TNAG-0863-FCO40-1073-Involvement-of-Hong-Kong-in-air-services-agreements-1979 — Page 170

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12.

It is generally recognised that airlines must grow in order to retain their position, and any arrangement which marely perpetuates the status quo is inadequate. Thus the expansion of CPA's operations within the above area is considered to be a legitimate aspiration which should receive all possible support both from the UK Government and from the Hong

Kong Government.

13.

It is essential to avoid the repetition of such damage to CPA's position as arose in the Malaysia/Singapore negotiations referred to in paragraph 5. Not only would a repetition of such damage cause difficulties for CPA; it would also weaken the overall position of British aviation interests in the region. The loss of regional traffic would not accrue (except in infinitesimal degree) to BCAC; it would accrue to foreign carriers, none of whom will contribute to the sterling area nor (except in minor degree) to the economy of Hong Kong. Such foreign carriers are not likely to employ more than 10% of Cathay Pacific Airways staff in Hong Kong: they would not have a comparable interest in Hong Kong tourism, and they would not generate to the same extent as do CPA regional traffic between Hong Kong and the other main cities served by CPA. Furthermore, such carriers would not use the maintenance facilities of the Hong Kong Aircraft Engineering Company, and would not contribute to the Hong Kong Government nor to United Kingdom companies such as Shell (HK 16,000,000 p.a.) to the same degree as Cathay Pacific Airways. Thus the departure of Cathay Pacific Airways from any regional air route could only be to the detriment of both United Kingdom and Hong Kong interests; whilst it would be of benefit to

foreign carriers and countries.

E. PROCEDURE FOR AIR SERVICES NEGOTIATIONS

14.

The following genoral principles are ut forward as a genoral basis

for the conduct of future air ser ices negotiations involving the interests

of CPA. No account has been taken of those talks which do not affect

traffic rights at Hong Kong for airlines of a foreign government. When

traffic rights at Hong Kong are being bartered, there are two types of

negotiations to be considered :

namely :-