TNAG-0964-FCO40-1183-Air-services-between-the-UK-and-Hong-Kong-1980 — Page 186

CONFIDENTIAL

NOW COONSSIDERED BY THE CAA TO BE THE MOST SUITABLE AIRCRAFT

FOR THE ROUTE, IN FAVOUR OF ROLLS-ROYCE POWERED TRISTARS SO AS TO BENEFIT THE UK BALANCE OF PAYMENTS. AS A FURTHER BENEFIT

TO THE UK BALANCE OF PAYMENTS, THIS DECISION TO BUY TRISTARS GAVE CPA NO REALISTIC OPTION OTHER THAN ROLLS-ROYCE POWERED 7475

FOR ITS LONG RANGE AIRCRAFT:

(E) FROM TIME TO TIME, TO THE BENEFIT OF BRITISH INTERESTS, -CPA HAS LOST OUT IN RESPECT OF ITS REGIONAL ROUTES. EXAMPLES

ARE IN

IN THE AIR SERVICES AGREEMENTS WITH SINGAPORE, MALAYSIA AND CHINA. IN ADDITION, OF COURSE, BRITISH BASED AIRLINES HAVE BEEN

ABLE TO BENEFIT ELSEWHERE FROM TRAFFIC RIGHTS ARISING FROM AIR SERVICES AGREEMENTS WITH FOREIGN COUNNTTRIEES TOO SERVE HONG KONG:

(F) IN CONTRAST, BRITISH AIRWAYS, BEING EXEMPT FROM HONG KONG LICENSING REQUIREMENTS ON THE INSISTENCE OF HMG CURRENTLY ENJOYS UNFETTERED RIGHTS INTO HONG KONG :

(G) HMG IS COMMITTED TO THE PRINCIPLE OF AN OVERSEAS TERRITORY BEING DEVELOPED FOR THE BENEFIT OF ITS PEOPLE. HK NEEDS TO DEVELOP ITS AIR LINKS IN EVERY WAY TO SUPPORT ITS ECONOMY AND IN PARTICULAR ITS TRADE AND TOURISM. TO THIS END, CPA AS HK'S ONLY ACTIVE AIRLINE, HAS AN IMPORTANT ROLE TO PLAY. IT CANNOT BE REPLACED BY A UK-BASED AIRLINE, WHICH WOULD NOT HAVE THE SAME NETWORK AND WOULD LACK CPA'S 30 YEARS OF LOCAL EXPERIENCE, IS NOT

AS ACCESSIBLE TO HKG AND THE LOCAL COMMUNITY AND SO IS NOT

GOING TO BE AS RESPONSIVE TO LOCAL NEEDS. THE CAA DID NOT FIND

CPA UNFIT TO OPERATE THE ROUTE. NOT TO LICENSE CPA IS TO DENY IT

THE OPPORTUNITY TO CONTRIBUTE TO HK'S DEVELOPMENT AND TO DENY

HK THE LOCAL AVIATION EXPERIENCE AND THA ECONOMIC BENEFITS OF

CPA'S PARTICIPATION:

(H) HOWEVER VALID THE CIVIL AVIATION ARGUMENTS THAT APPEALED TO THE CAA MAY HAVE BEEN, THE CAA COULD NOT LEGITIUTELY TAKE ACCOUNT OF THE UK'S WIDER RELATIONS WITH HONG KONG. THESE

RELATIONS LEAD CLEARLY TO A HK-LONDON ROUTE SERVED BY AIRLINES BASED AT EACH END. TWO BRITISH-BASED AIRLINES ARE NOT WHAT THE HONG KONG PUBLIC WANTS. THERE HAS BEEN CONSIDERABLE AND FORCEFUL REACTION TO THE CAA DECISION IN THE PRESS AND FROM INDUSTRIAL AND COMMERCIAL ASSOCIATIONS. THIS REACTION INDICATES HOW RESENTMENT WILL FURTHER BUILD UP IF HK IS DENIED WHAT THE PEOPLE WIL L REGARD AS ITS RIGHTFULL SHHARE OF THIS IMPORTANT ROUTE. THE RESENTMENT IS LIKELY TO AFFECT BRITAINS WIDER INTERESTS IN HONG KONG AANDD FRUSTRATE THE EFFORTS BOTH HMG AND HK ARE MAKING TO FURTHER THESE INTEREST.

ALL THESE ARGUMENTS, AND PARTICULARLY (H) INDICATE THAT MR NOTT SHOULD USE HIS POWERS OF DIRECTION IN FAVOUR OF CPA.

2 CONFIDENTIAL

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