September 28, 1995

1 . Delegations representing the Government of the United States of
America and the Government of Hong Kong met in Hong Kong from 26 to 29
September 1995 to discuss arrangements for the implementation of the Air
Services Agreement between their respective Governments (the "Agreement")
when it enters into force as well as arrangements for the conduct of air services
between the United States and Hong Kong for the period before such Agreement
enters into force. A list of the two delegations is at Annex 1, and the text of the
draft Agreement is at Annex 2 .

2. The Hong Kong delegation indicated that it would recommend the
Agreement be signed by a representative of the Government of Hong Kong as soon
as the Governor of Hong Kong had received for that purpose a specific
authorisation from the Secretary of State for Foreign and Commonwealth Affairs
of the United Kingdom . The United States delegation indicated that it would
recommend the Agreement be signed by a representative of the Government of the
United States of America as soon as the Government had been notified that the
Governor of Hong Kong had received the specific authorisation .

Routes

3 . As anticipated in the Annex to the Agreement, the Appendix to this
Memorandum of Understanding ("MOU") contains the routes which may be
served by the designated airlines .

Desisnation

4. The Hong Kong side expressed concern over the situation which
could arise if the United States side were to designate more airlines under Article 4
of the Agreement to serve Hong Kong than were currently designated to serve
Hong Kong under the Air Services Agreement between the Government of the
United Kingdom of Great Britain and Northern Ireland and the Government of the
United States of America, signed at Bermuda on 23 July 1977, as amended
("Bermuda 2"). While the terms of the Agreement itself do not impose any
general limitations on the number of United States airlines which may be
designated to serve Hong Kong, the wishes of the Hong Kong side are relevant to
the decision of the United States side concerning such designations . Should the
Hong Kong side transmit to the United States side their views concerning
Department of Transportation (DOT) proceedings which might result in
designations believed to'be excessive by the Hong Kong side, those views would
be transmitted by the Department of State to DOT for full and proper
consideration during DOT's proceedings, and would also be transmitted to the
President for consideration in review of DOT proposals .

5. It was understood that the United States side might consider it
necessary to refuse to grant or to revoke, suspend or condition the operating
authorisation of an airline for the exercise of rights specified in Article 3(2) of the
Agreement, if that airline is substantially owned or effectively controlled by an
airline designated, or which could be designated, pursuant to another bilateral air
transport agreement with the United States . It was also understood that before
taking such action, the United States side would inform the Hong Kong side. In
such circumstances, the United States side would recognise the right of the Hong
Kong side to call for consultations under Articles 6(2) and 16 of the Agreement
about whether the airline in que tion wa in fact ub tantiall owned or effecti el
controlled b an airline de ignated, or which could be designated, pusuant to
another bilateral agreement with the United State . It wa further under tood that
the Hong Kong ide had the right to take an other action it might judge nece ar
under the Agreement.

6. The United State ide confirmed that, a currentl owned and
controlled, Hong Kong ba ed airline now authori ed b United State authoritie
to conduct o eration to the United State would continue to qualif for uch
operating authority .

Ground Handling

7(a) To the e tent that de ignated airline of either ide are erforming
their own ground handling or ground handling for other airline at an air ort on
the date the Agreement enter into force, uch airline will be ermitted to
continue to erform uch er ice at that air ort for a long a that air ort remain
o en for international ci il a iation. De ignated airline who e ground handling
ha been erformed under arrangement with other airline or organi ation will
imilarl be ermitted to continue uch arrangement .

(b) A far a Hong Kong' re lacement Air ort i concerned, the current
intention of the Air ort Authorit i to allow airline to erform their own
technical line maintenance and a enger handling function on the bai of
objecti e and non-di criminator criteria, and to ermit a enger handling agent ,
whether third art or an airline, to erform in-terminal a enger handling for
other carrier baed on objecti e and non-di criminator criteria.

(c) Under the condition of the Air ort Authorit ' draft agreement
with it cargo handling franchi ee , airline are entitled to reque t the franchi ee to
ub-let ace in it cargo terminal for that airline to elf-handle it cargo terminal
handling acti it .

(d) US airline will recei e no le fa ourable treatment than other
airline in ground handling matter .

User Charges

8. The delegation e re ed their mutual under tanding that u er
charge referred to in Article 15 of the Agreement are ju t and rea onable onl if
the do not e ceed b more than a rea onable margin, o er a rea onable eriod of
time, the full co t to the com etent charging authoritie of ro iding the
a ro riate air ort, air na igation, and a iation ecurit facilitie and er ice at
the air ort or within the air ort tem. Such full co t ma include a rea onable
return on a et , after de reciation . In the ro i ion of facilitie and er ice , the
com etent charging authoritie con ider uch factor a efficienc , econom ,
en ironmental im act and afet of o eration.

Charters

9. The Hong Kong ide confirmed that it olic on charter o eration
wa not to gi e cheduled o erator an right of eto o er charter a lication ,
which are con idered according to objecti e criteria In a l ing the e criteria, the
aeronautical authorit take into con ideration, inter alia, the information ro ided
b the a licant about tour o erator / a enger/ hi er /freight forwarder
requirement , the ize of the con ignment, the need for ecial handling of the
hi ment, the need for direct er ice from the de arture oint to de tination, and
timing requirement . The Hong Kong ide further confirmed that, ubject to the
nece ar technical documentation being in order, the normal roce ing time for
acting u on a charter a lication i three working da .

Dispute Resolution

10. For the a oidance of doubt, neither ide intend to object to the
ubmi ion of the ro i ion of thi MOU a e idence in relation to an i ue in
di ute before an arbitral tribunal e tabli hed (a) under Article 17 of Bermuda 2
or (b) under Article 17 of the Agreement, a antici ated in aragra h 12 of thi
MOU

Provisional Application

11 (a) The delegation tated that the intended to recommend to their
re ecti e Go ernment that air er ice between the United State and Hong
Kong be conducted on the route ecified in the A endi to thi MOU on the
ba i of comit and reci rocit in a manner con i tent with the under tanding
contained in aragra h 3, 7 and 11 of thi MOU.

(b) The U.S. and Hong Kong delegation e re ed their mutual
under tanding that in all other re ect , the ro i ion of Bermuda 2, a amended
a of the date of the ignature of thi MOU, hould continue to be a licable to air
er ice between Hong Kong and the United State .

Application under the Agreement

12. The two delegation under tood that the arrangement et out in
aragra h 3 to 10 abo e would a l full on the date of entr into force of the
Agreement, and that an re iou go ernmental under tanding between the
United Kingdom and the United State of America in o far a the related to
Hong Kong air er ice would cea e to ha e effect from that date.
-------------------------

Edward B. O' Donnell
Head of US Delegation

Andrew Payne
Head of Hong Kong Delegation

Hong Kong,
29 Se tember 1995

Section I
Hong Kong Route 1:Combination Air Ser ice

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A)
(B) (C) (D)
Intermediate
Point
Points in US Territory
Points Beyond
Hong Kong Japan 1/ Alaska Canada
Guam/Commonwealth of the Northern Marianas Two points to be
elected 3/4
Hawaii
six other points to be
selected 2/

1/ Hong Kong airline de ignated on thi route ma er e Ja an with no more
than 7 round tri combination flight er week with full traffic right
between US oint and Ja an.

2/ The Go ernment of Hong Kong will notif the Go ernment of the United
State of it election in writing. The oint elected b the Go ernment
of Hong Kong ma , at it di cretion, be changed from time to time with not
le than 90 da notice to the Go ernment of the United State in writing.
There will be no limit on the number of Hong Kong carrier that can be
de ignated to o erate from the e oint to Hong Kong . If the Go ernment
of Hong Kong notifie the Go ernment of the United State that it will
con ert one of the e multi le de ignation oint to ingle de ignation, the
Hong Kong ide ma elect an additional US gatewa with ingle
de ignation (total of e en).

3/ Hong Kong airline ma o erate no more than 7 weekl round tri
frequencie with full traffic right between each of the e oint and the
United State .
A endi

4/ The Go ernment of Hong Kong will notif the Go ernment of the United
State of it election in writing. The oint elected b the Go ernment
of Hong Kong ma , at it di cretion, be changed from time to time with not
le than 90 da notice to the Go ernment of the United State in writin

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Hong Kong Route 2:A11-Cargo Air Service
(A)
(B) (C) (D)
Intermediate
Point
Points in US Territory
Two Points to be selected 2/3/
Hong Kong Alaska
Guam/Commonwealth of the Northern Marianas
Hawaii
eight other points to be selected 1/


1/ The Go ernment of Hong Kong will notif the Go ernment of the United
State of it election in writing . Point elected b the Go ernment of
Hong Kong ma , at it di cretion, be changed from time to time with not
le than 90 da notice to the Go ernment of the United State in writing.

2/ The Go ernment of Hong Kong will notif the Go ernment of the United
State of it election in writing. Point elected b the Go ernment of
Hong Kong ma , at it di cretion, be changed from time to time with not
le than 90 da notice to the Go ernment of the United State in writing.

3/ Hong Kong airline ma o erate no more than 8 weekl round tri
frequencie with full traffic right between the e oint and the United
State taken together. One of the e frequencie ma be con erted into two
weekl flight to be o erated b aircraft with a ca acit of le than 50
tonne o erated to and from oint in column (C) not in the continental
United State . Such con er ion hall a l for the remainder of the traffic
eaon in which it i made. No more than 5 weekl frequencie can be
o erated to an one oint.

If a scroll bar appears below the following table, swipe the table to move left/right of the dashed line.
Hong Kong Route 2:A11-Cargo Air Service
(A)
(B) (C) (D)
US Gateway Points Intermediate
Point
Points Beyond
Alaska Japan 3/ Hong Kong Singapore 4/
Guam/Commonwealth of the Northern Marianas Thailand 4/
Hawaii A point in Korea 5/6/
six other points to be selected 1/2/ A point in the Philippines 5/6/


1/ The Go ernment of the United State will notif the Go ernment of Hong
Kong of it election in writing. Point elected b the Go ernment of the
United State ma , at it di cretion, be changed from time to time with not
le than 90 da notice to the Hong Kong aeronautical authoritie in
writing.

2/ If the Go ernment of the United State elect New York, Lo Angele ,
Seattle, and/or San Franci co, there will be no limit on the number of US
carrier that can be de ignated to o erate from tho e oint to Hong Kong.
If the Go ernment of the United State notifie the Go ernment of Hong
Kong that it will con ert one of the e multi le de ignation oint to ingle
de ignation, the United State ide ma elect an additional US gatewa
with ingle de ignation (total of e en). At an other oint elected b the
Go ernment of the United State , e ce t Chicago, onl one US carrier can
be de ignated to o erate from that oint to Hong Kong . If Chicago i
elected b the Go ernment of the United State , no more than two US
carrier can be de ignated to o erate from that oint to Hong Kong and
until 1 Januar 2000 no more than 14 round tri frequencie er week can
be o erated. Further, after that date the ro i ion of Article 8(2) entence
two and three will no longer a l to er ice at Chicago .

3/ Not more than 14 round tri combination flight er week ma er e Ja an
with full traffic right between Ja an and Hong Kong. Flight that
Ja an with full traffic right between Ja an and Hong Kong on US Route 3
hall count toward that number.

4/ US airline ma o erate no more than 7 weekl round tri frequencie with
full traffic right between Hong Kong and the e oint taken together.
Flight that er e Thailand with full traffic right between Thailand and
Hong Kong on US Route 3 hall count toward that number .

5/ On or before 1 No ember 1997, if the Go ernment of the United State
notifie the Go ernment of Hong Kong that US Route 3 will not be
o erated thereafter, US airline ma o erate no more than 7 weekl round
tri frequencie with full traffic right between Hong Kong and the e oint
taken together, with no more than 5 weekl frequencie to an one oint.

6/ The Go ernment of the United State will notif the Go ernment of Hong
Kong of it election in writing. The oint elected b the Go ernment of
the United State ma , at it di cretion, be changed from time to time with
not le than 90 da notice" to the Hong Kong aeronautical authoritie in
writing.

US Route 2:All-Cargo Air Services

If a scroll bar appears below the following table, swipe the table to move left/right of the dashed line.
(A)
(B) (C) (D)
US Gateway Points Intermediate
Point
Points Beyond
Alaska Hong Kong Two point to be selected
Guam/Commonwealth of the Northern Marianas
Hawaii
Eight other points to be selected 1/


1/ The Go ernment of the United State will notif the Go ernment of Hong
Kong of it election in writing. Point elected b the Go ernment of the
United State ma , at it di cretion, be changed from time to time with not
le than 90 da notice to the Hong Kong aeronautical authoritie in
writing.

2/ US airline ma o erate no more than 8 weekl round tri frequencie with
full traffic right between Hong Kong and the e oint taken together. One
of the e frequencie ma be con erted into two weekl flight to be
o erated b aircraft with a ca acit of le than 50 tonne o erated to and
from oint in column (A) not in the continental United State . Such
con er ion hall a l for the remainder of the traffic ea on in which it i
made. No more than 5 weekl frequencie can be o erated to an one
oint.

3/ The Go ernment of the United State will notif the Go ernment of Hong
Kong of it election in writing. Point elected b the Go ernment of the
United State ma , at it di cretion, be changed from time to time with not
le than 90 da notice to the Hong Kong aeronautical authoritie in
writing.
4/
To be elected from oint in Korea, Thailand and the Phili ine .
San Franci co
1/
Not more than e en flight er week ma o erate in each direction on each
egment.
6
US Route 3 : Round the orld Combination Air Ser ice 1/
(D)
Point Be ond
Frankfurt
Turke
Point on egment
(a) 2/
Lebanon
S ria
Iran
Paki tan
New Delhi
Calcutta
Point on egment
(b) 2/
Segment (b):
Honolulu
Ja an
Hong Kong
Thailand
Lo Angele
2/
Segment (a) and (b) hall be combined, e ce t a ma be agreed ur uant
to Article 3, aragra h (4).
(A) (B) (C)
US Gatewa
Point
Intermediate
Point
Segment (a):
New ork
ahington/
Baltimore
SectionII
Note A licable to All Route

1. In addition to the right to carr tran it, connecting and local traffic
between oint in column B and oint in column C and between oint in column C
and oint in column D, de ignated airline ma carr tran it and on-line connecting
traffic between oint in column C and oint in other de tination , including oint
not li ted in column B or D . Such online connecting traffic ma be connected at an
oint in column A, B, C, or D or at oint in countrie not li ted in uch column .

2. Each de ignated airline ma carr tran it and on-line connecting traffic
between an two oint in the area of the other Contracting Part which a ear in
column C on an route for which that airline i de ignated.

3 . E ce t a ma be otherwi e ecificall ro ided, a de ignated airline
ma , on an or all flight , and at it o tion, er e oint on a route and o erate ia
oint not li ted in column A, B, C, or D in an order, o erate flight in either or both
direction , and omit to at an oint or oint , without lo of an right to u lift or
di charge traffic otherwi e ermi ible under the rele ant route or note a licable
thereto, ro ided that the er ice begin or terminate in the area of the Contracting
Part de ignating the airline . Unle ecificall re tricted, a oint on a route
a earing in column B hall be con idered a al o a earing in column D, and a oint
in column D hall be con idered a al o a earing in column B.

4. A de ignated airline ma carr traffic between oint in column A and
oint in column C, on the ame flight. or otherwi e, ia an oint including oint not
li ted in column B or D but e cluding oint in the area of the Contracting Partie

5. A de ignated airline ma er e oint behind an homeland gatewa
oint hown in column A with or without change of aircraft or flight number and ma
hold out and ad erti e uch er ice to the. ublic a through er ice .

6. A de ignated airline of one Contracting Part ma make change of gauge -
at oint in column B or column D or at other oint out ide the area of the other
Contracting Part . Such an airline ma al o make a change of gauge in the area of the
other Contracting Part from one aircraft to another aircraft . The abo e change of
gauge are ubject to the following condition :

(a) o eration be ond the; oint of change of gauge hall be erformed b
an aircraft ha ing ca acit le , for outbound er ice , or more, for
inbound er ice , than that of the arri ing aircraft;

(b) aircraft for uch o eration hall be cheduled in coincidence with the
inbound or outbound aircraft, a the cae ma be, and hall ha e the
ame flight number ;

(c) in the cae of combination air er ice onl , the onward flight,
inbound or outbound a the cae ma be, hall be cheduled to de art
within three hour of the cheduled arri al of the incoming aircraft,
unle air ort curfew , air ort lot , or other o erational con traint ,
at the oint where the change of gauge occur or at the ne t oint or
oint of de tination of the flight, re ent uch cheduling ; and

(d) if a flight i dela ed b unfore een o erational or mechanical
roblem , the onward flight ma o erate without regard to the
condition in aragra h (b) and (c) of thi Note.
Sto for non-traffic ur o e ma be made at an oint in coo r ec 'on
with the o eration on an route.

8. Notwith tanding the term of an of the Note , de ignated airline in
er ing Hong Kong hall not make to for traffic or non-traffic ur o e at an oint
or oint in the mainland territor of the Peo le' Re ublic of China.

9. In these Notes :
"Transit traffic" mean that traffic which i carried on a flight through a
oint. Flight, for the ur o e of thi definition, mean either:

(a) the arri al and onward o eration of an aircraft b an airline whether
or not under the ame flight identification number, or

(b) the arri al of one aircraft and ne t onward o eration of another
aircraft under the ame flight identification number, a otherwi e
allowable under thi Agreement, including Note 6 of thi Section; and

"On-line connecting traffic" mean that traffic which i carried on an
incoming flight of an airline and i tran ferred to an onward flight of the ame airline
under a different flight identification number . For a enger onl , the onward
tran fer hall be ticketed on the fir t a ailable onward flight of that airline for the oint
to which a a enger i connecting, ro ided that the time between the cheduled
arri al of the incoming flight and the cheduled de arture of the onward flight doe not
exceed 24 hour .

Mr Andrew P ne
Mi Janice T e
Mi Judith Ritchie
International A iation Directorate
De artment of Tran ort
Mr Arthur Ho
Mi innie Ho
Hong Kong/US Air Ser ice Con ultation
26-28 Se tember 1995, Hone Kong
UKIHONG KONG DELEGATION
Mr Nick Starling
International A iation Directorate
De artment of Tran ort
Princi al A i tant Secretar
Air Ser ice Negotiation Unit
Economic . Ser ice Branch
Hong Kong Go ernment
A i tant Secretar
Air Ser ice Negotiation Unit
Economic Ser ice Branch
Hong Kong Go ernment
Princi al A i tant Secretar
Air Ser ice Negotiation Unit
Economic Ser ice Branch
Hong Kong Go ernment
A i tant Secretar
Air Ser ice Negotiation Unit
Economic Ser ice Branch
Hong Kong Go ernment
Anne I
Dr Andrew oung
De ut Princi al Crown Coun el
International Law Di i ion
Hong Kong Go ernment
Mr Ste hen Kwok
Chief O eration Officer
Ci il A iation De artment
Hong Kong Go ernment
Mr illiam McArthur
General Manager
International Affair
Catha Pacific Airwa Limited
Mr I an Chu
Mr Simon Large
Manager
International Affair
Catha Pacific Airwa Limited
A i tant Manager
International Affair
Catha Pacific Airwa Limited
Hong Kong/US Air Ser ice Con ultation
26-28 Se tember 1995, Hone Kong
US DELEGATION
Mr Ed O'Donnell
Director
Office of A iation Negotiation
De artment of State
Mr Paul Gretch
Director of International A iation
De artment of Tran ortation
M Mar Street
Office of International A iation
De artment. of Tran ortation
Mr Peter Bloch
General Coun el' Office
De artment of Tran ortation
M Julie Oettinger
Office of the Legal Ad i er
De artment of State
Mr Michael Brownrigg
Economic/Political Section
US Con ulate General Hong Kong
M Martha Cheng
Economic/Political Section
US Con ulate General Hong Kong
Mr Ral h Ditano National Air Carrier A ociation
Mr Richard Carl on
Air Tran ort A ociation
Mr Glenn An linger
Continental
M Cecelia Bethke
Northwe t
M Sandra Chiu
United
M Ker tie Kre
E ergreen
M Mar Kenned
American
M Sarah Pro er
Federal E re
Mr O car Couto
Port of Portland
Mr Samuel Keiter
Detroit Metro olitan a ne Countr
Air ort
Mr Barrett Mur h
Chicago O'Hare International Air ort
Mr Carlo Shoda
Commonwealth Port Authorit
(Northern Mariana )
M Diane Peter on
Air ort Council International
North America
Mr Michael Engli h
Polar Air Cargo
Mr Victor Hocog
Chairman, Board of Director
Commonwealth of Port Authori .
(Northern Mariana )