TNAG-0964-FCO40-1183-Air-services-between-the-UK-and-Hong-Kong-1980 — Page 95

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STIAL

SECTION 4 DIRECTION TO THAT EFFECT. TO DO SO WOULD HAVE THE FURTHER ADVANTAGE OF CURING A SERIOUS SITUATION FACING THE TRAVELLING PUBLIC THIS SUMMER ARISING FROM BCAL'S BREACH OF THEIR

PROMISE TO ATLA TO COMMENCE FLYING IN APRIL IF LICENSED AT BOTH ENDS. IN ANTICIPATION OF THE ADVENT OF OTHER CARRIERS ONTO THE ROUTE, BA HAVE REMOVED SOME FLIGHTS FROM THEIR SUMMER SCHEDULES. BY AUGUST, WHEN BCAL HAVE ANNOUNCED THEY NOW INTEND TO COMMENCE, THE SUMMER PEAK IS PAST. CATHAY ARE READY TO COME ONTO THE ROUTE IF LICENSED WITHIN A VERY SHORT TIME AND WOULD BE ABLE TO TAKE UP THE ANTICIPATED SHORTFALL IN CAPACITY IN THE EARLY SUMMER''.

MOREOVER ARGUMENTS ABOUT THE VIABILITY OF TWO CARRIERS COMPETING

WITH BA ON THE LONDON/HONGKONG ROUTE HAVE NOT TAKEN INTO ACCOUNT THE VERY CONSIDERABLE FLEXIBILITY WHICH BA HAS TO TAILOR ITS CAPACITY TO THE TRAFFIC OFFERING BY ADDING INTERMEDIATE AND BEYOND POINTS SUCH AS PEKING OR SEOUL TO THEIR ROUTE. IT IS BY NO MEANS PROVEN THAT A 3 CARRIER REGIME CANNOT POSSIBLY RESULT IN A VIABLE OPERATION FOR ALL THE CARRIERS.

ENDS

MACLEHOSE

FILES

HK+GD

MAED

MR. MURRAY

MR. EVANS

MISS BROWN

COPIES SENT. TO

CAIR/DOT

-9-

CONFIDENTIAL

COPIES TO :

MR. GARDINER,

LEGAL ADVISERS

HONG KONG GOVERNMENT

OFFICE, LONDON