PAYABH
CONFIDENTIAL
VISIT TO HONG KONG BY LORD GLENARTHUR, 16-19 SEPTEMBER
BRIEF NO 9: AIR SERVICES
Background
UK/Hong Kong Air Services
1.
This has been a sensitive area in the UK/Hong Kong relationship in the last eleven months. The key problem is British Airways' wish to continue routeing their weekly London -Peking service via Hong Kong. BA had indicated in 1986 that they planned to come off the Hong Kong routeing in April 1987 and fly more directly to Peking. Hong Kong took this as a firm commitment. however, changed their minds and indeed now want to increase the frequency of their London-Hong Kong-Peking service to twice weekly.
2.
BA,
The Hong Kong Government reacted extremely badly to this change of tack by BA. ExCo, in particular, felt strongly that BA were in the wrong and should be asked to stick to their earlier planning intention. Hong Kong objections were essentially two-fold:
(a)
if BA were allowed to remain on the route against Hong Kong's wishes it would set a precedent for the Chinese to follow in pursuit of their own aviation interests and to the detriment
of the SAR's;
(b)
BA's presence on the Hong Kong-Peking sector, although without traffic rights, was an obstacle to Cathay Pacific's hopes to expand their Hong Kong-Peking services.
These arguments were fuelled by a long-standing resentment that on the London/Hong Kong route UK carriers (BA and BCal) are favoured at the expense of Cathay Pacific: the three airlines have equal capacity on the route (2:1 in terms of UK/Hong Kong interests, although earnings from the route are more or less balanced between the UK and Hong Kong).
CONFIDENTIAL