TNAG-0779-FCO40-983-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 66

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12. THE AUSTRALIANS TOOK THE LINE THAT WHILE THE AMERICANS WOULD REFUSE TO IMPLEMENT A SCHEME ON THE PACIFIC ROUTE, THEY WOULD HAVE NO REASONS TO OBJECT TO IT ON THE UK/AUSTRALIA ROUTE.

13. THE AUSTRALIANS AIM TO NEGOTIATE THE SAME KIND OF AGREEMENT WITH SOME EUROPEAN COUNTRIES (PROBABLY NETHERLANDS, YUGOSLAVIA, GREECE, ITALY AND FRG), AS WITH US, IE RESTRICTED TO AN EXCHANGE

to OF END TO END RIGHTS. SERVICES WOULD HAVE TO BE REDUCED PERHAPS BY UP TO 50 PERCENT A WEEK DEPENDING ON THE ROUTE. WITH OTHERS (PROBABLY FRANCE AND AUSTRIA), IF END TO END TRAFFIC WAS NOT ENOUGH TO JUSTIFY A SERVICE, THEY WOULD TERMINATE THEIR AGREEMENTS. THEY BELIEVE THAT EUROPEAN OPPOSITION WOULD NOT BE STRONG ENOUGH TO BLOCK THE SCHEME.

14. AT A SEPARATE MEETING TO CONSIDER THE POLITICAL EFFECT OF THE AUSTRALIAN PROPOSALS ON THIRD COUNTRIES, THE AUSTRALIANS PLAYED DOWN THE RISK THAT, IRRESPECTIVE OF THEIR SEPARATE AIR SERVICES /TOURIST INTERESTS, THE COUNTRIES CONCERNED WOULD GANG UP TO BLOCK THE SCHEME BY A TOTAL REFUSAL TO COOPERATE EG RY DENYING OVERFLYING AND LANDING RIGHTS. THEY STRESSED THE OVERRIDING DOMESTIC POLITICAL IMPORTANCE OF LOW FARES (AUSTRALIA GENERATES 70 PERCENT OF THE UK/ AUSTRALIA TRAFFIC) AND THEIR BELIEF THAT THIRD COUNTRIES COULD BE BROUGHT TO RECOGNISE THE BENEFITS THAT COULD ACCRUE TO THEM UNDER THE SCHEME. MURRAY (AUS FCO) POINTED OUT THE DIFFICULTY OF PREDICTING HOW THEY WOULD REACT IN ADVANCE OF ANY APPROACH TO THEM: IT WAS HARD TO BE SURE AT THIS STAGE THAT THEY WOULD NOT BE SWAYED BY APPEALS E G TO ASEAN SOLIDARITY OR NORTH/SOUTH CONSIDERATIONS. LEE KUAN YEW HAD ALREADY SOUNDED THIS NOTE (PARA 2(B) OF MY TELNO 159 TO SINGAPORE). MOREOVER, OPPONENTS OF THE SCHEME COULD CRITICISE IT AS BEING PROTECTIONIST AND A CARTEL BETWEEN THE TWO NATIONAL AIRLINES. THE AUSTRALIANS TOOK THE LINE THAT, WITHOUT AN INDICATION OF OUR AGREEMENT IN PRINCIPLE, THEY WOULD NOT BE PREPARED TO APPROACH OTHER GOVERNMENTS ABOUT THE PROPOSAL. WE UNDERTOOK TO PUT IT TO MINISTERS AS A MATTER OF URGENCY, WITH A VIEW TO RESUMING DISCUSSION WITH THE AUSTRALIANS AS QUICKLY AS POSSIBLE.

15. IN CONSULTING MINISTERS, WE WILL OF COURSE DISCUSS THE IMPLICATIONS OF THE AUSTRALIAN PROPOSALS FOR THE UK'S AVIATION POLICY GENERALLY. WE WILL ALSO TAKE ACCOUNT OF THE POINTS. MADE BY POSTS IN REPLY TO FCO TELNO 159 TO SINGAPORE ABOUT POSSIBLE ASEAN REACTION. THE AUSTRALIANS GAVE US A COPY OF AN ASEAN POSITION PAPER HANDED TO THEIR EMBASSY IN DJAKARTA ON 22 JUNE. THIS SUPPORTS THE INTRODUCTION OF LOW FARES TO PROMOTE TRAFFIC TO AND FROM AUSTRALIA, BUT EXPRESSES CONCERN AT THE POSSIBLE HARMFUL EFFECTS ON ASEAN COUNTRIES IF STOPOVERS ARE NOT PERMITTED, AND TRUSTS THAT THE AUSTRALIAN GOVERNMENT WILL GIVE CAREFUL CONSIDERATION TO ASEAN INTERESTS. COPY FOLLOWS BY BAG TO YOU AND ASEAN CAPITALS.

OWEN

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MAED SWPD

NKY GD

SEAD

SAD

FED

WED NAD

PLANNING STAFF

DEFENCE D

PS

PS/ HR JUDD

[COPIES SENT TO CAD/DOT]

PS | LORD GORONNY ROBERTS PS/ PUS

SIR A DUFF MR BUTLER

MR CORTAZZI

MR WEIR

MRR MURRAY

MISS BROWN ÷3-

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