TNAG-0868-FCO40-1078-Air-services-between-China--Hong-Kong-and-the-UK-1979 — Page 117

the case came to him on appeal (as inevitably it would).

6

As a result of this, the Hong Kong Government have asked HMG for discussions on the problem. These would include a survey of existing services and comparison with other routes, definition of the air transport market, and a study of the possible introduction of competition.

7 It would be very difficult for the Department to participate in such discussions if there was any chance that subscquently an application may be made to the CAA, since, if we had to consider an appeal against the CAA's decision, we might be held to have prejudiced our position. A fortiori it would be even more difficult for the CAA to do so - indeed they have told us that they could not participate if there were any possibility that they might have to hear an application for a licence to onerate on the route. If the talks are to take place, we need the expertise of the CAA.

*

8 The only way I can see out of this dilemma is to direct the CAA under S.4(3)(b) of the 1971 Act not to entertain applications for the UK/1long Kong route; then to negotiate the whole thing with the Hong Kong Government; and ultimately to direct the to issue a licence in accordance with the outcome.. S.4(3)(b) clearly envisages this sort of problem since it empowers the Secretary of State to give a direction to the CAA on any matter affecting HMG's relations with a country or territory outside the UK.

9

In holding the discussions we would have to take considerable care to assure Laker, BA, and other interested British lines that their interests were safeguarded as well as they are by CAA proce- dures. This would involve keeping them informed of the discussions and of the recommendations which we had it in mind at the end of the discussions to make to you. I have it in mind that at that stage we would undertake that we would put to you any representations they cared to make and offer them an opportunity if they wished to make representations to you orally.

10 Such a procedure would be a sort of cross between a CAA hearing and a bilateral negotiation with a foreign country. It is unusual; but so are the circumstances. I am sure we can make it work.

I have discussed the problem informally with the CAA. Before we make a Direction we have to consult the CAA formally and on this occasion the Chairman has asked that he personally be consulted. If our proposal. is acceptable to you in principle, 1 would propose to write to the Chairman accordingly and provided he is content issue the Direction.

12 We have formulated these proposals in close consultation with the Solicitor's staff. It is however important that they should be legally water-tight and I am therefore sending this submission to you through him.

Miller