CONFIDENTIAL
HKK 18+/3.
W
4 N
Ab
Lir Morland (MAED)
HONG TONG: AIR SERVICES MATTERS
1.
No bl
We have discussed the request that Gulf Air be allowed scheduled services into Hong Kong and agreed on a telegram to Fon Fong I should, however, record the substance of my discussions on this matter during my recent visit to Hong Kong.
2.
ir Jelfreson, Secretary for Economic Services, and membera of his staff maintained that there was a false impression in Britain that Hong Kong had done very well out of Bermuda II and that, therefore, "Hong Kong can afford to be thumped" where their and British interests collided. The Hong Kong Government and
CA (basically almost the same thing) are concerned not only over the possibility of reprisals by Gulf Air and other Middle Boatern airlines against CPA, but also over the loss to Hong Kong from landing rights and the profits of maintenance by HAEC, as Gulf Air had proposed to have their aircraft maintained in Hong Kong. Furthermore, the intercourse between the Gulf and Hong Kong in almost every sphere, both of communications and trade, shows all the indications of growth at an exponential rate. They were sure that the extra capacity requested by Gulf Air would not only be taken up soon but would not in any case present a danger to British Airways whose advantage over cabotage fares was over... whelming. During recent months an average of 17 out of every 22 BA flights left Hong Kong without any free places. They dismissed the argument that what would effectively be a direct run from Jondon to Hong Kong by Gulf Air would be dangerous to BA because they maintained that the psychological barrier presented by a change of flight number by the aircraft on its arrival in the Gulf would inhibit its utilization.
3. On the subject of Lufthansa services to Hong Kong they warned me that Hong Kong would protest in most vigorous terms The possible over any further cuts to the lufthansa service. Germans, they said, had warned them in terms that if cuts were made over the Lufthansa service they, the Germans, would retaliate through the textile agreements.
1 November 1977
CC:
Mr Murray
Mr Jenkins (EID(E))
A
CONFIDENTIAL
88
JA D Stewart
Hong Kong & General Department
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