TNAG-0964-FCO40-1183-Air-services-between-the-UK-and-Hong-Kong-1980 — Page 4

1

CONFIDENTIAL

HKG D

FCS/80/98

AKK 18416

RECEIVED IN REGISTRY NO. 51

0 3 JUN 1980

DESK OFFICER

INDEX

PA

J3.6

SECRETARY OF STATE FOR TRADE

REGISTRY Action Taken

Aw 316

Hong Kong/UK Air Route:

cc PS

Ps/Les

Ps luur. Blaker PS IPUS Sir. D. Mailand Mr. Donald Mus. Brown

Civil Aviation Authority Decision

мнед

Legal Advisors.

1. The Hong Kong Attorney-General wrote to you on 21 May

about Cathay Pacific Airways' appeal to you against the

decision of the CAA to license British Caledonian Airways on

the Hong Kong/UK route. Much of what is said in that

submission confirms what Ian Gilmour said in his letter to

you of 7 April.

2. I continue to be concerned about the effect on our

relationship with Hong Kong that your decision on CPA's

appeal could have. There are plenty of purely civil

aviation arguments that you will have been considering, but

my concern is that insufficient account may have been taken

of the United Kingdom's wider relations with Hong Kong.

These relations lead clearly to a Hong Kong/London route

served by airlines based at each end. Two British-based

airlines are not what the Hong Kong public wants. There

has been a considerable and forceful reaction to the CAA

decision in Hong Kong from virtually all sections of the

press, industry and commerce. This reaction indicates how

resentment will further build up if Hong Kong is denied what

the people there will regard as its rightful share of this

important route. Such resentment is likely to affect

Britain's wider interest in Hong Kong and frustrate the

efforts that our Government and Hong Kong are making to

further these interests.

3. I should add that the discussions on the Defence Costs

Agreement will resume in the middle of June. The

preliminary indications are that we will be asking the Hong

Kong Government to increase its contribution to the cost of

CONFIDENTIAL

/the garrison