TNAG-0868-FCO40-1078-Air-services-between-China--Hong-Kong-and-the-UK-1979 — Page 28

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10 JUL 1979

205

FM F C O 091858Z JUL 79

TO IMMEDIATE PEKING

TELNO 399 OF 9 JULY

INFO IMMEDIATE GOVERNOR HONG KONG

UK/CHINA AIR SERVICES

500

IND

YOUR TEL NO 619 AND 626 AND HONG KONG TEL NO 936.

7

See the

22

(224

1. THE CHINESE CONCERN ON THE ISSUE OF THE SAME BRITISH CARRIER

OPERATING BOTH BETWEEN HONG KONG AND LONDON AND HONG KONG AND POINTS IN THE PRC IS UNDERSTOOD. HOWEVER IT WOULD SEEM TO US THAT

THEIR CONCERN CAN BE ALLAYED IN ONE OF TWO WAYS OR IN A

COMBINATION OF BOTH.

A. THE SAME CARRIER COULD OPERATE BOTH SETS OF ROUTES PROVIDED

THAT THE SCHEDULING ARRANGEMENTS WERE SUCH THAT SERVICES DID NOT

CONNECT SO AS TO PROVIDE A THROUGH SERVICE. WE BELIEVE THAT THE

ONLY OBJECTION OF SUBSTANCE CAN RELATE TO A THROUGH SERVICE.

THE CHOICE OF AIRLINES TO OPERATE BETWEEN HONG KONG AND LONDON

IS A MATTER FOR THE UNITED KINGDOM ALONE TO DETERMINE.

B. THE HONG KONG BASED BRITISH AIRLINE OPERATING BETWEEN HONG KONG

AND POINTS IN CHINA COULD BE A WHOLLY OWNED SUBSIDIARY OF A

HONG KONG BASED BRITISH AIRLINE OPERATING BETWEEN HONG KONG AND

LONDON PROVIDED THAT THE WHOLLY OWNED SUBSIDIARY OPERATED UNDER

A NAME ENTIRELY DIFFERENT FROM THAT OF THE PARENT COMPANY.

2. YOU SHOULD ENDEAVOUR TO OBTAIN CHINESE ACCEPTANCE OF ONE OR THE OTHER OF THESE IN WHICHEVER ORDER OF PRECEDENCE THE TEAM CONSIDERS THE BETTER. IF THE CHINESE WILL ACCEPT NEITHER YOU SHOULD TRY A COMBINATION OF THE TWO.

3. IF NONE OF THE ABOVE IS ACCEPTABLE YOU SHOULD SAY TO THE CHINESE THAT YOU CANNOT PROCEED TO A DEAL ON THE BASIS OF OPTION A ON THE CHINESE CONDITIONS THAT HAVE EMERGED AND REGRETTABLY THEREFORE YOU ARE FORCED TO ABANDON OPTION A AND PROCEED TO A DEAL ON THE BASIS OF OPTION C (YOUR TEL NO 552). IF THE CHINESE SHOULD ASK WHAT, IN THAT EVENT, WOULD HAPPEN TO THE PRESENT CAAC SCHEDULED SERVICES

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