TNAG-0863-FCO40-1073-Involvement-of-Hong-Kong-in-air-services-agreements-1979 — Page 82

CONFIDENTIAL

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The Rt Hon Dr David Owen MP

LONDON

BRITISH HIGH COMMISSION

KUALA LUMPUR

2 February 1979

Sir

MALAYSIA AND CONCORDE

1. In December 1977 the Malaysian Government refused permission for Concorde to fly over their territorial waters on the projected London-Bahrain-Singapore service, to be run by Singapore International Airlines (SIA) in partnership with British Airways (BA). The decision, nominally technical, was primarily political and, now that the Malaysians have agreed, on

15 December 1978, to a trial period of 6 months, this despatch examines Malaysian motives.

2. The Malaysians bought wide-bodied aircraft, DC10s, in 1976 to augment passenger capacity on Malaysian Airline System's (MAS) routes to London, Hong Kong and Tokyo. British approval for increased capacity on the London leg was granted rather at the 11th hour only after hard bargaining on both sides at official level. An amicable arrangement might well have been more easily reached had BA and MAS rights only been involved, but the interests of Cathay Pacific, the Hong Kong airline, had to be brought into the new traffic equation to make the agreement more balanced and less heavily weighted in Malaysian favour. As it was, a deal was done and Aides Memoires were exchanged in October,

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