TNAG-0945-FCO40-1164-Future-of-Hong-Kong-1980 — Page 18

Mr Boyće

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Reference

VALUE OF HONG KONG IN AIR

SERVICES NEGOTIATIONS

1. You asked for my impression on the value to HMG of Hong Kong as a negotiating card to benefit UK-based airlines' in air services talks with third countries. I have not consulted the DOT.

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2.

The days when HMG could exact a good price for rights at Hong Kong to the advantage of UK-based airlines (to the exclusion of CPA) are virtually gone. In the recent past, the Hong Kong Government have in some instances expressed their displeasure to the Department of Trade for seemingly acting in this way even where there was no obvious quid pro quo which could have been gained by CPA. It is not that the HKG are against the granting of rights at HK; in fact they attach importance to maintaining speedy, reliable and punctual services between Hong Kong and important trading partners but they are now looking ahead as CPA expands their operations.

3.

Now, of course, CPA are spreading their wings further afield to Europe and, hopefully, across the Pacific; and in the process are changing their image from a regional to an international carrier. In such circumstances it comes as no surprise that the HKG are even more sensitive to the tactics adopted by HMG and expect CAIR/DOT wherever possible to secure rights for CPA rather than other British airlines in any trade-offs affecting rights at HK. And conversely they expect DOT not to endanger the present or potential operations of CPA when negotiating rights for UK-based airlines, bearing in mind that it is HKG policy not to grant to foreign long-haul operators fifth freedom rights into or out of HK in respect of sectors on which an adequate service is or will shortly be operated by CPA. The DOT are very much alive to these views and are careful to ensure that the HKG and CPA are given the opportunity to express their views well in advance of any bilateral talks which might affect their air Iservices negotiations with the US and Canada when our policy on

rights at Hong Kong was determined on the basis of the views of the HKG (who were represented at both sets of talks) and not by the operational considerations of UK-based carriers.

4. In so far as there are continuing benefits accruing to UK-based airlines written into Air Services Agreements from past negotiations where Hong Kong rights were traded for rights elsewhere (which suited BA or BCal), then of course such rights are of value to us; and from time to time similar opportunities could arise in the future. For example, it is possible that one or two Scandinavian countries might wish to operate to Hong Kong although the signs are that CPA are not interested in mounting a reciprocal service. In those circumstances it could well benefit UK-based airlines only. But this sort of

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