TNAG-0964-FCO40-1183-Air-services-between-the-UK-and-Hong-Kong-1980 — Page 130

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The Secretary of State for Trade

9th April 1980

B747 which offers, on this route with its particular pattern of demand, even in the short term (and more so in the medium and long term) the better service to the public. It has the right capacity for the right days as well as being the more economical and vastly the more popular aircraft with the travelling public.

It is extremely unlikely that BCAL, especially without intermediate rights, will be able on economic grounds to justify a daily service - the provision of which was the fundamental and indeed only reason for the CAA licensing them. Accordingly BCAL will be unlikely to fly daily. Their history of withdrawal even from entire routes on economic grounds (see transcript day 5 p.40) shows this to be probable. Were they not to fly daily in the near future, this would remove the sole reason for the CAA licensing them. The grounds underlying the CAA's decision are therefore misconceived. Taking into account Cathay's intermediate rights in the Gulf, it is their B747 and not BCAL's DC10 which is the more likely quickly to provide a competitive daily service to BA.

Therefore, even before taking into account (as the CAA failed to do) the other considerations described hereinbefore, or the political considerations special to Hong Kong, the proper evaluation of the arguments favours Cathay. Once these other matters are placed in the scale, the overwhelming balance of advantage for the public lies in favour of Cathay.

This being said, HKG nevertheless recognises the difficulty at this stage of removing BCAL from the route and replacing them by Cathay alone. HKG therefore submits that the sensible solution in the present unfortunate circumstances is, despite the thinness of the route, to license a three-carrier regime (BA/BCAL/Cathay). This solution was stated both before ATLA and before CAA by BCAL to be an equitable arrangement with which they were prepared to live. HKG and Cathay are now also prepared to accept such an arrangement. So far as the thinness of the route is concerned, such an arrangement would have the advantage of being an incentive to the creation of further traffic, both by recovering that which presently is carried from the Far East to Europe by other airlines and by stimulating new traffic (thereby furthering the economic objectives of S.3(1)(C)). It is just conceivable too that Sir Freddie Laker is right and there are, as he said "a lot of passengers still to be beaten out of the bushes" though no doubt not so many as he hoped route could prove fatter than one thinks. is an inexact science.

in which case the

Traffic forecasting

Contid