TNAG-2842-FCO40-4095-Air-services-agreement-between-Hong-Kong-and-India-1993 — Page 4

CONFIDENTIAL

06-776

MDLIAN

52

1

COURSE REFLECTED A COMPLETE MISUNDERSTANDING OF THE HONG KONG SITUATION. WE EMPHASISED THAT OUR POSITION ON THE DESIGNATION CRITERIA FOR HONG KONG AIRLINES WAS NOT NEGOTIABLE GIVEN ARTICLE 9 OF ANNEX I OF THE SINO-BRITISH JOINT DECLARATION AND INVITED THEM TO CONSIDER CAREFULLY THE PREVIOUS DISCUSSIONS ON THIS MATTER. WE ALSO POINTED OUT THAT THE INDIAN DELEGATION HAD NOT BEEN ABLE TO EXPLAIN PRECISELY WHAT THEIR CONCERNS WERE. IF, ON REFLECTION, THEY STILL FELT THERE WAS A PROBLEM, IT MIGHT BEST BE RESOLVED BY WRITING TO THE HKG (OR UK GOVERNMENT) SETTING OUT THEIR CONCERNS IN DETAIL. THE INDIAN SIDE MADE NO COMMENT BUT, IF THERE IS A GENUINE PROBLEM, WILL PRESUMABLY BE WRITING ON THIS MATTER.

3. ON CAPACITY OF SERVICES BETWEEN HONG KONG AND INDIA THE INDIAN SIDE AGREED THAT THE HONG KONG/DELHI MARKET HAD GROWN BUT WAS UNABLE TO AGREE WITH OUR PROPOSAL TO ALLOW EACH SIDE TO OPERATE FOUR ADDITIONAL SERVICES PER WEEK ALONG EXISTING ROUTES. THE INDIAN SIDE BASED THEIR REJECTION OF OUR PROPOSAL ON AIR INDIA'S STATEMENTS THAT THEY PROPOSED TO MOUNT ADDITIONAL CAPACITY ONTO THE MARKET BEFORE THE END OF SUMMER 1993 OPERATING SEASON. THEY PROPOSED, INSTEAD, THAT INCREASE IN CAPACITY ENTITLEMENT FOR THE HONG KONG SIDE SHOULD BE LIMITED TO ONE B747 DELHI/HONG KONG V.V. AND ONE B747 CALCUTTA/HONG KONG V.V. SERVICE

PER WEEK SUBJECT TO THE FOLLOWING CONDITIONS

(A)

(B)

-

THE DESIGNATION CRITERIA PROPOSED BY THE INDIAN SIDE AND DESCRIBED IN PARAGRAPH 2 ABOVE SHOULD BE ADOPTED:

DENOMINATION OF THE CAPACITY ENTITLEMENTS OF EACH SIDE

IN TERMS OF AIRCRAFT COEFFICIENTS:

(C) THE SUBSTITUTION OF THEIR EXISTING TWICE WEEKLY 8707

ENTITLEMENTS WITH A310 AND A320 AIRCRAFT: AND

(D)

THE GRANT OF SINGAPORE AS AN ADDITIONAL INTERMEDIATE POINT AND SEOUL AS AN ADDITIONAL BEYOND POINT UNDER ROUTE II OF THE ROUTE SCHEDULE OF THE UK/INDIA ASA.

WE FOUND THE ABOVE CONDITIONS TOTALLY UNACCEPTABLE AND REITERATED THAT THE EXISTING CAPACITY ENTITLEMENTS FOR BOTH SIDES HAD REMAINED UNCHANGED SINCE 1982. SIGNIFICANT GROWTH IN MARKET DEMAND SINCE THEN HAD LED TO OUR REPEATED REQUEST FOR ADDITIONAL CAPACITY SINCE 1987. WITH THE RECENT WITHDRAWAL OF BA FROM THE

2

PAGE CONFIDENTIAL