TNAG-0778-FCO40-982-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 113

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OF AIR CANADA) AT THE BEGINNING OF NEXT WEEK AND TO MAKE VERY URGENT ARRANGEMENTS FOR ANY REPRESENTATIONS THEY WISHED TO MAKE

TO DOT.

4. CHARRTERS

THERE WAS A WHOLE DAY DISCUSSION ABOUT CHARTERS ON 12 APRIL AT WHICH REPRESENTATIVES OF THE UK CHARTER OPERATORS WERE PRESENT AS OBSERVERS. WE EXPLAINED IN DETAIL THE DIFFERENCES BETWEEN THE RULES THAT HAD NOW BEEN AGREED WITH THE UNITED STATES FOR THE UK/US MARKET AND DISCUSSED THE DIFFERENCES BETWEEN THESE AND THE CURRENT RULES IN THE UK/CANADA MARKET. THE IMPLICATIONS OF CHANGES IN THE RULES WERE EXAMINED BY BOTH SIDES. WE ALSO DESCRIBED THE SITUATION THAT NOW EXISTED AS REGARDS CHARTER PRICE CONTROL IN CANADA AND THE UK, AND ROGERS EXPLAINED (TO THE CANADIANS' EVIDENT ASTONISHMENT) THAT THE UK MARKET WAS OPEN TO PRICE COMPETITION WHILE THE CANADIAN MARKET WAS PROTECTED FROM UNDERCUTTING BY UK CARRIERS. ROGERS POINTED OUT THAT IT WAS UNACCEPTABLE THAT THE UK MARKET WAS WIDE OPEN TO ENTRY BY CANADIAN CARRIERS WHILE UK CARRIERS WERE INHIBITED FROM SIMILAR INCURSIONS INTO THE CANADIAN MARKET BY THE CANADIAN QUOTE

UPLIFT RATIO UNQUOTE.

5. WE ARE PROVIDING THE CANADIANS WITH A FACUTAL SUMMARY OF THE ISSUES ARISING UNDER THE CHARTER HEADING. THIS WILL BE USED AS THE BASIS FOR CONSIDERATION BY THE AIR TRANSPORT COMMITTEE OF THE.. CTC (PROBABLY AT THEIR MEETING ON 27 APRIL) OF THE LINE ON WHICH THOMPSON WILL BE AUTHORISED TO NEGOTIATE WITH US. THIS WILL BE FOLLOWED BY A MEETING BETWEEN ROGERS AND THOMPSON (WITH APPROPRIATE SUPPORT ON BOTH SIDES) WHICH HAS BEEN PROVISIONALLY FIXED FOR OTTAWA IN THE FIRST OR THIRD WEEK IN MAY.

6. REVIEW OF THE AIR SERVICES AGREEMENT.

ROGERS OPENED THE DISCUSSION BY MAKING IT PLAIN THAT THE UK/CANADIAN AIR SERVICES AGREEMENT, IN CONJUNCTION WITH THE BRITISH AIRWAYS/ AIR CANADA COMMERCIAL AGREEMENT, HAD LED TO EXTREMELY SMOOTH AND CORDIAL RELATIONS AND HAD WORKED OUT WELL FROM THE POINT OF VIEW BOTH OF CONSUMERS AND OF THE AIRLINES CONCERNED. WE WERE FORTUNATE IN NOT HAVING ANY FIFTH FREEDOM OPERATORS AND THE SITUATION WAS SIMPLIFIED BY THE FACT THAT NEITHER BRITISH AIRWAYS NOR AIR CANADA AT PRESENT OPERATE ANY FIFTH FREEDOM SECTORS. HOWEVER, SOME DISTORTION HAD ARISEN FROM THE FACT THAT WHEREAS THE COMMERCIAL AGREEMENT WAS BASED ON EQUALITY BETWEEN THE TWO AIRLINES, THERE WAS A DISPARITY IN THE RIGHTS THAT THEY ENJOYED BY VIRTUE OF THE AIR

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