TNAG-0938-FCO40-1157-Visit-of-John-Nott--Secretary-of-State-for-Trade--to-Hong-Ko-1980 — Page 241

CONFIDENTIAL

Brief No 6

Secretary of State's visit to Hong Kong, 20-30 January 1980

Civil Aviation

Civil aviation tends to be an emotive subject in Hong Kong and it is not recommended that the Secretary of State should himself raise it. At some stage in his visit it is however almost certain to be raised in one form or another. This brief covers the topics that are most likely to arise.

A General UK Civil Aviation Policy and its Implications for

Hong Kong

Line to take

2

UK.

The Secretary of State might say that in general he favours a more liberal approach to civil aviation with a view to obtaining the best possible deal for the consumer both in Hong Kong and the

Nevertheless we have to pay regard to other factors eg a reasonable return to British (including Hong Kong) airlines on capital employed, conservation of resources; and therefore any move towards liberalisation needs to be in an evolutionary and careful manner. Also we have to bear in mind the attitudes of others with whom we have to deal. It would not be in the best national interest to open up the skies over Hong Kong and the UK to the airlines of other countries if we were not going to receive the same generosity from those countries in return. would not therefore expect there to be any radical change in the UK government's policy towards air services into and out of Hong Kong.

Background

We

3 The Hong Kong Government's attitude in the past to air services into and out of Hong Kong has varied from restrictionist to a free for all, the latter being most in evidence when it is BA's interests that are at stake. One can naturally expect Hong Kong to be on the look-out for possible benefits to them that might be found from a UK Government that take a more liberal view towards the operation of market forces. They have often complained that traffic rights at Hong Kong are traded for benefits to BA rather than to Cathay Pacific, or to the Hong Kong economy. There were some instances years ago when this happened but by and large we have served the interests of Hong Kong and its airline well in our air services negotiations. If they should revert to a theme which at one time gained some support in certain quarters in Hong Kong, viz. Hong Kong being responsible for conducting its own air services negotiations, the Sconetary of State ought not to get drawn into discussion, but might confine himself to saying that the Hong Kong Covormmont should think very carefully before alvocaling denying themselves the muscle that comes from being seen to be a part of one of the foremost civil aviation powers in the world.