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YOUR TELNO 294 -NOT TO HONG KONG: VISIT BY

SECRETARY GARCIA

1.

We regret that, due to other commitments, DoT Ministers were unable to see Secretary Garcia during his rearranged visit to the UK on 25 October.

2.

We were disappointed to have missed this useful opportunity to impress on Garcia the importance of progress on separation and trunk route issues. We would be grateful if you could see Garcia on his return to Manila and explain that Lord Caithness was sorry a meeting could not be arranged and had asked that the following points be passed on to him:

HONG KONG/PHILIPPINES

The UK welcomed the Philippines more liberal attitude in recent months to increased capacity between Hong Kong and Manila and Cebu.

However, the UK was concerned at the lack of progress on separation. If no Hong Kong/Philippines ASA in place by 1997, no secure continuation of air services and grave consequences for both sides.

Existing arrangements are well-balanced, mutually acceptable and geared to market demand. They should form basis for ASA separation. We will not concede additional rights to Philippine Airlines (PAL) as the price for separation.

Time is running out. Philippines is last partner to begin ASA separation negotiations with Hong Kong. Need to make substantial progress soon. Hope agreement can be reached on early date for next round of talks.

(Defensive) Cathay Pacific Airways (CPA) does carry

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more sixth freedom traffic on the route than PAL, but well within acceptable limits and much comes from points not served by PAL. No serious problem there for PAL. Rather, this benefits Philippines economy at Large, particularly inbound tourism.

UK/PHILIPPINES

HURD

Disappointed that Philippines could not accept dates offered for trunk route talks in October. Hope that acceptable dates can be arranged early in the new

year.

When next round held, hope Philippine side will be in a position to hold constructive discussions on the liberalisation of the trunk route arrangements.

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HONG KONG TELNO 008: VISIT OF MR GOODLAD: HONG KONG/ PHILIPPINES AIR SERVICES

1.

DISCUSSION DURING MR GOODLAD'S MEETING WITH ROMULO WAS LIMITED BY THE PRESENCE OF OUTSIDERS INVITED BY THE PHILIPPINE SIDE. MR GOODLAD SAID ONLY THAT TIME WAS RUNNING OUT FOR THE PHILIPPINES TO CONCLUDE A SEPARATE ASA WITH HONG KONG.

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SIR J COLES

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CAA//INT AVIATION&TOURISM DIV McGlennan]

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