TNAG-1176-FCO40-1478-Air-services-between-the-UK--China-and-Hong-Kong-1982 — Page 45

CONFIDENTIAL

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Hong Kong, that BA would cease to route their Peking

services over Hong Kong after four years so as to clear

the way for Cathay to operate between Hong Kong and Peking.

ine months notice has to be given and if BA are to meet

this undertaking they should have given notice last month.

We have not obliged them to do so because there would be

no benefit to British aviation interests or the travelling

public if BA came off the route, and consequently had to

cease London-Peking services altogether, while Cathay

might very well not be allowed to commence services

between Hong Kong and Peking after all.

10 It is against this background that we have to choose

between two possible approaches to the forthcoming

negotiations:

(i) we could insist that the review of the current

arrangements should lead to unqualified Chinese

acceptance of our designation of Cathay Pacific

for services to Shanghai and Peking, and a

reasonable share of such services; and if the

Chinese refuse to grant this, we should threaten

and at a second round early next year be

prepared to give notice of withdrawal from the

Memorandum of Understanding governing regional

services; BA might have to cease routeing their

Peking service over Hong Kong, but in a full

Ce inuation Sheet No

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1

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CCIDENTIAL