TNAG-0780-FCO40-984-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 136

CONFIDENTIAL

meeting with the Australians should not take place

before the Australians have approached certain third

countries about their proposals. I submit a draft.

Arguments

4.

What answer should be given to the Australians?

A

The joint paper sets out the arguments in detail. The

Australian proposal is mainly influenced by domestic pressure for

reduced air fares, particularly on the UK/Australia route.

charter solution would not suit Australian interests, since it

would make it harder to maintain viable and regular scheduled ser-

vices to any but the few` biggest cities. The Australians have

concluded that their needs can best be met by restricting UK/Australia traffic to BA and Qantas and by cutting out diversion to other car-

riers at-stop-over points en route. The estimated economic and

social advantage of such a scheme for the UK would be a reduction

in the lowest return fare from about £500 to £300 (but 70% of the

passengers are Australian) and a possible net increase in profit

by BA of some £5-6 million. The main difficulty lies in the effect

on other countries en route. We anticipate that all the countries

of South and South East Asia adversely affected would oppose the

scheme: they would consider joining together in opposition to it.

If several of them were prepared to do so they could even block

it. There may also be trouble from the Americans, and from the

French and the Dutch.

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15.