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CONFIDENTIAL
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Details of the service
6.
HKYF will be given an exclusive passenger service for an initial period of three years. Initially there will be three services in each direction per day, restricted to daylight hours. This may be increased to four or more. Mr Lau said (in confidence) that the return to HKYF on three services will be 15% but, because of economies in the use of craft, four services would give well over 20%. The Chinese will not be aware of his profit margins since they have been given capital costs for purchase and modification of the craft based on standard UK prices. In fact, HKYF are buying the craft at a large discount and have undertaken the luggage and airconditioning modifications locally at much lower cost.
7.
For the moment, night services are ruled out on (Chinese) security grounds. Mr Lau thinks these may be relaxed after a year or so. The passengers envisaged by the Chinese are group tourists, businessmen, diplomats, individual travellers and Hong Kong and Macau compatriots. Mr Lau is convinced that the service will not be used by normal emigrants from China. I am sure he is right.
8.
The Chinese have undertaken to ensure that the service is always filled to at least 90% capacity, based on 60 passengers (this may be upped to 63). In addition, three officials will embark and disembark on each trip at sea off Tai Shan Island (about four miles outside the square boundary): pilot, port health, one other (presumably PSB). Special luggage containers are to be constructed which will be sealed for security reasons by China Travel Service before departure.
9.
The Tai Kok Tsui pier will be used initially at the Hong Kong end but Mr Lau hopes that there can be early agreement to re-develop the Jordan Road pier so that it could eventually take larger hovercraft (and also ferries - see para. 14 below). The Whampoa dock will be
used in Canton with bus services to the centre of town and direct to the airport. There are excellent VIP facilities at Whampoa.
Publicity and Opening Ceremony
10.
No further announcement about the service will be made until after a trial run in mid-October.
By then Mr Lau hopes that arrangements will be fairly well advanced for an opening ceremony. There has only been initial discussion of this with the Chinese authorities. One possibility is that simultaneous trips will start from Whampoa and Hong Kong. Mr Lau hopes you will agree to
/contd.
CONFIDENTIAL
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