TNAG-0864-FCO40-1074-Involvement-of-Hong-Kong-in-air-services-agreements-1980 — Page 36

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CONFIDENTIAL

FM HONG KONG 0909112 JUL 79

TO IMMEDIATE F C O

TELEGRAM NUMBER 955 OF 9 JULY

INFO PRIORITY CANBERRA

UK/AUSTRALIA AIR SERVICES.

ADVANCE COPY

+4

MIK BROWN

Влаш

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MAES

ил

Hill, S.PS

HPG

1. CATHAY PACIFIC AIRWAYS (CPA) HAVE WRITTEN TO DCA EXPRESSING CONCERN ABOUT THE POSSIBILITY OF ICAP FARES BETWEEN AUSTRALIA AND HONG KONG NOT BEING INTRODUCED BEFORE THEIR 747 OPERATIONS COMMENCE ON 3 AUGUST.

2. YOU WILL RECOLLECT THAT THE TRAFFIC PREDICTIONS WERE BASED

ON ASSUMPTIONS

(A) DIVERSION OF TRAFFIC FROM THE EAST AUSTRALIA-HONG KONG ROUTE DUE TO DIRECT LOW FARES BETWEEN AUSTRALIA AND OTHER POINTS AND (B) INCREASED TRAFFIC DUE TO THE IMPLEMENTATION OF THE LOW FARES BETWEEN HONG KONG AND EAST AUSTRALIA. ALL OTHER THINGS BEING EQUAL, IT WOULD APPEAR THAT THERE WILL BE AN EXCESS OF CAPACITY ON THE HONG KONG-EAST AUSTRALIA ROUTE IF THE CPA 747 OPERATIONS COMMENCE WITHOUT THE IMPLEMENTATION OF ICAP FARES.

3. THE PROBLEM IS NOW COMPOUNDED SINCE WE LEARN THAT IN THE COURSE OF THE KUALA LUMPUR MEETING, QANTAS MADE REPRESENTATIONS TO CPA AIMED AT RETAINING THEIR FOURTH 747 WEEKLY FREQUENCY ON THE : EAST AUSTRALIA-HONG KONG ROUTE EVEN AFTER CPA HAVE COMMENCED THEIR

747 OPERATIONS. IT IS UNDERSTOOD THAT QANTAS ARE ADVANCING AS JUSTIFICATION FOR THIS PROPOSAL THE CONTINUED FIFTH FREEDOM OPERATIONS BY CPA INTO PERTH,

MMENTS ARE AS FOLLOWS