TNAG-0868-FCO40-1078-Air-services-between-China--Hong-Kong-and-the-UK-1979 — Page 71

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FROM HONG KONG ROUTEING IN 1983 WILL NOW GIVE THE CHINESE THE WHIP HAND. IF THEY WERE TO KEEP THIS RESTRICTION IN FORCE WHEN BA CEASED TO OPERATE VIA HONG KONG (AS THEY MIGHT WELL DO IF LOW GROWTH RATE POSTULATED IN PARA 3 ABOVE PROVED CORRECT OR IF THEIR OWN CARRIAGE FELL BELOW THE AGREED LIMIT) THEY COULD HOLD BA INDEFINITELY IN A LOSS-MAKING POSITION. WE WILL THEREFORE SEE SOME WAY OUT OF THIS TRAP, FOR EXAMPLE BY LINKING LIMITATION ON TRUNK ROUTE CARRIAGE TO THE EXERCISE OF TRAFFIC RIGHTS BY BA BETWEEN HONG KONG AND PEKING. BUT THERE IS A DANGER THAT IN SO DOING WE MAY UPSET THE DELICATE COMPROMISE NOW REACHED.

9.

THERE ARE ALSO IMPLICATIONS FOR DATE OF STARTING SERVICES. CHINESE HAVE SAID THAT CONSTRUCTION OF AIRPORT FACILITIES AT PEKING IS BEHIND SCHEDULE AND THAT THE AIRPORT WILL NOT BE AVAILABLE FOR

SIDE-BODIED AÏRCARAFT UNTIL EARLY NEXT ZEAR. ALL THE RECENT

DISCUSSION BETWEEN ROGERS AND LU HAS THEREFORE BEEN IN TERMS OF STARTING SERVICES ON THE TRUNK ROUTE ON 1 APRIL 1980

(PARA 3(1) OF OUR TELNO.552) AND THIS IS THE DATE WE HAVE WRITTEN INTO OUR DRAFT CMU. IF THIS IS LEFT TO STAND, THE PERIOD

OF FOUR YEARS FROM INITIALLING WILL REPRESENT ONLY 3 AND

A QUARTER YEARS FROM START OF SERVICES. IT MAY BE POSSIBLE TO . BRING THE 1 APRIL DATE FORWARD BUT THERE WOULD THEN BE A RISK THAT CAAC MIGHT START ON THE AGREED DATE BUT THAT ESPECIALLY IF THE NOTICE WAS SHORT BA WOULD BE HELD BACK BY SCHEDULING DIFFICULTIES ETC. GRATEFUL YOU THEREFORE ASK BA WHETHER IN THE CHANGED CIRCUM- STANCES THEY COULD START EARLIER THAN 1 APRIL 1980 IF WE WERE ABLE TO SECURE THE OPPORTUNITY FOR THEM TO DO SO.

19.

TEXT OF CMU WHICH WE HAVE GIVEN CHINESE IS BASED ON CONCEPT THAT WHEN BRITISH AIRWAYS CEASE TO USE TRAFFIC RIGHTS BETWEEN HONG KONG AND PEKING THE HONG KONG CARRIER WOULD COME ON WITH FULL. RIGHTS BUT BA WOULD HAVE THE OPTION OF EITHER

A. OPERATING ON THE DIRECT ROUTEING, OMITTING HONG KONG: OR

B. OPERATING VIA HONG KONG WITHOUT RIGHTS.

THIS CORRESPONDS WITH CONCEPT IN THIRD SENTENCE OF PARA 2 OF TUR. NEWS OF BA'S IMPENDING WITHDRAWAL WILL ALMOST CERTAINLY HAVE REACHED CHINESE LONG BEFORE TIME OF FIRST FULL REVIEW (PENULTIMATE SENTENCE OF THAT PARA) AND THIS MAKES IT HIGHLY IMPROBABLE THAT

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