TNAG-0779-FCO40-983-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 98

CONFIDENTIAL

彳

351

GRS 580A

IMMEDIATE

CYPHER CAT A

HKK 184/1

2▾ JUN 1978

:}

sk

FM KUALA LUMPUR 220850Z

IN EX

PA

ра

sotion Teken

No

CONFIDENTIAL

DESKBY FCO 221000Z

NIR

TO IMMEDIATE FCO TELNO 292 OF 22 JUNE 1978

PRIORITY TO SINGAPORE, JAKARTA, CANBERRA, MANILA, BANGKOK, DELHI AND HONG KONG (FOR GOVERNOR AND BCARFE)

YOUR TELEGRAM NO 159 TO SINGAPORE: UK/AUSTRALIA AIR SERVICES

1. THE MALAYSIANS REACTION WILL TURN ON THEIR ASSESSMENT OF HOW

DAMAGING THE NEW MEASURES WOULD BE TO THEIR CIVIL AVIATION INTERESTS.

HOWEVER AN IMMEDIATE EMOTIONAL TENDENCY TO REJECT THE PROPOSALS

COULD BE OVERCOME IF IT COULD BE SHOWN THAT THE NET EFFECT WOULD

BE BENEFICIAL AT LEAST IN THE MEDIUM TERM.

2. HOWEVER WE CANNOT UNDERSTAND HERE HOW THE MALAYSIANS COULD BE THE GAINERS. THE AUSTRALIAN PROPOSALS IMPLY THAT BOTH THE UK/ MALAYSIA AND THE AUSTRALIA/MALAYSIA BILATERALS WOULD NEED TO BE

RENEGOTIATED WITH THE OBJECT OF LIMITING MAS'S ABILITY TO CARRY SIXTH FREEDOM TRAFFIC, WHICH WE UNDERSTAND ACCOUNTS FOR ABOUT ONE-THIRD OF THEIR REVENYE ON THEIR AUSTRALIA/UK SERVICES. QUITE

APART FROM BEING POLITICALLY OUT OF THE QUESTION IN THE PRESENT

STRAINED STATE OF ANGLO-MALAYSIAN AVIATION RELATIONS, IT SEEMS IN ANY CASE UNLIKELY THAT WE WOULD BE IN A POSITION TO CUT BACK

MAS'S CURRENT TWO DC10S TO LONDON PER WEEK. THE REASON FOR THIS

IS THAT THE NEW PROPOSALS WOULD CREATE REDUCED OPPORTUNITIES FOR

MALAYSIAN TRAFFIC TO BE CARRIED TO LONDON OVER SINGAPORE AND

BANGKOK AND THEREBY INCREASE THE DEMAND ON THE KL/LONDON SECTOR. QANTAS'S WITHDRAWAL FROM FIFTH FREEDOM RIGHTS KL/LONDON SHOULD

ALSO HELP TO INCREASE THE DEMAND ON THIS SECTOR.

3. THEREFORE RESTRICTIONS ON MALAYSIA'S PRESENT ABILITY TO CARRY SIXTH FREEDOM PASSENGERS AUSTRALI/UK WOULD HAVE TO COME FROM REDUCTIONS IN THEY USTRALIA/MALAYSIA BILATERAL. HOWEVER THERE CAN

BE LITTLE COMFORT HERE SINCE IT WOULD BE CLEAR THAEHORLD-WIDE

THE UK AND AUSTRALIA WERE ACTING IN CONCERT TO DENY SIXTH FREEDOM

OPPORTUNITIES. WHATEVER HAPPENS IT IS DIFFICULT TO SEE HOW THE MALAYSIANS (OR ANY OTHER MID-POINT COUNTRY) COULD ACTUALLY BENEFIT FROM STEPS TAKEN TO REDUCE SIXTH FREEDOM OPERATIONS.

CONFIDENTIAL

114.

THE