TNAG-2310-FCO40-3350-Air-services-between-Hong-Kong-and-China-1991 — Page 7

RESTRICTED

017362

MDLOAN 0127

4.

ON THE REGIONAL ROUTE, WITH EFFECT FROM 1 APRIL 1992, DRAGONAIR MAY MOVE TO 2100 SEATS ON BEIJING, 1780 ON SHANGHAI AND 886 ON XIAMEN WHILST CHINESE SIDE MAY MOVE TO 5568 SEATS ON BEIJING, 3560 ON SHANGHAI AND 1772 ON XIAMEN.

5. DISCUSSION ON THE OTHER ISSUES CAN BE SUMMARISED AS

FOLLOWS:

TRUNK ROUTE: WE SOUGHT ABILITY TO SERVE AN ADDITIONAL POINT OR POINTS IN CHINA AND/IN ASIA BEYOND PEKING TO CREATE A VIABLE ROUTE FOR BA. WE MADE CLEAR THAT WE WOULD NOT AGREE THE NEW ROUTEING (WHICH THE CHINESE ARE CLEARLY EAGER TO USE) WITHOUT CHINESE AGREEMENT TO SUCH BEYOND POINTS. WE NOTED THAT POINTS IN OTHER COUNTRIES MIGHT TAKE TIME TO AGREE WITH THOSE OTHER COUNTRIES (OR, SO FAR AS SEOUL WAS CONCERNED REQUIRE IMPROVEMENT OF CHINA/KOREA RELATIONS) BUT WE NEEDED CHINESE COMMITMENT NOW TO BA OPERATING TO SUCH BEYOND POINTS ONCE THESE OTHER HURDLES WERE CROSSED. WITH SUCH A COMMITMENT WE MIGHT AGREE TO A CHINESE AIRLINE STARTING TO USE THE NORTHERN ROUTEING BEFORE BA FELT ABLE TO DO SO, BUT NOT OTHERWISE. LU RUILING (PRC LEADER) SAID HE COULD NOT AGREE BEYOND POINTS OUTSIDE THE PRC AT THIS ROUND AND OUR PROPOSAL OF SEOUL GAVE PARTICULAR DIFFICULTIES. IN PRIVATE SESSION, HE APPEARED TO OFFER TO ADD SHANGAHI/GUANGZHOU FOR NOW WITH PROMISE TO LOOK

AT OTHER POINTS OUTSIDE PRC AS LONG AS THESE DID NOT INCLUDE SEOUL OR TAIPEI. BUT SUBSEQUENT DISCUSSION IN AN EXPERT GROUP THREW SOME DOUBT ON WHAT LU HAD BEEN SUGGESTING AND THE MATTER WAS LEFT UNRESOLVED.

OVERFLIGHTS: WE SOUGHT OPEN ACCESS TO THE FASTEST ROUTEINGS

AVAILABLE FOR UK AND HK CARRIERS BUT LATER INDICATED THAT WE EXPECTED THE CARRIERS TOGETHER TO WANT TO MAKE ABOUT 100 FLIGHTS CONE DIRECTION) A WEEK. THE CHINESE RESPONDED THAT THE NORTHERN ROUTE WAS NOT OPEN BUT THEY COULD MAKE A SPECIAL ARRANGEMENT WITH US WHICH WOULD ALLOW 7 (ROUND TRIP) FLIGHTS PER WEEK, WHICH THEY CLAIMED WAS ALL THAT WOULD BE TECHNICALLY POSSIBLE. THIS OFFER WAS CLEARLY INADEQUATE FOR OUR NEEDS AS WE EXPLAINED. LU INDICATED IN PRIVATE SESSION THAT THE

NUMBERS COULD BE FURTHER DISCUSSED.

THROUGH RUNNING: THIS FINALLY RAISED ITS HEAD IN DETAIL IN THE CHINESE DRAFT CMU WITH A PROPOSAL, WITH EFFECT FROM 1 JANUARY 1992, FOR SERVICES TO LONDON, SYDNEY, SINGAPORE AND JAKARTA.