TNAG-0964-FCO40-1183-Air-services-between-the-UK-and-Hong-Kong-1980 — Page 278

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MR BLAKER'S MEETING WITH SIR MURRAY MACLEHOSE:

11.30 AM, FRIDAY, 11 JANUARY

BRIEF NO 6: LONDON/HONG KONG AIR SERVICES

1.

The London/Hong Kong route is a cabotage route (ie one between

two "domestic" points and therefore not subject to international

regulations) on which at present British Airways have a monopoly.

Growing discontent in Hong Kong with the quality of BA's services

has led to pressure for a second airline to be allowed on the route,

to provide passengers with a choice and also in the expectation that

competition would spur BA into improving their services. The view

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in Hong Kong has been that the second airline should be Cathay

Pacific Airways (CPA).

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Early in 1979, the DOT and the Hong Kong Government, with the

cooperation of BA and CPA, initiated studies into the feasibility

of introducing a second carrier on the route. This process was

abruptly halted, however, in June when British Caledonian and

Laker Airways formally applied to the British Civil Aviation

Authority for permission to operate on the route. The DOT then felt

obliged to withdraw from the joint studies. CPA (who, until then,

were by no means convinced that the route was economically attractive

to them) also felt obliged to file a formal application with the CAA.

BA registered their opposition to all three applications.

The

3. Before any airline can operate the route, it also requires a

permit from the Hong Kong Air Transport Licensing Authority.

three airlines therefore applied for ATLA permits. At their hearings

in November, the ATLA decided to issue permits to British Caledonian

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