CONFIDENTIAL
SERVICES AGREEMENT AND VARIOUS SUBSEQUENT QUOTE GENTLEMAN'S
AGREEMENTS UNQUOTE REGARDING THE ROUTE POINTS THAT COULD
BE SERVED. HE EXPLAINED TO THE CANADIANS (WHO WERE EVIDENTLY UNAWARE
OF THE REALITIES OF THE SITUATION) HOW WE SAW THE COMMERCIAL
AGREEMENT WORKING, DRAWING PARTICULAR ATTENTION TO THE FACT THAT THE MORE CAPACITY AIR CANADA MOUNTED TO THE POINTS IN WESTERN CANADA
WHICH WERE NOT SERVED BY BRITISH AIRWAYS, THE MORE THEY WERE OBLIGED TO REDUCE THEIR SERVICES TO MONTREAL AND TORONTO IN ORDER
TO KEEP THE OVERALL CAPACITY IN BALANCE. THIS PROBLEM WAS EXPECTED
TO BECOME WORSE SINCE TRAFFIC TO WESTERN CANADA WAS GROWING
FASTER THAN TRAFFIC TO THE EASTERN CANADA POINTS. HE ADDED THAT
IN ORDER TO OVERCOME THE DISADVANTAGES OF THIS UNBALANCED SITUATION AIR CANADA WERE (WITH BRITISH AIRWAYS' ACQUIESCENCE) MOUNTING EXCESS CAPACITY BETWEEN THE UK AND THE CANADIAN POINTS. HOWEVER, THIS WAS WASTEFUL OF RESOURCES: IT WAS CONTRARY TO THE CAPACITY
PROVISIONS OF THE AIR SERVICES AGREEMENT: AND IT CAUSED SOME
FINANCIAL DISADVANGAGE FOR BRITISH AIRWAYS. IT COULD NOT
- THEREFORE BE ALLOWED TO CONTINUE. HE SUGGESTED THAT THE MOST SENSIBLE
SOLUTION WOULD BE FOR BRITISH AIRWAYS TO OPERATE TO THE SAME POINTS
AS AIR CANADA ALTHOUGH THERE MIGHT POSSIBLY BE SOME. MINOR
G
EXCEPTIONS ON EITHER SIDE.
IT WAS AGREED TO INVITE BRITISH AIRWAYS AND AIR CANADA TO DRAW ! UP A JOINT ASSESSMENT OF THE SITUATION THAT WOULD DEVELOP OVER THE NEXT THREE OR IF POSSIBLE FIVE · YEARS IF THE PRESENT ARRANGEMENTS
FOR THE NORTH ATLANTIC WERE LEFT UNCHANGED.
7. AZS REGARDS THE PACIFIC ROUTE, ROGERS SAID THAT THE TIME HAD NOW COME TO MAKE PROVISION FOR CATHAY PACIFIC AIRWAYS TO OPERATE ON A ROUTE WHICH CORRESPONDED TO THAT OF CP AIR. USING THE STATISTICS
WHICH HAD BEEN PROVIDED BY HONG KONG HE DEMONSTRATED THAT TRAFFIC ON THIS ROUTE WAS RISING FAST AND THAT THERE SHOULD EASILY BE ROOM FOR A SECOND CARRIER BY THE TIME CATHAY PACIFIC WERE READY TO START. THE CANADIANS SEEMED REASONABLY RECEPTIVE TO THIS BUT POINTED TO THE SEVERE DIFFICULTIES THEY WOULD HAVE IN GIVING US FIFTH FREEDOM RIGHTS BETWEEN JAPAN AND VANCOUVER, SINCE THOSE RIGHTS WERE THE ONLY BONE OF CONTENTION STILL OUTSTANDING BETWEEN THEMSELVES AND THE CHINESE PEOPLES' REPUBLIC. THEY ALSO REFERRED TO THEIR DIFFICULTIES OVER FIFTH FREEDOM RIGHTS AND FREQUENCIES WITH JAPAN. THEY WERE ALSO RELUCTANT TO CONTEMPLATE GRANTING US RIGHTS BEYOND VANCOUVER TO THE UNTITED STATES SINCE THEY SAW NO PROSPECT OF OBTAINING CORRESPONDING
/RIGHTS FROM
3.
CONFIDENTIAL
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