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established that the Scandinavians have never made any offer of concessions to Hong Kong outside the air traffic field (eg, the removal of import restrictions on textiles); and it was therefore agreed that a bargain should be sought with the Scandinavians within the formal framework of air traffic rights negotiations.
5 British Airways and BCAL have been asked whether they would wish to obtain any air traffic rights from the Scandinavians. They are working on this but it is unlikely that anything they may want will equal the value of the proposed SAS route from Copenhagen to Hong Kong, The balance indeed, possibly the major part of the offsetting benefit will therefore need to be in hard cash. Rogers discussed this point with the Hong Kong Government, who agreed that they would not claim any part of such cash payment either for themselves or for the Hong Kong-based airline (Cathay Pacific).
6 Agreement was also reached with the Hong Kong Government about the route. SAS want a route which would run from Copenhagen to Hong Kong via the Soviet Union (Tashkent). But this would be unacceptable to the Hong Kong Government 23 well as to ourselves-because:
(a).
(6)
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it would open another door to the entry of disturbing elements into Hong Kong; and
it would provide an added reason for the route from Moscow to Hong Kong which the USSR have been seeking but which we have so far successfully resisted.
It was therefore agreed that the Scandinavians should be offered a route which ran to the South of the Soviet Union. In order to minimise complications in our agreement with the Swiss, it was also agreed that, so far as possible, the SAS route should differ from that of Swiss Air. Furthermore, the Hong Kong Government have no objection to our "blinding"* the sector Bangkok-Hong Kong (although they would not wish to "blind" it themselves). They would also be prepared for the route to continue beyond Hong Kong to Tokyo.
7 We shall now therefore formulate an offer to the Scandinavians on the lines agreed with the Hong Kong Government and outlined above, and pursue the matter through the normal process of bilateral negotiations.
8 I hope you and the other members of the Working Party will agree that, on the particular issue of SAS landing rights, the position as it now stamis is reasonably satisfactory, in as much as we are now proceeding on lines agreed with Hong Kong. You may also feel, however, that further consideration ought to be given to Hong Kong's grievance over aid for the runway at Kai Tak Airport. The fact that HMG may shortly be offering substantial aid to Nigeria (a country with substantial oil and other resources) for the development of Lagos Airport may well exacerbate Hong Kong's feelings on this, score.
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*(ie preventing an air-line from picking up at Bangkok passengers and freight
destined for Hong Kong and vice versa).
CONFIDENTIAL
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