(A) COMMERCIAL:
3. THE TOTAL TRAFFIC ON THE HONG KONG/SHANGHAI SECTOR FOR THE PERIOD FEBRUARY - JUNE IN 1981 AND 1982 WAS 28,057 AND 35,243 PASSENGERS RESPECTIVELY, ON THE BASIS OF THESE LIMITED STATISTICS, CPA HAS CALCULATED AN ANNUAL GROWTH RATE OF 22.7 PER CENT. IF THIS GROWTH RATE IS APPLIED TO THE TRAFFIC LEVELS RECORDED BETWEEN NOVEMBER 1981 AND MARCH 1982, THEN THE EXPECTED FIGURE FOR THE CORRESPONDING PERIOD THIS WINTER WOULD AMOUNT TO 34.661 PASSENGERS.
4. IF THE EXPECTED TRAFFIC FOR THE WINTER 82/33 PERIOD IS TO BE CARRIED AT A 60 PER CENT PLANNING LOAD FACTOR (WHICH MAY BE REGARDED AS APPROPRIATE ON HKG/SHA) A TOTAL OF 57,763 SEATS SHOULD DE OFFERED IN THE FIVE MONTH (22 WEEK) PERIOD. IF THIS CAPACITY IS TO BE MOUNTED BY CPA AND CAAC IN A 2:1 RATIO, THE APPROPRIATE CAPACITY FOR EACH AIRLINE WOULD BE AS FOLLOWS:
CAAC: 57,768 SEATS AT 66 PER CENT SHARE, BOTH DIRECTIONS, FOR 22 WEEKS, WITH 106 SEATS = 3.175 X TRIDENTS PER WEEK.
CPA: 57,768 SEATS AT 33 PER CENT SHARE, BOTH DIRECTIONS, FOR 22 WEEKS, WITH 300 SEATS = 1.44 X L1311 PER WEEK.
THESE CAPACITY PROJECTIONS ARE VERY CLOSE TO CURRENT LEVELS
(9 X TRIDENT BY CAAC AND 3 X 3707 BY CPA)
5. IF CPA'S PROJECTED TRAFFIC LEVELS ON THE HKC/SHA SECTOR PROVE CORRECT, AND CAAC'S PROPOSED SCHEDULE 13 ACCEPTED, THE CONSEQUENT REDUCTION IN CAPACITY BY BOTH CAAC AND CPA IN ACCORDANCE WITH THE 2:1 FORMULA, WOULD RESULT IN AN AVERAGE LOAD FACTOR OF 85 PER CENT ON THE SECTOR. IN OUR VIEW, THIS WOULD RESULT IN PASSENGERS FREQUENTLY BEING TURNED AWAY. CPA HAS ALSO POINTED OUT (AND WE SEE NO REASON TO DISAGREE):
(A) THAT EVEN DURING THE WINTER MONTHS WHEN TOURIST DEMAND IS NOT SIGNIFICANT, THEY CANNOT ADEQUATELY SERVE THE SHANGHAI MARKET WITH A FREQUENCY OF LESS THAN TWO SERVICES PER WEEK: AND
(B) THAT THE PUBLIC AND TRAVEL TRADE DO NOT LIKE CONSTANT AMENDMENTS TO SCHEDULES, AND THAT THIS DISLIKE HAS ALWAYS AN ADVERSE EFFECT UPON SALES.
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