TNAG-0780-FCO40-984-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 27

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PRIORITY CYPHER/CAT A

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FM ONG KONG 020343Z

RESTRICTED

HERRESTRICT

SULTED

OSACER

ctia: lexan

TO PRIORITY F.C.O TELNO.1054 OF 2 SEPTEMBER 78

INFO PRIORITY WASHINGTON,

ROUTINE HONG KONG GOVERNMENT OFFICE LONDON.

498

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Mì Quan hu Nothing Bet/in

YOUR TELNO.673: U.S/HONG KONG CURRENCY PROBLEMS. Ser.531)

1. THE U.S DOLLAR FARES AVAILABLE IN HONG KONG ARE THE SELLING

RATES AVAILABLE IN THE UNITED STATES FOR THE REVERSE JOURNEY, AND

WE HAVE NO GROUNDS FOR COMPLAINT ON THAT SCORE. THE HONG KONG DOLLAR FARES ARE CONVERTED AT THE IATA ARTIFICIAL EXCHANGE RATE WHICH ON THE SURFACE DISCRIMINATES AGAINST PASSENGERS PAYING IN LOCAL CURRENCY. HOWEVER, DISCREET ENQUIRY TO THE AIRLINES SHOWS

THAT FARES ARE BEING QUOTED IN U.S DOLLARS. IF ONE ASKS WHAT THE FARE IS IN LOCAL CURRENCY, IT IS POINTED OUT THAT IT IS CHEAPER TO PAY IN U.S DOLLARS.

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2. WE DO, OF COURSE, HAVE THE SAME PROBLEM IN RESPECT OF FARES

BETWEEN HONG KONG AND LONDON WHERE, FOR EXAMPLE, THE NORMAL ECONOMY FARE IS HONG KONG DOLLARS 4902 OR POUNDS STERLING 435.50.

THE EXCHANGE RATE IS THEREFORE 11.256 AGAINST A BANK EXCHANGE RATE OF 9.25 (AS AT 1 SEPTEMBER 78). WE HAVE BEEN URGING THE CAA TO DEAL WITH THIS PROBLEM BY PROPOSING THAT THE SALE OF TICKETS IN HONG KONG BE MADE AVAILABLE IN STERLING AT THE U.K SELLING LEVELS (IN EXACTLY THE SAME WAY AS THE UNITED STATES FARES) BUT WE ARE TOLD THAT THEY ARE OPPOSED TO THIS PROPOSAL AS IT IS A FORM OF QUOTE DISCOUNTING ON THE APPROVED FARE UNQUOTE. SURELY, IT IS INCONSISTENT TO PRESS THIS POINT WITH THE AMERICANS WHILST

WE SHOULD BE TAKING AN OPPOSITE VIEW ON THE CABOTAGE ROUTE. GRATEFUL FOR YOUR COMMENTS ON THIS.

MACLEHOSE

FILES

MAEP,

NAMD.

HKFG.D.

MISS BROWN.

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COPIES TO HONGKONG GOUT OFFICE

RESTRICTED.