TNAG-0865-FCO40-1075-Involvement-of-Hong-Kong-in-air-services-agreements-1979 — Page 138

CONFIDENTIAL

route via Singapore. They would be making a submission to this effect to the Department of Trade. The difficulty with the Department of Trade was that in their view it would be necessary for such cheap fares to be paralleled by similar cheap fares from Singapore to London, ie the whole matter was still bedevilled by the ICAP problem.

ICAP

5.

Mr Wilson stressed that British Airways were concerned to ensure that their basic profit position on this route was protected by restrictions on capacity. They were afraid that the Australians, who had given away too much at the last meeting in Kuala Lumpur, might give away even more. mentioned what Lord Carrington had said to Mr Peacock about this at their meeting on 24 July.

Malaysia

I

6. Mr Wilson was unhappy at the way in which agreement had been reached. He did not think it was wise to have allowed the discussions to be raised in this way to Ministerial level. The Malaysians had got much more than they really deserved, not only on the regional routes but also on the trunk routes. There had been no disagreement about three flights a week but they had thought that the fourth flight should be made subject to review in the light of traffic growth. They were very grateful to Mr Tebbit for having stood firm on a fifth flight. Mr Wilson expressed concern about

the implications of air service relations with Thailand. We had screwed the Thais down hard. They might well now think that they could get more out of us by forcing the pace at a political level.

Concorde

7. When I asked about a Concorde service to Australia Mr Wilson confirmed that British Airways had gone cald on this.

They could not see more than about 25 passengers between Singapore and Helbourne on each flight. This was simply not viable.

I commented that it had been unfortunate theway in which British Airways had blown hot and cold over the Australia route. Our efforts had got Mr Nixon out on a limb. Mr Wilson did not demur.

8. Mr Wilson said that he found it useful to talk very informally in this way to geographical Under-Secretaries and asked for advice about contacts with other geographical Under-Secretaries. I gave him relevant names and suggested that British Airways might like to arrange an informal lunch in the autumn with appropriate people: I suggested that this should be done through you. We must of course avoid upsetting the DoT whose new team (Mr Steele and Mr Roberts)

/was

CONFIDENTIAL