TNAG-0781-FCO40-985-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 80

CONFIDENTIAL

3. TOAKLEY WAS NOT ABLE TO TELL US MUCH MORE ABOUT EVENTS CONCERNING THE ASIAN COUNTRIES THAN WAS CONTAINED IN TELEGRAMS UNDER REFERENCE. HE DID NOWEVER SAY THAT INDONESIA HAS COMMITTED ITSELF IN PRINCIPLE TO THE AUSTRALIAN PROPOSALS. HE SEEMED CONFIDENT THAT THERE WOULD

BE NO PROBLEMS WITH THE THAIS AND WHILST HE WAS NOT ABLE TO SAY MUCH OF REAL REASSURANCE CONCERNING MALAYSIA'S REACTION HE DID NOT EXPECT A STRONG AND UNITED ASEAN FRONT AGAINST AUSTRALIA AT THE MEETING SCHEDULED FOR 11 DEC. THE VISIT OF THE AUSTRALIAN TEAM TO

INDIA ON 22 NOV HAD NOT EVOKED ANY STRONG REACTIONS FROM THE

INDIANS. SINGAPORE, AS WE ALL ACCEPT, IS THE PROBLEM COUNTRY BUT TOAKLEY SAID THAT THE DECISION TO ALLOW QANTAS TO SERVE NOTICE

OF TERMINATION OF THEIR COMMERCIAL AGREEMENT WITH SIA HAD BEEN

TAKEN ONLY AFTER FULLEST CONSULTATION BETWEEN THE SENIOR AUSTRALIAN

MINISTERS CONCERNED AND HE WAS CONFIDENT THAT AUSTRALIA WOULD

IMPOSE THE REQUIRED CAPACITY REDUCTIONS ON SIA WHEN THE NOTICE

EXPIRED.

4. THERE WAS SOME DISCUSSION WITH THE AIRLINES PRESENT ON THE INTERIM FARES PACKAGE ON WHICH BA AND QANTAS HAD REACHED AGREEMENT DURING AIRLINE DISCUSSIONS ON WEDNESDAY AND THURSDAY. (COPY OF THE AGREED DOCUMENT BY BAG TO CANBERRA ONLY). DOT HAS SOME RESERVATIONS ABOUT

WHETHER REALISTIC ASSUMPTIONS REFLECTING ON THE ECONOMICS OF THE

PACKAGE HAVE BEEN MADE AND WILL BE DISCUSSING THESE FURTHER WITH BA.

5. BUT THE QUESTION WHICH IS CAUSING US THE GREATEST CONCERN IS THE

ONE OF TIMING. TOAKLEY RE-AFFIRMED WHAT WAS REPORTED IN YOUR TELEGRAM

UNDER REFERENCE CONCERNING THE HOPED-FOR DATE OF INTRODUCTION OF THE

NEW LOW FARES ON 1 FEB 79 IN ADVANCE OF THE FULL NEW REGIME (PROPOSED START-DATE 1 APRIL), ALTHOUGH THEY ARE ESSENTIALLY A PART OF IT. THE REASONS FOR THE PROPOSED ACCELERATED INTRODUCTION

ARE THE LOW LEVEL OF FORWARD BOOKING WITH BA AND QUANTAS AND

RELUCTANCE TO INTRODUCE THE NEW LOW FARES AT THE START OF THE PEAK SEASON (APRIL), WHEN UNDER THAT SYSTEM THEY WOULD BE COMPARATIVELY HIGH. HE SHOWED US A REPORT OF A RECENT STATEMENT

BY MR NIXON IN THE HOUSE TO THE EFFECT THAT QUOTE HE NEXT WORD UNDERLINED EXPECTS TO BE ABLE TO ANNOUCE AGREEMENTS ON

FARES WITH BRITISH AND OTHER EUROPEAN COUNTRIES NEXT TWO WORDS

UNDERLINED BEFORE CHRISTMAS UNQUOTE.

2

CONFIDENTIAL

16.