TNAG-1176-FCO40-1478-Air-services-between-the-UK--China-and-Hong-Kong-1982 — Page 55

CODE 18-77

Mr Blake-Pauley PSD

2M 252

Reference

42

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pa.

12/11

HIK 184/1

RAN

CATHAY PACIFIC AIRWAYS

1.

CHI 41

Thank you for your minute of 12 October with the copy of Mr Stevens' letter to you of 4 October.

2.

Cathay Pacific Airways is registered in a British Dependent Territory, Hong Kong; it is therefore a British airline and indeed is treated as such by the DOT in negotiating Air Service Agreements, just like British Airways and British Caledonian. I might add that, after rights to UK airports, traffic rights to Hong Kong are the most valued bargaining card in DOT's pack in negotiating Air Service Agreements with other countries, since routes to and via Hong Kong are the biggest aviation prize in the Far East.

3.

As for the economic aspect, Swire Pacific Limited (the majority owner of Cathay Pacific) paid some £6 million in dividends to UK shareholders in 1981. Hongkong and Shanghai Bank (the minority holder) also has UK shareholders.

4.

It seems right that FCO should treat Cathay Pacific as a British airline on a parity with BA and BCal, just as the DOT does for Air Services Agreements. I would guess that all this has been gone into before when PSD decided its travel policy. I might add that any deviation in the policy could cause us serious embarrassment with Hong Kong; they are very sensitive to any doubts being cast on their 'Britishness'.

5.

I entirely agree with you that any letter to posts on the lines that Mr Stevens suggests would not help matters, particularly as FCO are already treating Cathay Pacific as a British carrier.

12 November 1982

H McQuade

Hong Kong and General Department WH 306

233 4381

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