TNAG-0779-FCO40-983-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 81

The desirability or otherwise of continuing the revenue pooling arrangements between the designated carriers was examined in depth. Both delegations were conscious of the benefits of competition. On the other hand a detailed investigation of the effects of competitive scheduling demonstrated that there would be significant extra costs. It was agreed that these factors needed to be weighed carefully one against the other and that further evaluation of this matter was warranted before a decision could be taken.

A preliminary assessment was made of the implications of the proposals for the Hong Kong Government and for Cathay Pacific Airways. The delegations noted that, contrary to the preliminary assessment by the Australian delegation that direct services at reduced frequencies between Perth and Hong Kong would be viable under the proposed arrangements, CPA considered that in order to maintain its West Coast service it might need to combine third and fourth freedom traffic from Hong Kong to an intermediate point with Hong Kong to Perth traffic. They agreed that this and other implications should be studied in greater depth as quickly as possible.

Both delegations agreed that the proposed regime would provide economic, social and other broad ranging benefits in both countries.

They considered the implications for third countries as fully as possible at this. stage. They noted that certain other Governments and carriers had expressed concern about possible changes. They recognised that the adoption of the proposed regime could have both adverse and beneficial effects, not only on the airlines but also on the tourist industries in third countries.

The United Kingdom delegation undertook to put the Australian proposal to their Ministers as a matter of urgency," explaining: that the Australian Government required a British commitment in principle before approaching any other countries.

The delegations agreed to meet again as soon as possible.

A list of the two delegations is attached.

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ANF 26

TROGEN

Leader, UK delegation

LONDON: 23 June 1978

H ROWLAND

Leader, Australian

delegation