TNAG-0779-FCO40-983-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 113

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expense of Singapore. Although again it will be for the

Australians

to make the running, Malaysia might see a UK-Australia agreement

as a barrier to the extension of her services to the UK, which she

is seeking. (We stalled on this in the recent talks, pending the

approach by the Australians.) This could lead her to postpone

further agreement to Concorde over-flying her territorial waters.

CONSEQUENCES OF TURNING DOWN THE AUSTRALIAN PROPOSAL

18 If the Australians are to succeed with their proposals, they

must have us as their partners. Their hand has no strength if they

approach other Governments without an indication of our agreement.

If we turn down the proposals, they could be expected to exert

strong political influence to get us change our minds. If that

failed, they would probably embark on an alternative course, such

is the intensity of domestic pressure to introduce cheap fares.

Possibilities could include either of the other options described

in paragraph 6: the introduction of charter services would still

shut out the third country carriers, such as Singapore and Malaysia.

Or they could seek an agreement for an arrangement similar to the

current proposal with another European country, eg the Netherlands,

through which they would hope to channel traffic to and from the

UK.

CONCLUSION

19

We would like to give a definite response to the Australian

delegation before they return home at the end of this week. They

can feel entitled to an indicative reaction from us. They have.

taken us into their confidence not only now, by approaching us

first, but also in March when UK officials were invited to

discussions in Canberra.

20 On the pro side, UK consumers will benefit from lower fares;

the UK-Australia through route should be a growth service and

2-