TNAG-0964-FCO40-1183-Air-services-between-the-UK-and-Hong-Kong-1980 — Page 182

CONFIDENTIAL

-2.

in the last administration that CPA purchases 747s, with Roll-Royce

engines, rather than DC 10s which was their original preference.

6. CPA are nevertheless in a difficult position because they

originally applied for only 3 flights per week each way and have

implicitly accepted the agreement that there was not a market for

3 carriers on the route.

7. The CAA's decision has also caused strong resentment in Hong

Kong. It has been criticised in the Legislative Council by

Mr Oswald Cheung, the Senior Unofficial Member of the Council.

The decision is seen as inequitable and as an example of the UK

taking advantage of its constitutional relationship with Hong Kong

for its own benefit.

8. CPA are appealing to the Secretary of State for Trade against

the CAA's decision and the Hong Kong Government, who took part in

both hearings, will be supporting CPA. They will also be looking

to the FCO to put the political arguments, which cannot be used in

the formal appeal, to Mr Nott.

9.

The Secretary of State for Trade has two options if he decides

that the CAA's decision should be changed. He can either do this

in the normal course of the appeal procedure, or issue directions

to the CAA under Section 4(3) of the 1971 Civil Aviation Act if

he judges that there are factors not covered by the appeal procedure

but "

.....appearing

to affect the relations of the United

Kingdom with a country or territory outside the United Kingdom.'

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CONFIDENTIAL