TNAG-1173-FCO40-1465-Future-of-Hong-Kong-special-study-by-FCO-for-the-Prime-Minis-1982 — Page 232

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and dividends and other payments remitted to UK shareholders

by CPA. The approximate annual benefits are as follows:

BA

: London-Hong Kong service

£6.2 m

BA

:

London-Johannesburg service

£6.1 m

BCal

: London-Hong Kong service

CPA

Dividends and other payments

£0.5 m (net outflow)

to UK shareholders

£6.8 m

4. These operations also give rise to substantial flows in

both directions in respect of the purchase of airframes and

engines. In particular CPA has in recent years been spending

an average of £30 m per annum on capital equipment in the UK

much of which was Rolls Royce engines. Quite apart from its

contribution to the UK balance of payments, CPA is also important

as a predominantly UK owned overseas asset. It is owned by the

Swire Group (70%) and the Hongkong and Shanghai Bank (30%).

Its present total assets are valued at £142m.

5. Air services relations between the UK and China are

governed by the terms of the UK/China Air Services Agreement (ASA)

and two accompanying confidential Memoranda of Understanding.

One of these governs services between London and Peking and

allows BA and the Chinese airline CAAC to operate twice a week,

although in fact neither operates more than once because the

traffic available is very limited. BA's service is uneconomic:

they have to operate the last leg Hong Kong-Peking (1235 miles)

with only about 50 passengers, as a result of restrictive

Chinese conditions.

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