་ཀ་ན·
NR7AJF (2)
CONFIDENTIAL
SIR Y K PAO'S CHEVENING WEEKEND: 13-14 SEPTEMBER 1986
(£)
Hong Kong: Civil Aviation: Dragonair Airlines (DAL)
Background
1.
DAL was incorporated in Hong Kong in September 1984,
following the initialling of the Joint Declaration which envisages special treatment for airlines incorporated in and with their head
offices in Hong Kong. It met these criteria but not the normal requirements in our Air Service Agreements
Air Service Agreements (ASAs) that it should be
owned and controlled by HMG, HKG or British Nationals.
originally owned and controlled by Chinese interests.
2.
It was
In October 1985 when Sir Y K acquired an interest in DAL, a
radical restructuring of the airline's shareholding took place,
apparently with the aim of meeting the necessary ownership and control criteria. Details provided by DAL now suggest that the
majority of shares are owned by British Nationals, with Sir Y K and companies under his control accounting for about 35% of the total.
3.
Hong Kong have recently advised us that in their view British
nationals now control some 68% of Dragonair's shares and that
adequate arrangements have been made within the company to ensure
that effective control will always rest with British nationals. Hong Kong is satisfied that Dragonair comply with the ASA criteria. and have asked us to proceed as quickly as possible with the
necessary bilateral negotiations at government level SO that ragonair may operate schedule services to Thailand and the PRC. We remain responsible for negotiating these rights until such time as Hong Kong has its own bilateral ASA with the country concerned.
4.
We will take the earliest practical opportunity to pursue Dragonair's application with the Thais and the Chinese. We cannot give a commitment to exactly when this will be but it is expected
that consultations will be held during the next few months. We are
in close contact with the Hong Kong
Kong Government about all
these
CONFIDENTIAL