1
in profit of £5-6m per year (50 per cent improvement in
the profitability of the route).
(Paragraph 6).
7 The disadvantages of the proposals to the UK are likely
criticism (no worse) from the Americans; and, more serious,
possible adverse reaction, either individual or collective,
from the mid-point countries in S E Asia, and India.
Singapore's airline (SIA) and tourism would be worst
affected and Lee Kuan Yew will probably react sharply.
Malaysia's initial reaction could also be adverse but we
hope that when the full implications of the proposals are
explained to her, she will view them at worst with
neutrality. There is a risk that irrespective of their
separate air service/tourist interests, the countries
concerned would gang up to block the scheme by a total
refusal to cooperate eg by denying overflying and landing
rights. There could also be opposition to the scheme
from some countries in Europe (particularly from the Dutch
if KLM services stopped) but this would probably not be
strong enough to block it. (Paragraphs 7 and 8).
8 There are implications for Hong Kong.
Provided we are
able, as we hope, to defend Cathay Pacific Airways' other
fifth freedom rights not directly affected by the scheme, they
do not appear very serious at first sight. The Hong Kong
Government and Cathay Pacific Airways are however still
studying the proposal. It is too early to give the
Australians a reply in respect of the Australia/Hong Kong
routes (Paragraph 9).
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