TNAG-0863-FCO40-1073-Involvement-of-Hong-Kong-in-air-services-agreements-1979 — Page 36

197

CONFIDENTAL

GAS 350

CONFIDENTIAL

FM FCO 061815Z APR 79

TO IMMEDIATE CANBERRA

TELNO 126 OF 6 APRIL

Doo

Ник

Hkk 184

RALLDE

9 APR 1979

PA

ما

замд

INFO SAVING HONG KONG (GOV AND BCARFE), BANGKOK, KUALA LUMPUR, SINGAPORE, MANILA, JAKARTA ANDWELLINGTON.

YOUR TÉLNO 192: UK/AUSTRALIA AIR SERVICES.

1. WE ARE STILL PUZZLED AND CONCERNED BY THE APPARENT CHANGE IN AUSTRALIAN PROPOSALS REGARDING SIA CAPACITY, THEY HAD PREVIOUSLY TOLD US THAT THEY WERE PROPOSING TO CUT SIA'S FREQUENCY FROM 14 TO 5 FLIGHTS A WEEK (NOT 15 AS IN MY TELNO 123). THE ANALYSIS OF THE EFFECT OF LOWER SECTOR FARES AND STOPOVER FARES, CARRIED OUT DURING ROGERS' VISIT IN JANUARY, SHOWED A RELATIVELY MODEST INCREASE IN THE NUMBER OF VISITORS TO SINGAPORE, RANGING FROM 3,100 TO 10,900 DEPENDING ON ASSUMPTIONS ADOPTED. THESE WOULD PRESUMABLY BE CARRIED MORE OR LESS EQUALLY BY QANTAS AND SIA, GIVING AN INCREASE OF BETWEEN 1500 AND 5,500 PASSENGERS (IE BETWEEN 3000 AND 11000 ONE-WAY JOURNEYS) FOR SIA TO SET AGAINST THE LOSS OF THROUGH TRAFFIC OF THE ORDER OF 42,000 ONE- WAY JOURNEYS IN 1978/79. THE STILL LOWER SECTOR FARES BETWEEN AUSTRALIA AND ASEAN POINTS NOW ENVISAGED COULD BE EXPECTED TO GENERATE SOME ADDITIONAL TRAFFIC: BUT, AGAINST THIS, THEY WOULD REQUIRE A HIGHER SEAT UTILISATION IN ORDER TO BE ECONOMIC AND

THIS CASTS DOUBT ON THE 70 PERCENT FACTOR WHICH THE AUSTRALIANS ARE

NOW PROPOSING TO USE FOR CAPACITY PLANNING PURPOSES.

2. OUR CONCERN IS THAT THIS ADDITIONAL CAPACITY WOULD GIVE THE

SINGAPOREANS A MARGIN OF SURPLUS CAPACITY WHICH THEY WOULD INEVITABLY FILL WITH END TO END TRAFFIC BY SOME MEANS OR ANOTHER, THUS UNDERMINING THE FINELY-BALANCED ECONOMICS OF THE BA AND

QANTAS OPERATIONS. THIS HAS, WE THOUGHT, BEEN COMMON GROUND BETWEEN THE AUSTRALIANS AND OURSELVES FROM THE OUTSET.

3. WE ARE ALSO UNCLEAR AS TO HOW FAR THE AUSTRALIANS PROPOSE TO

MOVE ON STOPOVER FARES.

CONFIDENMAL

/K. WE CONSIDER 从