TNAG-2879-FCO40-4151-Agreements-between-the-Hong-Kong-Special-Administrative-Regi-1993 — Page 84

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Roddy Wilson, Regional Manager of the British Airways his last para)

1. gave me today an update on their activities.

2. Hong Kong services: Turnover was at about £100 million a year, with passenger growth of some 8% over the last few years. He believed BA were ahead of Cathay Pacific and that BA flights filled up first at least for First Class and Club.

3. He was relatively relaxed about the Virgin service which will start early in 1994. He believed that Virgin had something to contribute and that Virgin would certainly make some inroads into BA's position. BA would approach the question of promotional activities with great care given the legal wrangles with Virgin which were likely to persist for

years.

4. China/Taiwan. As a result of lengthy and sometimes difficult negotiations in Peking, BA was now operating twice weekly a 747 into Taipei with the agreement of Peking. The aircraft displayed a "British Asia Airways" livery. The Chinese were now beginning to niggle, asking for example for the flight number to be changed. But Wilson thought that given that the original deal had the blessing of the State Council, it was unlikely to come unstuck.

5.

He said that agreement with the Chinese over this had opened the door. They were now in detailed discussion in Peking on a number of fronts. These included the possibility of BA getting involved in information management

in a big way.

The Chinese were currently using Sperry equipment which had been virtually a gift. But it was not working and BA had the opportunity to introduce

IBM equipment compatible with their own systems. BA were also talking to the Chinese about revenue accounting.

6. Chek Lap Kok. British Airways were preparing a major bid for engineering, base maintenance and line maintenance at Chek Lap Kok. This was big stuff and would involved about 40% of Chek Lap Kok's requirements in these three fields. For this they were in partnership with Hutchison (via Simon Ko) and CNAC (the Hong Kong registered commercial arm of CAAC which owned about 40% of Jardines operation at Kai Tak).

BA involvement would be largely the management contract, but BA, Hutchison and CNAC were all equal partners in the venture. Their competition was HAECO but Wilson thought that their own rival bid was very well placed indeed.

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