TNAG-0779-FCO40-983-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 107

UK/AUSTRALIA AIR SERVICE NEGOTIATIONS

Negotiations with an Australian Government delegation have been in

progress since 12 June. These are the direct consequence of the

Australian Government's international civil aviation policy review

and we knew from talks in Canberra in March that the Australians

would be putting their proposals to us before any other Government.

In addition to the DOT, the FCO and the CAA have participated in the

UK delegation. Representatives of British Airways and Qantas have

been brought in.

AUSTRALIAN PROPOSALS

2 The objectives of the Australians, which have been approved by

their Cabinet, are lower fares on their major trunk route to the

UK and a continuation of on-demand scheduled services which

serve all the main cities of Austraia.

Considerug

3 The Australians have elected to go for the most extreme of the

various options which they said they were commencing when tackled

at Canberra at the beginning of March, viz. to maintain Air Services Agreements (ASA) only with those countries to and from

which there is a sufficient volume of true origin and destination

traffic to justify end to end services. They intend to re-negotiate

all their ASAs with those countries restricting exchanges of rights

to third/fourth freedom rights only. Coupled with this is the

intention to pre-determine capacity to what is needed to meet the

demands of end to end traffic. So far as their arrangements with

us are concerned they intend that there should be a new low fare

(lower even than the suggested Laker fare at certain periods of the

year) which will be available only to Qantas and British Airways.

Also there would be no fifth freedom rights available to either

BA or Qantas nor would either be able to combine end to end

1