431 Mr R. G. Menzies, Prime Minister, to Mr A. W. Fadden, Acting Prime Minister

Your telegram 164 of 26th March [1] and Casey's 21 to me of 12th March [2] regarding landing rights.

I have now discussed the matter with the appropriate British authorities and it has been agreed that Pan-American Airways might be given landing rights in Australia for their Trans-Pacific service if the following arrangements can be made:-

(1) Reciprocal landing rights at Honolulu and San Francisco to be made available to the Commonwealth Government for a British service from the date of the first flight to Australia by Pan- American Airways even though we might not be in a position to make use of them until after the war.

(2) The position of New Zealand to be safeguarded by stipulating that Pan-American Airways should undertake to operate alternates flights to an Australian and a New Zealand terminal (as proposed by Mr. Casey).

(3) The position at Noumea to be satisfactorily clarified and since Pan-American Airways' rights are not exclusive this should present no difficulty.

(4) That all negotiations should take place as between the Governments (i.e. with the State Department at Washington) and that direct discussions with Pan-American Airways should be avoided.

(5) That the matters should be so handled that the initiative would come not from the Commonwealth Government but from the United States Government.

It might [for example] [4] be possible that when next the Commonwealth Minister at Washington was approached on the matter by the State Department he should ask that a communication should be made to him in writing putting forward a definite proposal.

If you agree with these proposals would you please consult with the New Zealand Government and if they are acceptable to them I will take up the matter with Casey.

MENZIES