TNAG-0868-FCO40-1078-Air-services-between-China--Hong-Kong-and-the-UK-1979 — Page 11

~CKS 1049

CONFIDENTIAL

PEKING 2096382 JUL 79

DESK BY FCO 200930Z HONG KONG 200839Z

TO IMMEDIATE FCO

TELEGRAM NUMBER 655 OF 20 JULY

INFO IMMEDIATE HONG KONG

FOLLOWING FROM DELEGATİON.

CONFIDENTI AL

214

Hke 1841

PA

23 JULI

MIPT: UK/PRC AIR SERVICES NEGOTIATIONS.

213

See (215) 11 219

A

1. PROVIDED BOTH YOU AND THE CHINESE ACCEPT THE SOLUTION TO THE HEATHROW/GATWICK PROBLEM RECOMMENDED IN PARA 7 OF TUR, THE ONLY OUTSTANDING OBSTACLE TO THE CONCLUSION OF AN OVERALL AGREEVENT ON THE BASIS OF OPTION A IN MY TELNO.552 IS THE RELATIVE- LY MINORQUESTION OF OUR ABILITY TO DESIGNATE FOR THE REGIONAL ROUTES AN AIRLINE WHICH IS A SUBSIDIARY OF AN AIRLINE THAT OPERATES BETWEEN LONDON AND HONG KONG.

2. WE HAVE ALREADY ACCEPTED THE MORE IMPORTANT POINT THAT WE WILL NOT DESIGNATE ON THE REGIONAL ROUTES AN AIRLINE WHICH ITSELF OPERATES BETWEEN LONDON AND HONG KONG. THE QUESTION NOW IS WHETHER CR NOT WE SHOULD REJECT AN AGREEMENT FOR THE REGIONAL SERVICES OVER THE LESSER QUESTION OF DESIGNATING A SUBSIDIARY OF SUCH AN AIRLINE.

rodr

3. WE WOULD OURSELVES HAVE PREFERRED THE COURSE PROPOSED IN HONG KONG TELN.936 NAMELY TO ADOPT A FORM OF WORDS WHICH DID NOT PRECLUDE A SUBSIDIARY OF AN AIRLINE WHICH OPERATED THE LONDON- HONG KONG ROUTE FROM OPERATING THE REGIONAL ROUTES BUT NOT TO SPELL CUT THE FACT THAT IT COULD DO SO. WE BELIEVE THAT WE COULD.

HAVE ACHIEVED THIS WITHOUT DIFFICULTY AT THE TIME. HOWEVER, THE CHINESE ARE NOW FULLY ALERTED TO THIS POINT AND UNLESS THEY ARE BLUFFING (WHICH WE THINK IS UNLIKELY) THE BEST THEY WILL AGREE IS THE FORMULA IN PARA 4 OF MY TUR.

4.

ALTHOUGH WE HAVE NOT SPECIFICALLY RECHECKED THIS, IT IS OUR UNDERSTANDING THAT (SUBJECT OF COURSE TO THE RESOLUTION OF THE HEATHROW/GATWICK PROBLEM) OPTION C STILL REMAINS OPEN. INDEED LU HAS GONE CUT OF HIS WAY ON MORE THAN ONE OCCASION TO STRESS

CONFIDENTIAL

/THAT OPTION B