TNAG-0779-FCO40-983-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 158

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4. ESPECIALLY IN VIEW OF THIS LEAK, AUSTRALIAN MINISTERS WERE

ANXIOUS 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

POSSIBLE A SUBSTANTIAL REDUCTION IN FARES WITH CORRESPONDING

INCREASES IN OPPORTUNITIES FOR FOREIGN TRAVEL. THEIR PRINCIPAL CONCERN IS WITH THE COST OF OUTBOUND 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 BETWEEN 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 (WITH 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).

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8. THEY WOULD THEN CUT DOWN THE CAPACITY ON EACH ROUTE BOTH 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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