TNAG-0779-FCO40-983-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 159

CONFIDENTIAL

THIS WOULD INCLUDE END TO END PASSENGERS WHO REQUIRE A STOP-OVER,

BUT THEY WOULD NOT BENEFIT FROM THE NEW LOW THROUGH FARES AND WOULD

AVE TO CONTINUE THEIR JOURNEY BY OTHER SERVICES, THEY CLAIM, HOWEVER, THAT THEIR OWN RESEARCHES SHOW THAT VERY FEW AUSTRALIANS ARE REALLY PREPARED TO PAY THE TRUE COST OF THE STOP-OVER FACILITIES AT POINTS SUCH AS SINGAPORE, WHICH THEY AT PRESENT ENJOY.

9. THEY RECOGNISE THAT THESE PLANS WOULD REQUIRE A MAJOR RESTRUCT- URING OF QANTAS' RESOURCES AND BIG CUTS IN QANTAS STAFF ALL ALONG THE TRUNK ROUTE TO EUROPE. THE PLANS WOULD ALSO ENTAIL A SERIOUS REDUCTION IN THE CARRIAGE OF TRAFFIC BY SIXTH FREEDOM OPERATORS SUCH AS SIA, AIR INDIA AND KLM, AND WOULD SUBSTANTIALLY REDUCE TOURISM EARNINGS FROM STOP-OVER TRAFFIC IN SINGAPORE AND ELSEWHERE,

IN THE LAST RESORT, HOWEVER, AUSTRALIAN MINISTERS BELIEVE THAT

THEIR INTERNAL POLITICAL PRESSURES FOR LOWER FARES OUTWEIGH THESE

EXTERNAL POLITICAL CONSIDERATIONS.

10. IN RESPONSE TO OUR QUESTIONS, THE AUSTRALIANS HAVE SAID THEY DO

NOT EXPECT THEY WILL BE ABLE TO PERSUADE THE AMERICANS TO ACCEPT

THIS LINE OF THINKING. HOWEVER, THEY BELIEVE THAT THEY COULD

TOLERATE A SITUATION IN WHICH THE UNITED STATES WAS THE ODD MAN

OUT, THEY BELIEVE THAT IF WE CONCUR IN THEIR PROPOSALS AND ARE PREPARED TO TAKE THE NECESSARY STEPS ON OUR SIDE (NOTABLY BY

REDUCING THE CAPACITY OF THE SIXTH FREEDOM CARRIERS BETWEEN THEIR HOME BASES AND LONDON TO WHAT IS REALLY NEEDED TO CARRY THE 3RD/4TH FREEDOM TRAFFIC BETWEEN THOSE POINTS), THEIR, OTHER BILATERAL PARTNERS IE WITH THE EXCEPTION OF THE AMERICANS CAN BE PERSUADED OR

FORCED TO DO THE SAME. THEY BELIEVE THERE IS SUFFICIENT JEALOUSY OF

SINAGPORE TO PREVENT EVEN THE ASEAN COUNTRIES FROM QUOTE GANGING UP

AGAINST THEM UNQUOTE: WHILE THEY CAN AFFORD TO ADOPT A TAKE IT OR LEAVE IT ATTITUDE TOWARDS THOSE COUNTRIES FROM WHICH THEY WOULD IN FUTURE NOT BE REQUIRING ANY TRAFFIC RIGHTS.

11. THEY HOPE TO MOLLIFY THE SINGAPOREANS BY POINTING OUT THAT AS

PART OF THIS PACKAGE THE FARE BETWEEN AUSTRALIA AND SINGAPORE (WHICH HAS BEEN KEPT UNDULY HIGH FOR REASONS CONNECTED WITH PRO-RATING ON THE TRUNK ROUTE TO EUROPE) CAN BE REDUCED AND THAT

THIS WILL ENCOURAGE AN INCREASE IN THE NUMBER OF SHORT HOLIDAYS

TAKEN BY AUSTRALIANS IN SINGAPORE AND ELSEWHERE IN SE ASIA,

12. THE AUSTRALIANS INTEND TO MAINTAIN A POLICY OF SINGLE DESIGNAT- ION AND WOULD EXPECT ÚS (AND THEIR OTHER BILATERAL PARTNERS, EXCEPT

CONFIDENTIAL

| POSSIBLY,

יי

!

;