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CENTRAL INTELLIGENCE AGENCY
PROSPECTS FOR INTERNATIONAL AIR TRANSPORT
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PROSPECTS FOR INTERNATIONAL AIR TRANSPORT SUMMARY
Die danger thai the UK will split with the US on international air policy now seems less acute (in spite of heated debate within the UK Government regarding future poncy) than it did immediately after the failure of the Geneva Conference in7 toultilateral civil air transport agreement. Nevertheless, in the absenceultilateral agreement, the structure of international air transport will remain unstable and susceptible lo deterioration, because contracting parlies can demandof existing bilateral agreements at any time and can cancel them on due no.ice. The weaker air transport countries will continue U> seek lo limit commercial ail operations of foreign long-range carriers in order to protect theirines US-JK collaboration in foreign air policy, however, if continued, will frequentlyable vo impose libera! principles on other countries in situations sufficiently important to justify political pressure at high levels.
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PROSPECTS FOR INTERNATIONAL AIR TRANSPORT
1. US-UK COOPERATION IN INTEHKATIONAL AlR POLICY.
InC Uie US and UK agreed al Bermuda mutually lo recognize the principles ol fair and equal opportunity to engage In air commerce under competitive conditions. This agreement was further extended, in September of the same year, in an understanding that both countriesommon policy of inserting in Ihcir air agreements with other powers the principle of "Fifthhis princlplo (the right to pick up or put down air traffic in territory of the other country destined for or originatinghird country) is essential lo thc US if long-range operations are to pay their own way.esult of combined US-UK efforts, more than thirty otherhave accepted "Fifth Freedom" in agreements with either the US or UK and many have adopted the "Bermuda" formula in their negotiation of air agreements with other countries.
2. Present Instability of Wohlii Ain Agreements.
In spite of wide acceptance of the "Bermuda" formula, the structure of bilateral agreements throughout the world remains unstable, as bilateral agreements are liable to renegotiation or termination upon due notice. Had the right to "Fifth Freedom" traffic been incorporatedultilateral treaty at Geneva inheof world air transport would have crystallised on lines permitting long-rangeaviation to develop with thc minimum of restriction. The conference at Geneva failed in its purpose because, though they were willing to concede thesein bilateral agreement with countries of their choice, many countries werefor political or economic reasons to concede themultilateral basis. 3. Attitude or tub Lesser Aim Transport Countries.
The restrlctionist countriesultilateral treaty for the following reasons:
on the part of weaker countries that competition wiih theexperienced and powerful nir carriers would, in practice, result in theof their own air services;
by many countriesroprietary right lo traffictheir own territory;
on the part of some countries, that unrestricted competitionworld's airwaysotential source of international friction, and thatair transportation should be operatedool of aircraft by anand,
for the bilateral type air agreement as ailording greaterin bargaining.
Having demonstrated at Geneva their collective ability to defeat US-UK alms, these countries arc now encouraged to renew attempts to restrict special areas for the benefit of their own air carriers. For example, Argentina Is attempting to reserve the air traffic of its neighbors lo the air lines of the region and lo exclude long-range carriers from local "Fifth Freedom" benefits. Thc strategically located Arab League States (al-
though In some cases granting "Fifth Freedom" to the US in return for otherhave made plain their desire to limit local interstate air traffic to their own air lines. Mexico has flatly denied to the UK any traffic available at Mexico City forto the South. China is willing to accord "Fifth Freedom" rights to other countries in exceptional cases only.
PnOSPKCTS FOH CONTINOKD US-UK COLLABORATION.
Failure to stabilize fundamental principles of International aviationultilateral treaty has increased the importance to the US of the present US-UK policy of mutual support.
The future of British civil aviation is now the subject of Intense debate within the government, and strong pressures are being exerted toodification of UK air policy. The Issue has been broughtead by the basic "Fly British" policy requiring use of available alrcralt even though proved to be unsuitable for commercial opeialions While this has afforded protection for the entrenched British aircraft Industry. It has also resulted In critical operating0 million in the last fiscalhe Civil Aviation Act6 requires that subsidies for the nationalized air lines decrease progressivelyet the prospects are that greater subsidies will be needed lo retain present services in view of growing operating deficits. The government now must choose its course of action from the following:urther drastic reduction of air services (this would meet the public clamor for economics in air-lineb) amendment to the Civil Aviation Act authorizing subsidies al the present or increased rates, thus permitting continuation ol all air services required by national prestige; or (c) acquisition of modern US air transports. (The US has offered particularlyterms to the UK for thc purchase of Constellationss; the Dutch and Scandinavians have demonstrated that these aircraft can produce profits.)
If the UK is impelled lo initiate drastic retrenchment in ils air services, it may depart gradually from the liberal objectives of present US-UK air policy and have recourse to agreements with other countries providingooling of resources with arbitrary division of traffic and, therefore, less onerous competitive operations. The UK. however, might be reluctant to makeove if it should result in an accelerated trend toward world-wide limitation of commercial air rights, anticipating strong US objection lo restriction of US long-range air operations Legislative authorization for increased subsidies for the nationalized British air lines is not likely lo be obtained at thisove to purchase efficient US air transports, on the other hand, would be vigorously resisted by the politically powerful British aircraft industry.
It appears probable that in this dilemma the British Cabinetelax its support of the UK air industry to the extent of permitting use of US transports during the next few years on thc more importantirect the controlled UK aircraft Industry lo concentrateesearch and development program of advanced types for future use. thusegree of financial support, bulthe expensive and unsatisfactory efforts of thc UK aircraft industry to produce interim-type air transport,nsist that harmonious atr transport relations Willi thc US be maintained at all costs
A British decision to continue US-UK cooperation in International air policy wouldowerful aid lo the US In preserving world conditions favorable to International aviation. It would alsotrong deterrentar of subsidies between countries operating their air lines as Instruments of national prestige. Although these countries may be able to demand or withhold concessions on relatively minor issues, they willbe unable to deny rights to thc US and UK if the issues arc sufficiently Important to warrant strong combined US-UK pressure at high levels.
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DIBTRI10TIOH
Tarn FRatdani BaerotaryState
Cfalat of Sufi to Ojnxmaadar ta Chat*
Secretary ol Defense
Secretary of tea Army
Secretary of too Karj
Secretary of tbe Air Faroe
Kxecittre Secretary. MbUcoU Becurlty Ooaacfl
Chairman. National Security Resource* Board
Chief of Staff, US Anay
Chief of Naval OperaUooa
Chief of Staff, US Air force
Director of Plana and Operations, Oenersl Staff. US Army
Deputy Chief of Navalperations)
Director of Plans aad OpereUooa. US Air Force
Special Aaatetant to tbe Secretary ofesearch and Intelligence
Director or Intelligence. Oaneral Staff, US Army
Chief of Naval Intelligence.
Director of Intelligence, US Air Force
Secretary. Joint ctJefs of Staff
Secretary. Joint Intelligence Droop
Secretary. State-Army-Navy-Air Force OoordmaUng Committee
Executive Secretary, Military liaison Committee to too Atomic Energy Ootnmlaelnp
Director ot Security and intelligence, Atomic Energy Commission
uidttoa and Distribution. OICD, Departmant of State
Original document.
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