TNAG-0963-FCO40-1182-Air-services-between-China--Hong-Kong-and-the-UK-1980 — Page 7

4. AT THE SAME TIME WE HAVE BEEN PRESSING FOR TALKS AIMED AT RESOLVING THE HK/SHANGHAI PROBLEM. ON 11 OCTOBER PEKING REPORTED (THEIR TELNO 664 TO FCO) THAT CAAC HAD SAID THE UK WAS WELCOME TO SEND A TEAM TO PEKING AS SOON AS POSSIBLE TO SEEK A SOLUTION TO THIS PROBLEM, ALTHOUGH AT THE SAME TIME THEY SAID IT WAS CLEAR CAAC WOULD TRY TO PURSUE THEIR WIDER PROPOSALS AT THESE

TALKS.

5. IN OUR TELNO 1362 TO FCO WE SUGGESTED SENDING A TEAM TO PEKING FOR TALKS BEGINNING 27 OCTOBER. PEKING REPORTED (THEIR TELNO 681 TO FCO) THAT CAAC WOULD NOT BE ABLE TO HOLD TALKS IN THE WEEK BEGINNING 27 OCTOBER NOR AT ANY TIME IN NOVEMBER, BECAUSE THEY WERE

FULLY OCCUPIED WITH THE INAUGURATION OF THE LONDON AND PEKING SERVICES, AND THAT CAAC HAD NOT PUT FORWARD ANY DATE FOR TALKS ON HKA, BUT WOULD SEND A LETTER CONTAINING NEW PROPOSALS.

6. IN PEKING TELNO 695 TO F.C.O. THE EMBASSY REPORTED RECEIPT OF CAAC'S LETER, IN WHICH THE LATTER SUGGESTED TALKS BE HELD AFTER THE INAUGURATION OF AIR SERVICES TO DISCUSS AND RESOLVE THE H.K./SHANGHAI QUESTION AND THE CHINESE PROPOSALS FOR CAAC TO HAVE OPERATING AND TRAFFIC RIGHTS VIA H.K. TO LONDON AND U.S.A. PEKING SUGGESTED THAT THEY RE-STATE THE U.K. POSITION THAT THE H.K./SHANGHAI PROBLEM BE RESOLVED, THEREBY IMPLEMENTING THE REGIONAL ROUTES CMU, BEFORE ANY DISCUSSION OF THE CHINESE PROPOSALS COULD BEGIN, BUT COMMENTED THAT THE U.K. SIDE WOULD PROBABLY HAVE TO LISTEN TO THE PROPOSALS. IN THEIR TELNO 573, F.C.O. CONFIRMED THAT PEKING SHOULD PROCEED AS PROPOSED AND DIRECTED THAT ANY POINTS ON THE WIDER PROPOSALS SHOULD BE NOTED WITHOUT COMMENT. F.C.O. ALSO CONFIRMED THAT THE TEAM SHOULD CONSIST OF HKG, HKA AND EMBASSY REPRESENTATIVES (1.E. NO D.O.T. MEMBER), AND ASKED H.K. TO SUGGEST DATES FOR THE TALKS. IN OUR TELNO 1423 WE PUT FORWARD 8 OR 15 DECEMBER AS ALTERNATIVE

STARTING DATES. THERE HAS BEEN NO CHINESE RESPONSE. WE SHALL,

IF NECESSARY, REMIND PEKING TO PRESS FOR A RESUMPTION OF THE DIALOGUE WITH CAAC (YOUR PARA 1(C).

7. AGAINST THIS BACKGROUND, THE FOLLOWING POINTS ALSO HAVE TO

BE BORNE IN MIND:

(A) THERE IS NO IMMEDIATE ALTERNATIVE AIRLINE TO A RECONSTITUTED HKA AS A HK-BASED BRITISH CARRIER FOR THE SHANGHAI ROUTE. EFFORTS WERE MADE IN TALKS WITH CAAC IN EARLY AUGUST IN PEKING TO ELICIT WHAT CHANGES IN OWNERSHIP OF HKA WOULD MAKE IT ACCEPTABLE, BUT WITHOUT SUCCESS. WE AGREE THAT HKA

IS SOMETHING OF A FIDDLE AND CPA ARE WILLING TO CONSIDER ANY REASONABLE SUGGESTION ON OWNERSHIP CHANGES.

(B) ON YOUR POINT 1(D), CAAC ARE OFFERING EASY CONNECTIONS BETWEEN HANGZHOU AND SHANGHAI IN RESPECT OF THEIR FLIGHTS FROM H.K. TO THE FORMER, THERE IS ALSO SOME EVIDENCE THAT CAAC ARE SELLING ORDINARY FLIGHT TICKETS ON WHAT PURPORT TO BE INCLUSIVE TOUR CHARTERS HK/SHANGHAI/HK.

CONFIDENTIAL

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