TNAG-0780-FCO40-984-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 146

who at present carry about a quarter of the through traffic,

would be cut out of the trunk route and would be limited

to services between their country and Australia or UK.

The consequent reduction of services and high utilisation

of aircraft seating capacity would permit cheap through

fares. The Australians see no place for charter flights,

eg Laker, which would cream off the low fare traffic and

so affect the economics of the scheduled services. Laker

are currently considering modifications to their proposals.

(The Australian proposals are described in paragraphs 1 to 3

of the paper.)

Analysis of the proposals

4

Examination of the proposals revealed a number of practical

problems. The Australians have been flexible on these and

there are grounds for thinking that satisfactory solutions

to them can be found (Paragraph 4).

5 On the other hand they have been inflexible over charters.

We are not convinced that a small charter operation need be

incompatible with the Australian proposals and might be

beneficial. We propose to discuss this further with the

Australians.

(Paragraph 5).

6 The advantages of the proposals to the UK are that the

lower fares would benefit the consumer and should increase

traffic between Australia and the UK (of which 70%

originates in Australia) by about one-fifth to 600,000 one

way journeys per year. BA have calculated that the proposals

are in their commercial interests and estimate a net increase