TNAG-0778-FCO40-982-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 79

GR 365

PERITY

CYMER/CAT A

FM HONG KONG 280701Z

CONFIDENTIAL

CONFIDENTIAL

#KK, 184/1

MAY 1978

AX OFF.

194,

TO PRIORITY F.C.O TELNO.535 OF 28 APRIL 78,

INFO WELLINGTON, PORT MORESBY.

по

PA

238

YOUR TELNO.89 TO WELLINGTON HKG/POM/AKL AIR SERVICES.

1. CPA HAVE CONDUCTED A FURTHER EVALUATION OF THE HKG/POM/AKL

ROUTE AND CONCLUDED THAT, SINCE THEIR LAST STUDY SOME MONTHS AGO, THERE HAS BEEN A VERY SEVERE DROP IN YIELD ON THIS ROUTE.

THIS IS LARGELY CAUSED BY THE RECENT INTRODUCTION OF BUDGET

FARES FROM USA ACROSS THE PACIFIC AND BY THE SUPER APEX FARES

BETWEEN AUSTRALIA AND THE U.K WHICH HAVE DIVERTED TRAFFIC AWAY

FROM THE HONG KONG ROUTE HENCE THE INTERNAL ADVERTISING

CAMPAIGN REPORTED IN WELLINGTON TELNO.144. ADDITIONALLY, THE

GENERAL NEW ZEALAND ECONOMIC SLUMP HAS DEEPENED AND, APPARENTLY, THERE IS LITTLE OPTIMISM OF A TURN FOR THE BETTER, AT LEAST IN

THE MEDIUM TERM.

2. ALSO OF CONSIDERATION IN STARTING SERVICESON THIS ROUTE, IS

THE POSSIBILITY OF RADICAL CHANGES TO CPA'S FLEET (MY TELNO.452 REFERS) WHICH WOULD RESULT IN B707'S BEING PHASED OUT OVER THE

NEXT TWO AND A HALF YEARS. THIS PUTS A LARGE QUESTION MARK OVER

ANY MEDIUM TERM B797 SERVICE.

3. AGAINST THIS BACKGROUND, CPA HAVE MADE A RADICAL CHANGE OF

PLAN IN THAT THEY WOULD NOT EXPECT TO START SERVICES ON THE HKG/POM/AKL ROUTE BEFORE 1989: THEY DO RETAIN A CONSIDERABLE LONGER TERM INTEREST IN OPERATING ON THIS ROUTE AND, AT THE FORTHCOMING TALKS, WE HOPE THAT SUCH A ROUTE CAN BE OBTAINED

WITH TRAFFIC RIGHTS ON ALL SECTORS AND WITH PROVISION FOR

TRISTAR SERVICES.

1

14.

CONFIDENTIAL