TNAG-2051-FCO40-2922-Meeting-between-Lord-Caithness--Minister-of-State-for-Foreig-1990 — Page 9

B

C

D

Background

References

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A.

B.

DTp Background Note on Cathay Pacific Airways (CPA).

ASAS: Background Note

C.

Letter of 31 August from Sir Adrian Swire to Lord

Caithness: Swires' approach to the Chinese

D.

E.

F.

G.

FCO telno 713: Agenda for UK/PRC air services talks

Hong Kong telno 3433: Dragonair services to PRC

Hong Kong telno 3503 to FCO and Singapore: Singapore Airspace Industries

FCO telno 845 to Singapore and Hong Kong: Singapore Airspace Industries

Air Services Agreements (ASAs)

1.

As the Minister is aware, the process of clearing draft ASA texts with the Chinese has ground to a halt. The

background is set out in the attached note. Swires have

pursued a helpful initiative by writing to the Chinese Ambassador in London, setting out their concerns in a paper which they also passed to NCNA in Hong Kong.

UK/PRC Air Services

2.

We expect to resume air services talks with the PRC

early next year, on the basis of an agenda we proposed to

CAAC in September. Hong Kong are concerned that we should not concede through-running rights to CAAC (ie permitting CAAC to serve points beyond Hong Kong) on the basis that this would undermine Hong Kong's aviation autonomy and the value of its ASAS. The main priority at the talks will be

to secure access to the Northern/Siberian routine between

Peking and Europe for UK, Hong Kong and Chinese carriers.

SAIAGK/5

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E

In an

3. Swires are concerned at the large imbalance in terms of

market access and capacity which exists on Hong Kong/PRC routes between Hong Kong airlines (Dragonair) and Chinese

carriers. CAAC has produced a number of spurious arguments

to defend this imbalance (Hong Kong telno 3433).

attempt to redress this imbalance, Hong Kong are freezing CAAC's existing services and rejecting their applications

for new routes and additional capacity. There are some

signs that this strategy in starting to have an effect.

Hong Kong/Vietnam Air Services

4.

The Hong Kong Air Transport Licencing Authority (ATLA)

announced its decision on 16 March to approve the

applications of Cathay Pacific Airways (CPA) and Air Hong Kong (AHK) for licences to serve Hanoi and Ho Chi Minh City.

An airline licensed by ATLA (an independent statutory body) cannot, however, commence services on the route concerned

until the necessary traffic rights have been negotiated at

Government level. Both CPA and AHK have lobbied the Hong

Kong Government hard to be allowed to commence services.

is

5. HKG have taken the view hitherto that the development of

air services between Hong Kong and Vietnam, and the

improvement in trade which would be consequent upon that,

one of the very few "carrots" they have to offer the

Vietnamese in exchange for co-operation over the

repatriation of Vietnamese boat people (VBP). Therefore, until such co-operation is forthcoming, it is unlikely that HKG would be prepared to allow direct air services whether

scheduled or charter between Hong Kong and Vietnam, other

-

than UNHCR charters operated for repatriation purposes.

However, the Governor will be meeting officials on

19 December to review the policy.

London Traffic Distribution Rules

For the last 12 years, the London Traffic Distribution

6.

SAIAGK/6

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