TNAG-1962-FCO40-2794-Aviation-rights-in-Hong-Kong-for-Federal-Express-1989 — Page 12

(4) MON

Department of Transport

CONFIDENTIAL

Room

J Hunt Esq British Embassy Washington

Deny John

84/20.

HKC184

12/1 NH

UK/US AIR SERVICES TALKS:

Room S6/18

10

276 5410

2 Marsham Street London SWIP 3EB

Telex 22221

Direct Line

Switchboard

GTN 212

01-212 01-212 3434

17 November 1989

29 NOVEMBER 1 DECEMBER 1989

-

I enclose a copy of David Moss's recent submission to Ministers, setting out the objectives we propose pursuing during the coming discussions.

As you will see, we intend opening the negotiations by proposing that a comprehensive, liberal, bilateral agreement be developed to replace Bermuda II. We shall explain that we are ready to remove the current constraints, provided the USG are prepared to remove the inbuilt advantage to their carriers that flows from the current unequal access to connecting traffic in the US.

But whatever the US reaction to that, we shall press for an immediate deal on US access to Manchester Airport. We have in mind a package which would give the US (perhaps 2 or 3)

or 3) new routes to Manchester, or other regional airports, and us double designation on some existing routes and some new rights from UK regional airports that we would bank for our smaller carriers.

You will also see from the submission that Prestwick and Federal Express's plans loom fairly large. We already have, as you know, a proposal to lift the '7-Gateway' restriction on fifth freedom cargo activity. From the Scottish Office and BAA we have heard of an interest in extra fifth freedom destinations; in a cabotage route Prestwick-Hong Kong; and in fifths Hong Kong-Japan. The US Embassy have asked whether we would be ready to discuss that last "away from the table" (we have not replied yet) but they have not mentioned the other extras.

I have just heard that Ministers have approved the submission.

Yours

Geoff

G J SKINNER

CONFIDENTIAL