TNAG-1434-FCO40-1917-Hong-Kong-leading-personality-Sir-Yue-Kong-Pao--businessman-1986 — Page 323

CONFIDENTIAL

the airline must approach the DCA, Hong Kong to settle the

basis on which he will support their exercise of traffic

rights under intergovernmental Air Services Agreements (ASAs),

for which HMG retains responsibility for the time

being. DCA then consults with HMG to decide how and when

an approach to the other country in question should be made

in order to negotiate traffic rights for scheduled

Scheduled services cannot be operated until we

have secured the specific agreement of the other Government

and negotiations are often protracted.

services.

4.

For the reason given in pa ra 2, as originally

incorporated, DAL did not meet the requirements for the

designation of airlines to operate International Services

because i t was not substantially owned and effectively

controlled by HMG ог British Nationals. In October 1985

when Sir Y K acquired an interest in DAL, a radical

restructuring of the airline's shareholding took place,

apparently with the aim of meeting the necessary ownership

and control criteria. Details provided by DAL now suggest

that about 65% of the shares are owned by British

Nationals, with Sir Y K and companies under his control

accounting for about 35% of

of the total. A final view has

yet to be reached on whether DAL meet the ASA ownership and

control criteria and we await the views of the HKG.

5.

•

Sir Y K Pao wrote to the prime Minister about his

recently acquired interest in DAL on 25 October last year

asking for the

support of HMG for "This new Hong Kong

venture"

The Prime Minister's reply was non-commital.

Since then DAL has been granted ATLA licences to mount

scheduled services to eight regional cities in the PRC;

this is being followed up

in discussions between DAL and

DCA Hong Kong prior to any request being made by the HKG

for HMG

HMG to seek the necessary traffic rights with the PRC.

Application for licences to serve Peking and Shanghai,

which are already

were rejected.

served by Cathay Pacific Airways (CPA)

DAL have also applied to ATLA for

scheduled services to the UK and

permission to operate

CONFIDENTIAL