GR 1188
PRIORITY
HER CAT A
FM FCO 001718Z
CONFIDENTIAL
CONFIDENTIAL
HKK 184/3.
14
PA
TO PRIORITY DOWN TELNO 636 OF 8 DECEMBER
INFO HONG KONG (GOVERNOR AND SCARFE)
YOUR TELNO 982 PARA 91 UK/FRG AIR SERVICES
1. THE FIFTH ROUND OF TALKS IN LONDON ON 5/6 DECEMBER BROUGHT TO
A SUCCESSFUL CONCLUSION OUR CONSULTATIONS WITH THE FRG REGARDING THE
CAPACITY MOUNTED BY LUFTHANSA ON THEIR SERVICES TO HONG KONG AND THE
LARGE IMBALANCE OF EARNINGS IN FAVOUR OF THE FRG UNDER THE AIR
SERVICES AGREEMENT AS A WHOLE. THE FRO DELEGATION WAS LED BY PASS (FIIT) AND THE UK DELEGATION BY ROGERS (DOT).
2. SINCE THE LAST ROUND, THE EXECUTIVE BOARD OF LUFTHANSA HAD HAD UNDER CONSIDERATION TWO ALTERNATIVE PROPOSALS PREPARED BY THE
AIRLINES FOR CASH PAYMENTS TO D A WITHIN THE FRAMEWORK OF A
COMMERCIAL AGREEMENT COVERING SERVICES BETWEEN FRANKFURT AND HONG
KONG. THE BOARD'S DELIBERATIONS HAD BEEN DELAYED BY THEIR
PREOCCUPATION WITH PROBLEMS ARISING FROM THE HIJACKING OF THE
LUFTHANSA AIRCRAFT AT MAJORCA IN OCTODER BUT THEY HAD FINALLY
PROMOUNCED TOWARDS THE END OF NOVEMBER THAT THEY WERE UNWILLING TO ENDORSE ANY KIND OF CAST TRANSFER TO B A IN RESPECT OF
LUFTHANSA'S HONG KONG SERVICES.
3. THE LUFTHANSA REPRESENTATIVE (JACOB) EXPLAINED THAT IN REACHING
THEIR DECISION THE BOARD HAD BEEN HEAVILY INFLUENCED BY B A'S PROP SAL TO STEP UP FROM THREE TO SEVEN THE WEEKLY FREQUENCY OF THEIR
VC 10 SERVICE LONDON DUSSELDORF TEHERAN (WITH SOME SERVICES GOING ON TO DELHI) WITH EFFECT FROM 1 APRIL 1978. THEY ESTIMATED - THAT LUFTHANSA STOOD TO LOSE SOME POUNDS STERLING 4M REVENUE P.A. AS A RESULT OF THIS SERVICE. WHILE WE HAD MENTIONED, AT PREVIOUS MEET INGS, THE LIKELIHOOD OF SERVICES FROM GATWICK, IT WAS ONLY DURING THE- PAST MONTH THAT THEY HAD LEARNED THAT B A WERE DEFINITELY PLANNING
TO INTRODUCE DAILY SERVICES FROM GATWICK TO DUSSELDORF AND
FRANKFURT WITH EFFECT FROM NEXT APRIL, D A WERE THUS EXPLOITING
TO A MUCH GREATER EXTENT THAT LUFTHANSA HAD PREVIOUSLY. EXPECTED THE ·
CPPORTUNITIES AVAILABLE UNDER THE AGREEMENT AND THE LUFTHANSA BOARD
THEREFORE THOUGHT MATTERS SHOULD BE LEFT AS THEY STOOD,
CONFIDENTIAL.
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14.
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