TNAG-0777-FCO40-981-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 143

HOFO 285/04

PP FCO

RR KUALA LUMPUR

GR 190

CYPHER/CAT A

FM HONG KONG 040319Z

CONFIDENTIAL

ADVANCES COPY

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36620

NO DISTRIBUTION

TO PRIORITY F.C.O TELNO.149 OF 4 FEBRUARY 78,

INFO KUALA LUMPUR.

FOR D.O.T.

Joot

MALED

H K J G D Swith

YOUR TELNO.ALLOT 23 U.K/MALAYSIA AIR SERVICES.

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Sea

85 86 106

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1. IN CUR VIEW, THE CMU OF 25 NOVEMBER 1977 ACKNOWLEDGES, INTER ALIA, ROGERS' LETTER OF 29 SEPTEMBER 1976 TO MAHADZAR WHICH CLEARLY STATES THAT THE CAPACITY TO BE MOUNTED BY MAS WITH EFFECT FROM 2 OCTOBER 1976 (WHICH INCLUDES THE THREE B747 SERVICES A WEEK BKI/HKG V.V) FULLY EXHAUSTS THEIR ENTITLEMENT UNDER THE CMU OF 11 JANUARY 1973.

2. ALTHOUGH WE UNDERSTAND THE DIFFICULTIES BEING FACED BY MAS, THE FACT OF THE MATTER IS THAT THERE IS A MASSIVE IMBALANCE OF EARNINGS IN FAVOUR OF THAT AIRLINE. WE WOULD NOT WISH TO PROVIDE MAS WITH GREATER OPPORTUNITIES UNDER THE AIR SERVICES ARRANGEMENTS, AND SO AGGRAVATE THE SITUATION. INSTEAD, WE SUGGEST THAT MAS BE ALLOWED TO MAKE THE SWITCH TO B787'S ON BKI/HKG V.V. SERVICES, SUBJECT TO THE CAPACITY OF EACH FLIGHT BEING LIMITED TO THAT OF

A B737.

3. THERE HAVE BEEN NO CPA/MAS DISCUSSIONS ON THIS MATTER (DOT TELNO.ALLOT 19) AND, INDEED, CPA ARE STILL AGGRIEVED AT MAS FARES DISCOUNTING PRACTICE.

MACLEHOSE

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