CONFIDENTIAL
The Hong Kong ATLA and Civil Aviation Department are at present responsible for licensing Hong Kong-based airlines and for handling applications from foreign airlines to operate charter flights to and from Hong Kong. HMG remains responsible for negotiating traffic rights for Hong Kong-based airlines to operate international scheduled services. In the lead up to 1997 we propose to make new arrangements progressively the Hong Kong Government will be able to take over
so that responsibility for the latter international negotiations. It
is not clear whether and if so how we shall be able to transfer to Hong Kong responsibility for making arrangements with the Chinese for services between Hong Kong and the Mainland. For the next few years at least we shall need to continue to exercise this responsibility and shall naturally seek to meet the Hong Kong Government's wish to press Cathay's case for routes to major Chinese cities while at the same time not appearing to reject Dragonair's claims unfairly.
At this sensitive stage it is therefore important to avoid giving Sir Y K Pao any reason to suppose that HMG will support Dragonair at the expense of any other Hong Kong airline.
I am copying this letter to Richard Alien at the Department of Transport.
C D Powell Esq
10 Downing Street
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(P F Ricketts) Private Secretary
ever
Pete Zickets
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