All in all the effect of the Australian proposals on Malaysia should in our view be beneficial. However this will not be immediately apparent to them if only because some of the benefits accrue from secondary effects. What 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 to them the benefits that could accrue to them. But, given the extent of their ambitions, they may be looking for more.
THAILAND
3 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
like not want to give the Thais a monopoly. Thailand, 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 fauge 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.
INDONESIA
4
Indonesia would lose some tourist stop-over traffic both on the Australia-Europe route and on the Australia- Hong Kong route. However she is already concerned to confine air traffic exchanges to the third and fourth freedoms; and may gain from an increase in Australian tourists taking advantage of the new low fares to visit Indonesia. On balance her air services/tourist interests are not
Nonetheless likely to be more than marginally affected.
they might for political reasons respond to a strong appeal from Singapore to ASEAN solidarity. If they were to go so far as to deny overflying rights they could block CPA's services to East and West Australia. Qantas and BA could
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