TNAG-0863-FCO40-1073-Involvement-of-Hong-Kong-in-air-services-agreements-1979 — Page 190

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GRS 670

(CONFIDENTIAL

CONFIDENTIAL

FM WELLINGTON 080425Z FEB 79

TO IMMEDIATE KUALA LUMPUR

TELEGRAM NUMBER 3 OF 8 FEBRUARY

118

HEK 184/

INFO BANGKOK, SINGAPORE, CANBERRA, HONG KONG GOVERNOR AND BCARFE) FCO

FOR ROGERS

DA

WELLINGTON TEL NO 44 TO FCO REFERS: AIR SERVICES.

1. HEALY (DEPUTY SECRETARY OF TRANSPORT) ASKED HEAD OF CHANCERY TO CALL ON HIM TODAY. HE SAID THAT HE HAD BEEN VERY DISAPPOINTED THAT DISCUSSIONS LAST WEEK ENDED WITHOUT AGREEMENT. HE RECOGNISED THAT ROGERS HAD HAD TO CONSIDER DIFFICULTIES THAT ANY NEW FARES MIGHT CREATE FOR THE AUSTRALIAN/ASEAN DISCUSSIONS AND HE HAD APPRECIATED ROGERS FRANKNESS ABOUT THIS. THE PROBLEM WAS THAT NZ MINISTERS COULD NOT ACCEPT THAT A NZ/UK LOW FARE COMPETITIVE WITH THE AUSTRALIAN/UK LOW FARE MUST AWAIT THE RESOLUTION OF THE AUSTRALIAN PACKAGE.

2. HE AND HIS OFFICIALS HAD BEEN LOOKING FOR A WAY ROUND THE

DIFFICULTY. HE THOUGHT THAT THE PROBLEM WAS NOT REALLY ABOUT THE

NUTS AND BOLTS OF A FARES PACKAGE. INDEED AIR NEW ZEALAND HAD

REPORTED THAT THEIR DISCUSSIONS WITH BA IN AUCKLAND ON FRIDAY HAD

BEEN ENCOURAGING. HEALY'S PROPOSAL WAS AS FOLLOWS. THE NEW ZEALANDERS

SHOULD AGREE A BA END-TO-END LOW FARE. IT HAD NOT PROVED POSSIBLE

FOR THE AIRLINES TO FIND AN ADEQUATE ANZ SHARING ARRANGEMENT ON

THE EXISTING BA ROUTE AND IN ANY CASE IT WOULD NOT BE POLITICALLY

ACCEPTABLE IN NZ FOR THE ONLY LOW FARE TO BE OFFERED ON BA SCHEDULES.

THEREFORE IT WOULD BE NECESSARY TO MATCH THE BA FARE ON SERVICES

IN WHICH ANZ COULD PARTICIPATE. HE ACCEPTED THAT FARES COULD NOT BE

AGREED THOUGH SINGAPORE/HONG KONG PENDING THE SETTLEMENT OF THE AUSTRALIAN/ASEAN NEGOTIATIONS. BUT HE COULD NOT SEE THAT LOWFARE THROUGH THE WEST COAST WAS SO DIFFICULT. ROGERS HAD STILL SEEN SOME

PROBLEMS IN THIS BUT HEALY HOPED THAT THESE COULD BE OVERCOME BY NEW ZEALAND ACCEPTING THAT IT WOULD BE FOR THEM TO JUSTIFY THE FAREKV TO THE SINGAPOREANS ON THE GROUNDS THAT THIS WAS THEIR DECISION AND

WAS NECESSARY TO STIMULATE TRAFFIC ON A ROUTE ON WHICH AIR NEW

ZEALAND HAD 11 SERVICES EACH WEEK. THERE WAS NO SIMILAR CONSIDERA-

TION ON THE SINGAPORE ROUTE WHICH WAS SUBJECT TO A CAPACITY RESTRICT-

ION. THERE WOULD BE NO QUESTION OF NEW ZEALAND AGREEING TO SIA

CONFIDENTIAL

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