TNAG-0780-FCO40-984-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 209

ANNEX A

IMPLICATIONS FOR THE COUNTRIES AFFECTED AND THEIR LIKELY

REACTIONS

SINGAPORE

1 There are two aspects. First, the ability of through passengers, particularly from Australia, to stop over in Singapore for say a couple of days and continue their journey with the same carrier at a through preferential fare will be removed. This will significantly affect the tourist trade in Singapore. Secondly, it will be necessary for both countries to impose an appreciable cut on SIA's services (SIA's operations make a significant contribution to the Singapore economy). Out of London, these are likely to be reduced from a daily service to four or five a week and the Australians propose considerably to reduce services between Singapore and Australia (from 14 to about 5 a week). The net revenue loss to SIA could be of the order of

£10 million per annum. The Australians hope to arrange the introduction of cheap fares between Australia and Singapore to encourage the growth in tourist trade from Australia for

It is stays for longer than the present one or two days. fairly certain, however, that Singapore will be seriously upset at the immediate loss which she will suffer.

MALAYSIA

2 The Australians may decide to withdraw Qantas from the Malaysia-Australia service altogether and leave it in the hands of MAS. Malaysia will lose the ability legally to carry through traffic at the new low fare from Australia to Europe. MAS will however gain from cuts in the SIA services to London, because SIA will be much less able to

MAS carry traffic from Malaysia to the UK over Singapore. will also gain traffic from Qantas' exclusion from the Kuala Lumpur-London sector and if Qantas come off the Australia-Kuala Lumpur sector. It will not be necessary to cut the existing two services per week operated from London by MAS. On the contrary we estimate that the net effect on the traffic which they get between Kuala Lumpur and London as a result of the changes should be an increase of more than one sixth on their present carryings. Whilst this increase of itself is not sufficient to warrant an increase in the capacity which MAS operate between Kuala Lumpur and London, it should nonetheless facilitate in due course our acquiescence in some modest expansion. The effect on MAS's revenues of this gain in traffic between Kuala Lumpur and London, the reduction in the payment of levies on sixth freedom traffic to BA and the gain between Australia and Kuala Lumpur as a result of Qantas leaving the route should be a net gain of over £2m p.a. On the other hand there could in the short term at least be some loss in tourist income from the decline in numbers of through passengers stopping over in Malaysia. The Australians believe however that there is considerable potential for growth in genuine Australian tourist traffic to Malaysia.