TNAG-0864-FCO40-1074-Involvement-of-Hong-Kong-in-air-services-agreements-1980 — Page 37

NT

4. OUR COMMENTS ARE AS FOLLOWS :

(A) FIRST, THERE WOULD SEEM TO BE LITTLE BALANCE BETWEEN THE VALUE OF A VERY LOW LOAD FACTOR OPERATION BY 707 AIRCRAFT TO AND

FROM WESTERN AUSTRALIA COMPARED WITH WHAT THE ADDITIONAL 747

IS LIKELY TO CARRY AT THE EXPENSE OF CPA, IE APPROXIMATELY ONE-SEVENTH OF THEIR WEEKLY TRAFFIC BETWEEN HONG KONG AND EAST

AUSTRALIA.

(B) SECONDLY, ALTHOUGH WE WOULD FEEL THAT A DAILY SERVICE BETWEEN

HONG KONG AND AUSTRALIA WOULD BEST SERVE THE PUBLIC INTEREST IF

THE PREDICTIONS AND ASSUMPTIONS OF ICAP ARE CORRECT, THERE

WOULD CLEARLY BE VERY CONSIDERABLE EXCESS CAPACITY ON THE ROUTE

WITH EFFECT FROM 3 AUGUST (ASSUMING SEVEN X 747 A WEEK), WHICH

IS CONSISTENT NEITHER WITH THE PRINCIPLES OF ICAP NOR WITH THE

BROADER PRINCIPLES OF FUEL CONSERVATION.

5. WE SHOULD BE GRATEFUL IF YOU WOULD CINTINUE TO PRESS FOR THE IMPLEMENTATION OF THE ICAP FARES (NOT LATER THAN 3 AUGUST) AND FOR THE REDUCTION OF QANTAS'S FREQUENCIES TO THREE PER WEEK (PARA 10 OF CANBERRA TEL NO 76 TO YOU). IT IS NOW SOME SIX MONTHS SINCE THE BASE OF THE PACKAGE WAS AGREED, AND THERE IS

INCREASING EVIDENCE OF TRAFFIC DIVERSION RESULTING FROM THE LACK

OF COMPETITIVE FARES ON THE HK/EAST AUSTRALIA ROUTE.

LACK

6. YOU WILL ALSO RECALL THAT IT WAS AGREED LAST JANUARY THAT, SHOULD JUSTIFICATION BE FOUND FOR THE OPERATION FO A SEVENTH 747 ON THE ROUTE AFTER THE INTRODUCTION OF ICAP (BECAUSE OF INCREASED DEMAND EXCEEDING THE AVAILABLE CAPACITY) IT WOULD FALL TO CPA TO PROVIDE THE ADDITIONAL FLIGHT (PARA 6 OF CANBERRA TELNO 54 AND PARA 9 OF CANBERRA TELNO 76 TO YOU). IF QANTAS WERE TO RETAIN THEIR FOURTH FREQUENCY AFTER THE ICAP FARES HAVE BEEN INTRODUCED, IT WOULD BE IN BREACH OF THIS AGREEMENT.

7. IT IS NOTED THAT QANTAS'S SUMMER SCHEDULES WERE ACCEPTED BY

DOT SUBJECT TO ANY SUBSEQUENT AGREEMENT ON THE IMPLEMENTATION DATE OF ICAP (DOT TELNO ALLOT 38 TO HONG KONG) WHICH WILL MAKE IT DIFFICULT TO REJECT THE QANTAS PROPOSAL UNLESS THE ICAP

HONG KONG-AUSTRALIA FARES ARE IMPLEMENTED.

8. WE ACCEPT THAT IN THE COURSE OF PURSUING THESE OBJECTIVES

CPA'S FIFTH FREEDOM OPERATIONS TO PERTH MAY BECOME A CASUALTY (AND THIS IN TURN HAS A BEARING ON CUR DEALINGS

WITH MALAYSIA) BUT THIS HAS ALREADY BEEN ACCEPTED AS A NECESSARY EFFECT OF ICAP.

9. WE WOULD BE GRATEFUL TO LEARN WHAT ACTION IT IS PROPOSED TO