TNAG-0513-FCO40-578-Development-of-Kai-Tak-airport-in-Hong-Kong-1974 — Page 25

CRR40440

Dear Sunith,

CONFIDENTIAL

DEPARTMENT OF TRADE AND INDUSTRY

I VICTORIA STREET

LONDON SW 1

01-222 7877

1 November, 1973.

OPPICIAL WORKING PARTY ON HONG KONG

SAS REQUEST FOR AIR TRAFFIC RIGHTS AT HONG KONG

At our meeting on 18 October I undertook to let you have an up-to-date revicw of the position on this subject, after my colleague G T Rogers had returned from Hong Kong. This letter summarises the upshot of his discussions with representa- tives of the Hong Kong Government on 23 and 24 Cetober.

2

Unlike some of the other topics mentioned in the Foreign Secretary's minute of 20 September to the Prime Minister, the SAS request for air traffic rights. from Copenhagen to Hong Kong is not a matter which affects the standard of living or the employment opportunities of the people of Hong Kong. However, the Government of Hong Kong believe that it is to Hong Kong's advantage to have a network of direct air services to the countries with which they have substantial business or tourist links, They estimate that there is sufficient traffic to ani from the Scandinavian countries to justify one (and only one) service per week. There are plenty of services which connect through from Scandinavia to Hong Kong but a direct route would be more convenient.

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Moreover, the Hong Kong Government have claimed that the United Kingdom is not justified in withholding agreement to the proposed SAS service, for two reasons:-

(a) While the United Kingdom made an interest-free loan of £3 m for the

extension of the runway at Kai Tak airport in 1956, ODA has refused to make any contribution towards subsequent airport development costs. Hong Kong's grievance on this score is enhanced by the fact that they

2 interpreted the Foreign Secretary's remarks, at a meeting on 14 February 1972,

to mean that ODA's refusal of aid would be overridden.

(b) The United Kingdom itself granted rights to KiM for a route to Hong Kong

in 1971 without receiving (in Hong Kong's view) any real return. They claim that if the UK could behave in an irrational manner when it suited us, Hong Kong should be allowed their fling when it suited them.

Nevertheless, at mectings in liong Kong on 23 and 24 October the representatives of the Hong Kong Government accepted Rogers's suggestion that it was to the advantage of Hong Kong, no less than the United Kingdon, to maintain the value of Hong Kong as a bargaining counter in negotiations over air traffic rights and that there was no reason to give the Scandinavians something for nothing.

It was

/established

HFT Saith Esq., CMG,

Cabinch Offics,

3.W.1

CONFIDENTIAL