TNAG-0778-FCO40-982-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 234

139

IMMEDIATE

CYPHER CAT A

GRS 365

FM HONG KONG 031025Z

CONFIDENTIAL

DESKBY @40203Z

HKK184|1

CONFIDENTIAL

REN

6 MAR 1978

Nott

TO IMMEDIATE SINGAPORE TELNO 14 OF 3 MARCH 1978

INFO F C O, DO T.

FOR ROGERS.

See

See 165

CANBERRA TELNO 3 OF 1 MARCH TO HONG KONG: UK/SINGAPORE AIR SERVICES

BLUCK MET LIM AT 1530 THIS AFTERNOON. HE REPORTS AS FOLLOWS.

2. LIM WAS OBVIOUSLY VERY ANXIOUS TO CONCLUDE SOME KIND OF A DEAL AND SUGGESTED THAT A QUOTE CONCORDE FORMULA UNQUOTE MIGHT BE USED. AT THE SAME TIME HE ASKED BLUCK TO PUT FORWARD ANY BASIS U WHICH A DEAL COULD BE STRUCK. BLUCK HAVING BEEN TOLD WHAT IS THE BASIS OF THE CONCORDE FORMULA SAID THAT HE FELT THAT THIS WAS TOO COMPLICATED AND THE CPA VIEW WAS THAT NOT ONLY MUST THE SCHEME GUARANTEE NO LOSS BUT IT MUST ALSO EFFECTIVELY COVER ALL THE PRELIMINARY EXPENSES ASSOCIATED WITH THE STARTING UP OF A COMPLETEY NEW ROUTE. IN THE CPA VIEW WHAT THIS BOILED DOWN TO WAS A GUARANT PROFIT OF NOT LESS THAN US DOLLARS 2 MILLION A YEAR. IT APPEARS THAT THE SIA PROPOSALS ENVISAGED A TOTAL PROFIT OF 9 MILLION FROM THE SERVICES AND THEREFORE BLUCK COULD SEE NO REASON WHY SIA SHOU NOT BE PREPARED TO GUARANTEE 2 MILLION, IE LESS THAN HALF OF THE PROJECTED PROFIT. LIM ASKED BLUCK IF HE WAS PREPARED TO REACH AN UNDERSTANDING ON THIS BASIS HERE AND NOW BUT BLUCK DECLINED SAYING THAT HE WOULD WISH TO HAVE THE AIRLINE EXPERTS TO GO INTO FAR MORE DETAIL AND AT THE SAME TIME HE WOULD NEED TO CONSULT HIS GOVERNMENT IN THE MATTER. THE MEETING THEN CONCLUDED.

CONFIDENTIAL

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/ 3. IT APPEARS