TNAG-0281-FCO40-317-Visit-of-the-Chancellor-of-the-Duchy-of-Lancaster-to-Hong-Ko-1970 — Page 196

CONFIDENTIAL

Background Note for the Chancellor of the

Duchy of Lancaster

KLM and Hong Kong

The Governor's views on the admission of major trunk

carriers to Hong Kong are well known. He has expressed the

desire that as many as possible of the major airlines who

apply for traffic rights should be admitted to Hong Kong.

This is in pursuance of the aim that Hong Kong should become

a major centre of tourism and communications in the Far East.

He will have been told of the details of the present

Dutch initiative by his political adviser who has recently

been in London and discussed the issue with Hong Kong

Department. It is possible that the Governor will press for

the admission of KLM to Hong Kong. He has recently reminded

us that he would also welcome the admission of SAS.

2.

3. The last Administration refused these rights to the

Dutch in Karch, 1969. In his letter to the Netherlands Prime

Minister the then Prime Minister said however that we would

always be happy for a solution to be found in the civil

aviation context. The Dutch then initiated a statistical

review of the balance of earnings under the bilateral air

services agreement, in an attempt to prove that the excess

earnings of U.K. carriers justified the grant to KLM of a

once-weekly service to Hong Kong. This examination proved

inconclusive with experts on both sides differing over the

interpretation of the figures. The Dutch eventually wrote

on 20 April, 1970 to call the exercise off.

4.

Mr. Luns, with whom the subject has become something

/of....

CONFIDENTIAL