CONFIDENTIAL
4. IN DISCUSSION ARISING FROM THIS IT EMERGED THAT CAAC FEAR THE STRENGTH OF BA AS COMPETITORS. THEY ALSO BELIEVE (DESPITE ROGERS' VERY CAREFUL RESERVATION OF OUR POSITION) THAT WE WILL DESIGNATE CATHAY PACIFIC ON THE REGIONAL ROUTES, AND THEY ARE IF ANYTHING EVEN MORE FRIGHTENED OF THEM. LU THEREFORE PUT IT THAT DURING THE EARLY YEARS THE CHINESE WOULD HAVE TO PUT RESTRICTIONS ON OUR CARRIERS IN ORDER TO EQUALISE THE COMPETITION. HE DID NOT ACCEPT THAT THEIR EXPERIENCE ON OTHER ITERNATIONAL ROUTES (WHERE THEY HAVE CARRIED AT LEAST HALF THE TRAFFIC) WAS A RELIABLE GUIDE, SINCE ALL THE OTHER CARRIERS HAD STARTED LEVEL WITH THEM IN TERMS OF TYPE OF EQUIPMENT,
ROUTEING ETC.
5.
THAT
TURNING TO THE REGIONAL ROUTES LU INSISTED THAT THE CHINESE SHOULD HAVE MORE ROUTES THAN OURSELVES.
HIS BEST
OFFER WAS 7 FOR CAAC AGAINST 3 (WHICH COULD INCLUDE SHANGHAI AS WELL AS PEKING) FOR US. HE ALSO SAID THAT THEY SHOULD HAVE THE PREPONDERANCE OF CAPACITY ON THOSE ROUTES.
MIND EITHER 2:1 OR, PREFERABLY, 3:1.
HE HAD IN
ROGERS REPLIED THAT
WHILE HE WAS PREPARED TO ACCEPT A DISPARITY IN THE NUMBER OF ROUTES AVAILABLE HE COULD NOT ACCEPT A SUBSTANTIAL DIFFERENCE IN THE CAPACITY ON EACH ROUTE AS WELL. WITH SOME RELUCTANCE LU EVENTUALLY ABANDONED THIS LATTER POINT.
6.
OTHER POINTS WHICH EMERGED IN DISCUSSION WERE:
A. LU FELT THERE SHOULD BE NO LIMIT ON CAAC'S FREQUENCY
OR CAPACITY BETWEEN PEKING AND HONG KONG (SEMI COLON)
B*
AS REGARDS BA'S OPERATION VIA HONG KONG HE SUGGESTED FIRST THAT THE TIME LIMIT SHOULD BE INCREASED TO FIVE YEARS AND SUBSEQUENTLY THAT THE CHINESE WOULD NOT NECESSARILY INSIST ON ANY LIMIT AT ALL.
C.
HE
LU ACCEPTED THAT THE REVIEW WILL BE A GENUINE ON. INDICATED THAT THE CHINESE WOULD BE WILLING TO CONSIDER IMPROVEMENTS AT THAT TIME ALTHOUGH HE WAS UNWILLING TO BE
SPECIFIC.
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