TNAG-0868-FCO40-1078-Air-services-between-China--Hong-Kong-and-the-UK-1979 — Page 103

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CONFIDENTIAL

AN ALYSIS OF OPTIONS.

3.

OPTION A WOULD PROVIDE FOR:

(1) AN EXCHANGE OF TRUNK ROUTES ON WHICH SERVICES WOULD PROBABLY START IN APRIL 1980. BA WOULD BE ABLE TO OPERATE 2XB747 PER WEEK, WITH CAPACITY AVAILABLE FOR END-TO-END TRAFFIC BETWEEN LONDON

AND PEKING RESTRICTED TO THE EQUIVALENT OF 2XB707 PER WEEK.

THIS REWTRICTION WOULD BE APPLIED TO CAAC WHEN THEY SUBSTITUTED 2XB747S FOR 2XB707S ON THEIR SERVICE AND IS UNLIKELY TO HAVE ANY PRACTICAL EFFECT IN THE EARLY YEARS. WHEN IT DOES BEGIN TO BITE, IT WILL BE EQUALLY IN CAAC'S INTERESTS TO HAVE IT REMOVED.

(11) BA WOULD BE ABLE TO OPERATE VIA HONG KONG BUT WITH RIGHTS BETWEEN HONG KONG AND PEKING LIMITED TO QUOTE TRUNK ROUTE STOP- OVER UNQUOTE TRAFFIC. (THE PRECISE DEFINITION OF THIS HAS YET

TO BE AGREED AND IT REMAINS TO BE SEEN HOW EFFFECTIVELY THE

RESTRICTION CAN OR WILL BE ENFORCED). BA COULD OPERATE VIA HONG KONG UNTIL THE TRAFFIC BETWEEN LONDON AND PEKING HAD BUILT

UP TO A LEVEL WHICH RENDERED A DIRECT ROUTEING PROFITABLE.

BOTH SIDES ENVISAGE THAT THIS WOULD TAKE SEVERAL YEARS.

(111) A FIRM COMMITMENT THAT A HONG KONG BASED CARRIER COULD OPERATE SERVICES BETWEEN HONG KONG AND PEKING ONCE BA DROPPED

HONG KONG FROM THE TRUNK ROUTE. THE ARRANGEMENTS FOR THIS WOULD

BE WORKED OUT NEARER THE TIME.

(IV) REGIONAL SERVICES BETWEEN HONG KONG AND POINTS IN CHINA. THE UK WOULD HAVE TWO POINTS, OF WHICH ONE WOULD BE PEKING UNDER THE ARRANGEMENTS IN (11) AND (111) ABOVE AND THE OTHER SHANGHAI, WHICH A HONG KONG BASED CARRIER WOULD BE ABLE TO OPERATE FROM THE OUTSET. CHINA WOULD HAVE SIX POINTS BUT IT IS UNLIKELY THAT CAAC WOULD OPERATE SCHEDULED SERVICES ON A YEAR-ROUND BASIS FROM ANY POINTS OTHER THAN PEKING, SHANGHAI AND CANTON DURING THE NEXT FEW YEARS. CAAC WOULD BE RESTRICTED TO A MAXIMUM OF 6XB707 ON THE HONG KONG-PEKING ROUTE (WE MIGHT BE ABLET TO GET THIS DOWN TO 5). THEY WOULD HAVE FREQUENCY/CAPACITY WEIGHTED IN THEIR FAVOUR ON THE SHANGHAI -HONG KONG ROUTE BY 2:1.

(V) A REVIEW ABOUT ONE YEAR AFTER THE START OF SERVICES ON THE TRUNK ROUTE. IN PRACTICE, THIS WOULD PROBABLY BE MID-1981,

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QONET DENTIAL

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