TNAG-0780-FCO40-984-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 155

levies on sixth freedom traffic to BA and the gain between Australia and Kuala Lumpur as a result of Qantas leaving the

On the other route should be a net gain of over £2m p.a.

hand there could in the short term at least be some loss in foreign exchange from tourist income from the decline in numbers of through passengers stopping over in Malaysia. (The real loss to the Malaysian economy could however be less than at first sight since the short-term stop-over

The Australians tourism is very heavily subsidised). believe however that there is considerable potential for growth in genuine Australian tourist traffic to Malaysia. All in all the effect of the Australian proposals on

However this Malaysia should in our view be beneficial. will not be immediately apparent to them if only because some of the benefits accrue from secondary effects. will be immediately apparent is the loss they will suffer in being excluded from carrying through traffic between Australia and the UK and Europe and their first reaction could be sharp. We believe however that their initial resentment could be mitigated when we are able to demonstrate

But, given to them the benefits that could accrue to them. the extent of their ambitions, they may be looking for more.

THAILAND

What

4 We shall not need to cut Thai International's existing 3

This is because services weekly between Bangkok and London. they stop at Frankfurt and the Frankfurt/Bangkok sector accounts for a significant proportion of their capacity. Their load factors are in consequence very high with the result that they are presently having to turn away traffic. The Australians are confident that services from Thailand to Australia would be viable. The Australians would probably reduce Qantas services to Thailand but they would not want to give the Thais a monopoly. Thailand, like Malaysia will lose the ability to carry through traffic at the new low fare from Australia to Europe and will gain from the exclusion of Qantas from the sectors west of Bangkok, and from reduction of its services between Australia and Bangkok. The apparent net effect on Thai International revenue is a loss of around £3m p.a. but the real loss, if loss at all there is, will probably be much less. With a reduction in their sixth freedom traffic they can be expected to retrieve more of the end to end traffic which they say they are presently turning away. The same considerations apply to tourism in Thailand as to those in Malaysia. The Thais are not going to like the Australian scheme but it is difficult to gauge how strong their reaction will be. This will depend on whether they can be satisfied that their present capacity will remain and that there will be scope for growth.