TNAG-0870-FCO40-1080-Air-services-between-Hong-Kong-and-the-UK-1979 — Page 79

Miss Stoddart, MAED

CONFIDENTIAL

HKK. 184/5.

RECEIVED MA ZEUSTRY NO. 51

1 6 AUG 1979

REGISTRY

>ion Taken

INDEX

AIR SERVICES ON THE LONDON-HONG KONG ROUTE

28

1.

16

29

Thank you for your minute of 14 August with the draft submission and reply to Mr Roberts' Letter of 3 August.

2. It seems to me that we are in danger of getting bogged down in arguments over subsidiary issues and losing sight of our main objective. This, you will recall, is to enable CPA to mount a Hong Kong-London service for the reasons spelt out in Mr Cortazzi's letter of 13 June to Mr Steele:

"If we take our responsibilities towards Hong Kong seriously,

we must recognise that CPA has a natural right to the route and I believe it would be unnecessarily damaging to our relations with Hong Kong for us to continue to deny CPA the opportunity to show they can compete effectively. The removal of this particular grievance should also make it easier for Hong Kong to accept any sacrifices they may have to make in the context of air agreements with Malaysia and China, and indeed in future.

As you know, since June, Hong Kong have indeed had to accept sacri- fices over the new agreement with Malaysia and, they would maintain, over the agreement with China.

G

3. The nearest that DOT have come to replying on this point is in paragraph 5 of Mr Roberts' letter of 3 August, where he says that DOT must be entirely neutral on the matter of which airline should be given the route. As Mr Cortazzi's letter made plain, it is not the FCO view that HMG should remain neutral. We should try to persuade the LOT of this, and if they are not open to persuasion at official level, then this surely is the point that we should put to Ministers for decision. Once the basic objective has been agreed, then (again as Mr Cortazzi said back in June) the means of achieving it are essentially a matter for the DOT: if they prefer to allow the CAA hearing to follow its prescribed course, and then rely on being able to change the CAA's decision if it is not the one we want, through the appeal procedure, then that is up to them provided we are convinced that that is indeed what they intend to do.

4. I suggest therefore that the reply to Mr koberts ought to con- centrate on this point. I have attempted a draft reply (and covering submission) in the form I have in mind (since the subject is new to Mr Murray, the submission should perhaps give a brief history of the problem - I have tried to cover this in the draft).

5. In the meantime, there is no objection as far as I can see to sending the reply that Hong Kong are so anxious to have to their telegram No 959. It would perhaps be helpful to indicate that the

/question

CONFIDENTIAL