TNAG-0778-FCO40-982-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 226

HKK184 | LYNG. ST

RE IVLO

-7 MAR 1978 | KAD

DAK OFFICES

INDEX

PA

ло

tä

RE

SEAD ISMAED (3)

TO PRIORITY GOVERNOR HONG KONG TEL NO ALLOT 44 OF 3 MARCH

INFO SINGAPORE (FOR ROGERS)

BCARFE HONG KONG.

See

R45

FOLLOWING FROM C A A.

1LLLL

FOR WONG FROM COLEGATE C A A..

I REFER TO YOUR TELEX OF 10 JANUARY. WE REGRET WE HAVE BEEN REMISS IN NOT RESPONDING EARLIER TO YOUR ENQUIRIES ON AIR FARES MATTERS. BRITISH AIRWAYS HAVE FOR SOME MONTHS BEEN PROMISING TO DISCUSS WITH US PROPOSALS FOR CHANGING LONDON-HONG KONG FARES PACKAGE. VARIOUS FACTORS HAVE CONTRIBUTED TO THE DELAY BUT PART- ICULARLY THEIR DIFFICULTIES IN QUANTIFYING THE CONSEQUENCES THAT THEIR NEW OPERATING PLAN FOR THE ROUTE WILL HAVE ON COSTS. WE HAVE NOW HAD A MEETING WITH THEM ALTHOUGH THEY STILL DO NOT HAVE FIRM PROPOSALS. THEIR THINKING IS CURRENTLY AS FOLLOWS:

1) NO CHANGE IN NORMAL FARE LEVELS. THEY HAVE POINTED OUT THAT DUE TO CURRENCY CHANGES THE DISPARITY IN NORMAL ECONOMY SELLING LEVELS HAS REDUCED FROM 40% TO ABOUT 26% OVER THE LAST YEAR. WE HAVE TOLD THEM TO LOOK AGAIN AT WHETHER THEY CAN MAKE FURTHER REDUCTIONS OVER AND ABOVE CURRENCY EFFECTS. BA ARE RECONSIDERING. 2) CABOTAGE EXCURSION FARE 10% REDUCTION FOR MID-WEEK DEPARTURES

EX-HONG KONG.

3) APOW AND APEX NO CHANGE IN BASIC FARE EX-HONG KONG BUT 5% INCREASE EX-U K AND WEEKEND SURCHARGE OF 5% AT BOTH ENDS.

THIS WOULD REDUCE DISPARITY FROM TODAYS 12% AND 16% TO 6% AND 10% FOR BASIC AND PEAK SEASONS RESPECTIVELY.

4) CABOTAGE GIT EX-HONG KONG SOME SIMPLIFICATION OF CONDITIONS IS PROPOSED BUT FARE LEVELS ARE RESTRUCTURED.

BASIC SEASON AND WEEKEND SHOULDER SEASON FARES TAKE ABOUT 4% IN- CREASE BUT SHOULDER MIDWEEK, PEAK MIDWEEK AND PEAK WEEKEND TAKE 7%, 18% AND 8% DECREASES RESPECTIVELY.

THE ABOVE LEVELS ARE ALL TENTATIVE. BA WILL BE COMING BACK TO US ON NORMAL ECONOMY AND OTHER DETAILS IN TWO OR THREE WEEKS. FINAL REVISIONS ARE UNLIKELY TO BE FILED FOR AN EFFECTIVE DATE

PRIOR TO 1 JULY.

OUR INITIAL REACTION IS THAT BA HAVE MADE A GENUINE ATTEMPT TO IMPROVE THE SITUATION. THEIR LONG HAUL COSTS GENERALLY HAVE IN-