TNAG-0871-FCO40-1081-Air-services-between-Hong-Kong-and-the-UK-1979 — Page 60

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KAZINO IN ROUSEY NO."51 2 9 OCT 1979

FM FCO 24154OZ OCTOBER 79

TO ROUTINE HONG KONG

TELEGRAM NUMBER 863 OF 24 OCT

3

INDLY

See (67 ES ON

ENTRY

Juken

YOUR TELS NOS 1388 AND 1406: AIR SERVICES ON LONDON/HONGKONG ROUTE

1. WE DO NOT THINK THAT THE POSITION OF THE APPLICANTS BEFORE THE

CAA IS AS UNFAVOURABLE AS YOU SUGGEST. WE HAVE ALREADY ACKNOWLEDGED THAT SECTION 3(1) OF THE ACT FAVOURS BRITISH AIRLINES AS DEFINED AND NOT HONG KONG-BASED AIRLINES AND CANNOT ADD TO PARAGRAPH 4 OF OUR TELNO 672. WE DOUBT HOWEVER WHETHER YOUR POINT ABOUT GREATER QUOTE LEGISLATIVE PREJUDICE UNQUOTE IS WELL-FOUNDED. WE HAVE NEVER CLAIMED THAT CAA IS LEGALLY ENTITLED TO IGNORE THE GUIDANCE (CMND 6400) OR TO TREAT IT AS POLITICALLY A DEAD LETTER. WE NEVERTHELESS QUESTION THE VALIDITY OF LINKING THE GUIDANCE WITH THAT SECTION OF THE ACT, FOR THE FOLLOWING. REASONS:

A. THE COURT OF APPEAL IN ITS DECISION IN THE LAKER CASE DECLARED THAT PARAGRAPH 7 OF THE GUIDANCE AND THE PROVISO TO PARAGRAPH 8(B) WERE ULTRA VIRES. ACCORDINGLY NO QUESTION OF BRITISH AIRWAYS' CONSENT ARISES.

B. WE STAND BY OUR PREVIOUS COMMENT (PARA 3 OF OUR TELNO 672)

THAT THE CAA DOES HAVE DISCRETION

DISCRETION IN THE WAY IT APPLIES THE SPHERE OF INTEREST POLICY: THIS IS CLEAR FROM THE DECISION OF THE COURT OF APPEAL. WHILE THE CAA MUST FOLLOW THE GENERAL POLICY IN THE GUIDELINES, IT HAS DISCRETION IN THE MANNER OF APPLYING IT IN EACH PARTICULAR CASE. THE GRANT OF A LICENCE TO BCAL TO SERVE DALLAS/FORT WORTH IS AN EXAMPLE OF THE USE OF THIS DISCRETION. C. PARAGRAPH 6 OF THE GUIDANCE WOULD STILL APPLY. ALTHOUGH IT INDICATES SOME PREFERENCE FOR BRITISH CALEDONIAN, IT DOES NOT APPEAR TO EXCLUDE THE GRANT OF A LICENCE TO ANY OF THE APPLICANTS. CAA WILL NO DOUBT HAVE IN MIND THAT, AS A LONG-HAUL CABOTAGE ROUTE, THE LONDON-HONG KONG ROUTE IS SU! GENERIS.

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