TNAG-2051-FCO40-2922-Meeting-between-Lord-Caithness--Minister-of-State-for-Foreig-1990 — Page 11

CONFIDENTIAL

Rules (LTDRS) have inter alia prevented any new operators of

international scheduled passenger services from serving Heathrow. Cathay Pacific Airways (CPA), who began services to London within this period, have complained on a number of

occasions in the past that they are excluded by the LTDRS

from Heathrow while their direct competitor on the

London/Hong Kong route, BA, is not. Moreover, BA may and does operate from both Heathrow and Gatwick. CPA argue that this gives BA a significant competitive advantage and thus represents a breach of the UK/Hong Kong air services arrangement which provides that there should be fair and equal opportunity for the airlines of both sides to compete.

7. The LTDRS also ban all-cargo flights during peak hours

from both Heathrow and Gatwick. This restriction has made

it more difficult for CPA to obtain the slots they require

for their services, particularly at Gatwick during holiday periods when priority is given by the airport scheduling committee to leisure industry charter flights.

8.

Recently, Lord Brabazon has announced that he has asked

the Civil Aviation Authority (CAA) to advise him on the

possibility of abolishing some or all of the LTDRS. Both

the CPA and the Hong Kong Government have been given an

opportunity to make their views known to the CAA in

connection with this exercise. The deadline for this was

Friday 30 November.

Economy

9. Hong Kong's economy has been in the doldrums for some time now.

Growth in 1989 was only 2.5% and growth for 1990 is projected to be 2% to 2.5%. But in recent months growth has infact been negative and a positive growth rate will only be achieved if the economy picks up well soon. This seems to have now happened: September figures were quite

encouraging with growth for the first nine months of 1990

8.5% higher in money terms than in 1989.

SAIAGK/7

CONFIDENTIAL