TNAG-0862-FCO40-1072-Involvement-of-Hong-Kong-in-air-services-agreements-1979 — Page 89

CONFIDENTIAL

BETTER THAN THE AUSTRALIANS HAD EXPECTED AND THAT IT HAD BEEN PLAIN THAT THE OTHER ASEAN COUNTRIES WERE EXERCISING A STRONG RESTRAINING INFLUENCE ON SINGAPORE. THE MALAYSIANS AND THAIS WERE GREATLY CONCERNED WITH SINGAPORE'S 'POACHING'' OF TRAFFIC BETWEEN THEIR COUNTRIES AND AUSTRALIA WHICH PARALLELS SINGAPORE'S CORRESPONDING ACTIVITIES ON THE TRUNK ROUTE.

1

THEY WERE ANXIOUS THAT THE NEW ARRANGEMENTS SHOULD BE SUCH AS TO ELIMINATE OR AT LEAST MINIMISE THESE PREDATORY ACTIVITIES BY SIA AND THIS EXPLAINED THE REFERENCE TO THE NEED TO TAILOR CAPACITY TO DEMAND IN THE STATEMENT ADOPTED BY ASEAN ECONOMIC

MINISTERS IN DECEMBER 1978.

5.

DISCUSSIONS WITH THE ASEAN COUNTRIES BOTH AT THE CONFERENCE TABLE AND IN PRIVATE TALKS HAD ALSO REVEALED A STRONG CONFLICT OF VIEWS REGARDING FARES BETWEEN THEIR RESPECTIVE COUNTRIES AND AUSTRALIA. WHEREAS SINGAPORE WANTED THE LOWEST POSSIBLE FARES FOR THE AUSTRALIA-SINGAPORE SECTOR, INDONESIA AND MALAYSIA WERE OPPOSED TO LOW APEX FARES, IN DEFERENCE TO THESE WISHES THE AUSTRALIANS HAD TABLED INDICATIVE FARES BETWEEN AUSTRALIAN POINTS AND THE VAÏOUS ASEAN CAPITALS WHICH WERE SENSIBLY RELATED TO EACH OTHER

AND TO THE PROPOSED HONG KONG FARES ON A MILEAGE BASIS BUT WHICH WERE ALL A GOOD DEAL HIGHER (ESPECIALLY SO FAR AS APEX FARES WERE CONCERNED) THAN THE FARES AGREED FOR THE TRUNK ROUTE.

6. ROGERS GAVE A BRIEF SUMMARY OF HIS DISCUSSIONS IN SINGAPORE LAST WEEK AND MENTIONED THE VOLTE FACE BY THE YSINGAPOREAN GOVERNMENT OVER THE PROPOSAL TO HOLD CONSTRUCTIVE DISCUSSIONS ABOUNETHE LONDON-SINGAPORE SECTOR FARE AND ABOUT FOSSIBLE STOPOVER ARRANGEMENTS. V IT WAS DISAPPOINTING THAT THE SINGAPOREANS SEEMED MORE INTERESTED IN PUBLICITY THAN IN DISCUSSING THE PROBLEMS REALISTICALLY.

THE REST OF THE DAY WAS TAKEN UP WITH AN EXAMINATION OF THE VARIOUS WAYS IN WHICH THE LEGITIMATE CONCERNS OF THE ASEAN COUNTRIES MIGHT BE MET. IT STILL APPEARED THAT THE NEW REGIME WOULD BE BENEFICIAL, OR AT LEAST NEUTRAL, IN ITS EFFECTS ON ALL ASEAN AIRLINES EXCEPT SIA WHERE THE EFFECT WAS LIKELY TO BE A SLOWING OF THE EXTREMELY RAPID RATE OF EXPANSION RATHER THAN AN ACTUAL CUT-BACK. IT WAS AGREED THAT THE OBJECTIVE SHOULD BE TO PRODUCE A NEUTRAL EFFECT ON THE

2

CONFIDENMAL

/TOURISM