TNAG-0870-FCO40-1080-Air-services-between-Hong-Kong-and-the-UK-1979 — Page 118

CONFIDENTIAL

A.

COUNTRIES ON THE WEST SIDE OF THE PACIFIC BASIN

Australia

Was

the

5. Air service arrangements between the UK (including Hong Kong) and Australia are governed by the CMU signed in July 1974. In the negotiations leading up to that agreement, one of the UK's principal objectives and, as things turned out, our most difficult re-establishment of CPA services on the route between Hong Kong and East Australia from which CPA had been driven off by competition from Qantas some years before. In this connection, the Australian delegation were concerned at the possibility which was then rumoured of CPA starting a service from Hong Kong to London. They thought this would result in CPA carrying traffic between Australia and the UK, on a sixth freedom basis, outside the capacity controls envisaged for the trunk route and outside the proposed pool arrangements between Qantas and BA. At that time there were in fact no proposals for a CPA service to London. The UK team therefore pointed out that this was a hypothetical problem, but we recognised Australia's legitimate

After a long argument, the following understanding was included in the CMU:

concern,

ა.

4

"Should the United Kingdom aeronautical authorities have in

mind to authorise ล service by Cathay Pacific Airways between Hong Kong and London, three months prior notice of the proposed start of the service will be given to the Australian aero- nautical authorities. In the event that Cathay Pacific Airways operates a service between the United Kingdom and Hong Kong, any traffic on this service which is carried between the United Kingdom and Australia by being trans- ferred to or

or from a directly connecting Cathay Pacific Airways service on United Kingdom Route IT at Hong Kong will form part of the United Kingdom's 50% total entitlement of traffic between the United Kingdom and Australia and will not be treated as part of the United Kingdom entitlement between Hong Kong and Australia,"

In

We envisage that when the current negotiations with the ASEAN countries over the implementation of the ICAP proposals have been concluded we shall negotiate a fresh CMU with Australia to replace the CMU of 1974 and possibly also amendments to the Air Services Agreement itself. It is unlikely that the Australians will then overlook the point about possible sixth freedom carriage by CPA and the best

we can expect is to agree the same text as before. addition to interposing a delay of three months, this would mean that any traffic carried by CPA over Hong Kong by direct transfer would be at the expense of BA's share of the traffic on, and proceeds

the Kangaroo route. Negotiations about the access of i inter mediate carriers to the Australia-UK traffic are still in train; but

present expectations CPA would be able to carry only the

Low- fare stopover traffic (for which a premium of ƒA ̈ ̄40 over the ASEAN stopover faro is envisaged) and the higher-rated traffic such normal

from,

on

CONFIDENTIAL

First