport Licensing Authority (ATLA) in Hong Kong received an
application to operate a number of services from Hong Kong to
Chinese cities from a company called "Cleverworld Limited",
subsidiary of the "Hong Kong Macau International Investment Company
Limited (HKMII)", whose Chairman is the Chairman of the Bank of
China in Hong Kong. HKMII was incorporated in Hong Kong on 28
September 1984 (ie 2 days after the initialling of the Sino-British
Joint Declaration) and it thus appears likely that "Cleverworld's"
incorporation is the result of a carefully organised Chinese effort
to establish an airline controlled by PRC interests with its
principal place of business in Hong Kong.
2. "Cleverworld"s application to ATLA was received too late to be
considered prior to Sino-British Air Service talks which were
scheduled for 14-20 June. These talks had as their aim the
development of air links between Hong Kong and regional cities in
China. The Chinese told us on 4 May that they would prefer to
postpone the talks until later in the year, probably September, no
doubt to allow time for "Cleverworld"s application to be processed.
Although "Cleverworld" have only so far leased one Boeing 737
aircraft, Hong Kong have informed us that their application for an
Airline Operating Certificate appears to be
to be in order and is likely
to be granted by the end of June.
3.
ATLA have separately received another application, from a firm
called "Oriental Pearl Limited", to operate Hong Kong to London and
Hong Kong to the USA routes. Investigations have revealed that the
financial backing for "Oriental Pearl" is unsure. We do not know
whether this company is backed by the Chinese.
4. While Cathay Pacific Airlines naturally enough wishes to remain
the only Hong Kong based airline we are not able to refuse licences
CONFIDENTIAL