With reference to your mission abroad, I attach hereto a memorandum for your guidance and information on matters relating to Civil Aviation. This, as requested, is furnished in duplicate.
The questions affecting Civil Aviation which are likely to arise for consideration during your discussions overseas may, for convenience, be grouped under two main headings:-
(1) The need to obtain civil aircraft to enable civil air routes in Australia to continue to operate during the war, and to prepare an organisation ready to meet the immediate post war period.
(2) The future policy for Civil Aviation in its International aspects.
You will probably prefer that the present position be explained as briefly, as possible, and that some useful comment be offered on the questions in their present stage of development, and as to probable alternatives which may arise for your decision. To supplement this statement, I append copies of relevant documents, charts, and maps.
ARTHUR S. DRAKEFORD
The policy of Internationalisation announced and supported by the Commonwealth and New Zealand Governments  is apparently not gaining the support of other nations. This is unfortunate, and it may well lead to future disaster. The position has to be faced, however, that while there is a body of public opinion which favours the Australian conception of Internationalisation, by which is meant that a representative World Authority would own and operate and control all International air routes, there are also very strong interests supporting the view, recently expressed by the Minister of Transport in the Canadian House of Commons , that there should be freedom of innocent passage and freedom of landing grounds which, in fact, means open competition.
2. There is every probability that the United States Government will support this view also.
3. The U.K. Government which once supported Internationalisation appears to have drifted away from this. There is evidently a strong feeling that in four or five years' time British Civil Aircraft and British organisations will meet on equal or better terms any competition put forward by the United States. This view may prevail and the U.K. Government may join with U.S.A. and Canada in some form of agreement which will open all the routes to competition probably under some form of international supervision by a body which will represent the various Nations concerned in aviation.
4. Such a body, not owning and operating the aircraft and the organisations, cannot fully control operations. All sorts of influences can operate within the body itself It will lack the urge to achieve commercial success, and will probably have no financial responsibilities. Open or concealed subsidies to airline organisations by powerful nations can make operations by smaller nations extremely difficult or expensive or inefficient, unless their organisations receive similar support from their governments.
5. In time only efficient organisations will survive.
6. It is a mathematical certainty that in airline operations the larger the organisation is, the lower operation costs will be, compared with those of smaller organisations. The success of airline operations depends on, and will be judged by, low operating costs resulting in cheap fares and low freight charges.
7. It may be necessary for the Commonwealth to review the international position in the light of the views of other nations, because internationalisation is not possible if the British Commonwealth of Nations and the United States cannot agree on this common basis.
8. If a new policy must be adopted because agreement cannot be reached, the Australian outlook must be readjusted, and steps taken to meet the situation.
9. The Commonwealth may be forced to take its place in the competition, and at present it has neither aircraft nor an organisation in being ready to meet such a situation.
10. It is realised that once adequate airline services have been established by well organised and well equipped organisations, it is extremely difficult for a rival organisation to obtain a foothold and compete with the established lines.
11. Australia is in a position to create now an organisation which could establish all its internal airlines and expand them overseas and this organisation could be ready to do this immediately the war with Japan ends and probably sooner, because American aircraft will be obtainable even if British aircraft are not then available.