TNAG-0779-FCO40-983-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 127

CONFIDENTIAL

ESPECIALLY IN VIEW OF THIS LEAK, AUSTRALIAN MINISTERS WERE XIOUS TO MAKE A FULL STATEMENT OF THEIR INTENTIONS AND OF THE REASONS LYING BEHIND THEM, BUT THEY WANTED AT LEAST TO INFORM US, AND IF POSSIBLE TO GET OUR REACTIONS, FIRST, NOT ONLY WERE WE THEIR PRINCIPAL CIVIL AVIATION PARTNER: THEY ALSO EXPECTED TO GET THE MOST SENSITIVE AND REALISTIC RESPONSE FROM US.

5. THERE HAS BEEN VERY LITTLE PRESS INTEREST HERE, SO FAR.

6. THE AUSTRALIAN PROPOSALS ARE VERY FAR-REACHING. THEY START FROM THE BASIS THAT AIR FARES (ESPECIALLY ON THE LONG ROUTES TO THE UK AND POINTS IN EUROPE WITH WHICH THEY HAVE STRONG ETHNIC TIES) MUST BE REDUCED. SINCE THEY BELIEVE AIRLINES ARE MAKING ONLY MODEST RETURNS, THIS CAN BE ACHIEVED ONLY BY MORE EFFICIENT UTILISATION OF AIRCRAFT. THEY RECKON THAT TOTAL CAPACITY BETWEEN AUSTRALIA AND THE REST OF THE WORLD IS SOME 50 PERCENT HIGHER THAN IS NEEDED TO CARRY THE TRAFFIC. IF THIS WASTE COULD BE REDUCED, IT WOULD MAKE PÜSSIBLE A SUBSTANTIAL REDUCTION IN FARES WITH CORRESPONDING INCREASES IN OPPORTUNITIES FOR FOREIGN TRAVEL. THEIR PRINCIPAL CONCERN IS WITH THE COST OF CUTBOUND TRAVEL, ESPECIALLY OF THE VFR (VISITING FRIENDS AND RELATIONS) TYPE, WHICH NOW FORMS BY FAR THE BIGGEST PART OF THE LONG HAUL MARKET.

7. THEIR SOLUTION IS TO HAVE DIRECT END-TO-END SERVICES AT HIGH SEAT FACTORS TO THOSE COUNTRIES WHERE THE TRAFFIC WILL SUPPORT THEM ON AN ECONOMIC BASIS, AND TO CUT OUT ALL INTERMEDIATE STOPS EXCEPT WHERE THESE ARE NECESSARY FOR REFUELLING. SERVICES DETWEEN AUSTRALIA AND POINTS TO WHICH THERE WAS INSUFFICIENT TRAFFIC TO SUPPORT OPERATIONS OF THIS KIND WOULD THEN BE PROVIDED BY PASSENGERS TRAVELLING ON THIS TYPE OF SERVICE TO THE MOST CONVENIENT INTER- CHANGE POINT AND ON A SEPARATE SERVICE (WTH A SEPARATE TICKET) FROM THERE TO THEIR ULTIMATE DESTINATION. AS PART OF THIS PLAN THEY WOULD GIVE UP ALL REPEAT ALL FIFTH FREEDOM RIGHTS AND WOULD EXPECT THEIR BILATERAL PARTNERS TO DO THE SAME. UNDER THE NEW ARRANGEMENTS THEY WOULD NOT EVEN BE LOOKING FOR QUOTE OWN STOP- OVER UNQUOTE RIGHTS OR FOR THE ABILITY TO COMBINE MORE THAN ONE DESTINATION POINT (EG PARIS WITH LONDON).

8. THEY WOULD THEN CUT DOWN-THE CAPACITY ON EACH ROUTE EUTH BY QANTAS AND BY THE BILATERAL PARTNER CONCERNED TO THE LEVEL NEEDED TO CARRY ONLY THE GENUINE 3RD/4TH FREEDOM TRAFFIC ON THAT ROUTE.

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NEIDENTIMI

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