CONFIDENTIAL
AIR SERVICES : ESSENTIAL FACTS
1.
Cathay Pacific Airways (CPA) is the Hong Kong based airline 71% owned by Swire Pacific Ltd., a public company registered in Hong Kong. Numerous recent international air services negotiations involving the interests of CPA. New rights for CPA to Canada, India, New Zealand, Indonesia and
Germany. Sometimes we cannot meet CPA's full aspirations
because the price is too great or there are overriding conflicts
of interest with UK based carriers. UK carriers suffer
vis-à-vis their competitors including CPA in precisely the same
way. The DOT have continually to balance the interests of
individual carriers against the overall interest of UK (including Hong Kong) civil aviation.
2.
The negotiations have produced considerable advantages
for CPA. But signs of concern on the part of CPA and the Hong
Kong Government over outstanding matters less favourable to CPA.
These include CPA's desire for services to Paris, negotiations
recently conducted with Malaysia and Singapore, and negotiations being resumed with the Chinese.
3.
Negotiations with China (7 December). DOT wish to secure
rights for CPA to expand their services to Shanghai and start a
new service to Peking. They believe the best approach is a
tough one, and wish to threaten to terminate the present
Confidential Memorandum of Understanding (CMU) with the Chinese
(negotiated in 1979) in order to clear the way to securing a
better deal for CPA. The Hong Kong Government, supported by the
FCO, have firmly opposed this tactic, which they consider would
result in unnecessary confrontation with the Chinese at a time
when delicate negotiations on the future of Hong Kong are in
progress. The FCO have proposed and the DOT are likely to agree, that the UK negotiating position for the talks should be to attempt to obtain a more balanced share of the air market
within China for British carriers (including CPA), within the
/framework
CONFIDENTIAL
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