TNAG-0208-FCO40-244-Discussions-about-extension-to-Kai-Tak-airport-1969 — Page 142

CONFIDENTIAL

proposal would, we imagine, enrage the Dutch and would stand a very good chance of being classed as discriminatory treatment in terms of the Chicago Convention. But it is very much matter on which we think the Foreign & Commonwealth

Office should comment

7. For the rest I see from Ricketts' letter of 8th April that there is no apparent prospect of any assistance from the ODM and, if there is also no hope of any loan on the London market (?does that apply to continental markets as well), that would seem to leave only the Board of Trade – and, moreover, under conditions which, as stated in your letter, appear to be restrictive to say the least. With the OIM sto. out of the running the position is that the Board of Trade should find a loan of £3 million spread over four years 1969/73 but that you cannot agree "to there being any increase in the overall Votes of Departments to cope with this £3 million which would therefore have to come out of existing budgets". Since you (rightly) say that there is no hope on the overseas side of BOT expenditure that leaves home expenditure. I am not at this point in time in a position to commit myself but I should be very surprised if an attempt to squeeze a loan of £3 million from home expenditure - already pretty heavily pruned as you know did not meet with very strong opposition. The problem is not made easier by the feet that, though there is an undoubted UK civil aviation interest, Hong-Kong is (as I understand it) in a flourishing financial state,

8.

Against this background of "no commitment" (a state on which I cannot improve for the moment in view of my departure abroad) we have endeavoured to do some calculations on a "Colonial Formula" basis - I do not deny that answers other than the one I have produced could be found by different manipulation. On the basis of the 1967/8 Report of the D.C.A. Hong-Kong BQAC and other UK airlines (not including Cathay Pacific which, for this purpose, should not come into the reckoning) had:

(1) a 7% share of the total civil aircraft movement at Kai-Tak.

(ii) a 6.3% share of the total number of passengers embarked and disembarked.

(111) m 11% share of freight.

This gives an average of about 8% of all civil aircraft business at Kai-Tak. If applied to the total cost of the Kai-Tak project (£13.7 m.) this would give a UK share of about £1.096 m.

But

(a) Hong-Kong as a whole undoubtedly derives considerable benefit from

UK trunk-route traffic (not to mention much more from other airlines).

(b) not all of the Kai-Tak development plan could be regarded as vital

or important (depending on the as yet unknown BQAC assessment) to UK trunk-route interest. It is indeed not unreasonable to say that the "important" element is runway extension and, perhaps, ATC improvement - 1.8. £6.08 a. • £0.66 n. » £6.74 x.

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