BRITISH TRANS-PACIFIC AIR SERVICES

On 22nd June Cabinet in dealing with Agenda No. 77 [1] on this
subject endorsed generally the recommendations of the Wellington
Conference for the establishment of a British service across the
Pacific and Cabinet authorised certain expenditure on survey work
flights preparatory to the establishment of such a service on a
permanent basis (copy of Cabinet decision attached hereto).

Cabinet decision was duly communicated to the Prime Minister of
New Zealand. [2]

The United Kingdom Government in commenting on the report of the
Wellington Conference on this subject (Part 3 of the Conference
report) stressed the desirability of seeking the participation of
the Canadian Government in the enterprise both as regards the cost
of the surveys and as regards the proposed representations to
Washington for the use of facilities at Hawaii and in the United
States. [3] The New Zealand Government was duly advised that the
Commonwealth shared this view [4] and it is believed that the New
Zealand Government has taken steps to seek the co-operation of
Canada in the proposals.

In the same cable the United Kingdom Government asked that pending
receipt of Canada's views the Commonwealth and New Zealand
Governments should confirm the United Kingdom Government's
understanding on the following two points:-

(a) Until Canada's attitude towards participation becomes known it
appears impracticable to take early steps envisaged in the Report
with regard to ground organisation and flights other than
preparatory flying boat base at Suva which is dealt with in my
telegram No. New Zealand so Commonwealth of Australia 59. [5] It
is agreed that as soon as Canadian participation has been secured
the application for facilities can nevertheless be made at
Washington on behalf of Tasman Empire Airways, this company being
nominated provisionally pending a future decision as to
arrangements for operating the service on behalf of the British
Commonwealth Governments concerned. (b) Assuming again that the
Canadian Government decides to cooperate in the representations
and the service and that the diplomatic representations are made
accordingly can U.K. Government assume that their understanding of
the position is correct, namely that if the United States
Government made difficulties over granting this application
notwithstanding preparations being made for the establishment of a
British Commonwealth trans-Pacific service, New Zealand Government
will for their part make it clear that they are prepared to
terminate their agreement with Pan American Airways and the
Commonwealth Government will for their part keep the joint
services bargaining position intact by withholding their consent
to any application by Pan American Airways for terminal facilities
in Australia.

As regards point (a) the other two Governments have already been
advised that the Commonwealth agrees with the United Kingdom view
that pending advice of Canada's attitude the actual preparations
for the services should be limited to those necessary for the
survey flights to Suva. [6] It does seem desirable however that
steps should be taken to ascertain the approximate cost of the
permanent service from New Zealand to Canada (assuming that
permission can be secured for the use of American territory which
is essential at this stage of aviation development). Some
information in this respect seems essential before the Governments
enter into any major commitment in regard to the route beyond
Suva. It is therefore recommended that the other two Governments
be advised that the Commonwealth considers that approximate
information on this point is essential.

As regards point (b) the position is that the Delegates at the
Wellington Conference whilst agreeing with the objective for the
establishment of a through British air service from New Zealand to
Canada realise that there was a major obstacle to be overcome in
the securing of American permission for landings in the Hawaiian
Islands. The Conference therefore gave careful consideration to a
proposal emanating from the Commonwealth Delegation that following
[sic] [7] the granting of permission to use Hawaiian Islands the
best alternative arrangement appeared to be a British service over
the southern portion junctioning at some convenient centre with an
American service bearing over the northern section on to the
American Continent. This arrangement would be brought about, it
was contemplated, by withdrawing existing permission for the
American service to New Zealand and refusing permission (if such
were requested) for the American service to terminate in
Australia. This arrangement though not as acceptable as a through
British service running side by side and in close co-operation
with a through United States service was accepted by the Delegates
as the best alternative if American permission for the use of
Hawaiian Island[s] could not be secured.

Whilst the Wellington Conference favoured this alternative course
in the event of the use of Hawaii being refused the Delegates drew
attention to the desirability of maintaining friendly relationship
and co-operation between the British Government and the United
States in the South Pacific. The feeling of the Delegates was that
important as is the establishment of a British air service in the
Pacific the Governments concerned would no doubt hesitate to take
any action which might have the result of disturbing the
relationship with the United States or of curtailing that nation's
interest in the South Pacific.

The question raised by the British Government in point (b) is
whether the Commonwealth and New Zealand Governments are in fact
prepared to refuse permission to the American service in the South
Pacific if the U.S. Government does not grant permission for the
use of Hawaii by the British service. In this connection a recent
advice [8] from the Australian Counsellor of Embassy, Washington
[9], and the United States Secretary of State [10] made it clear
'that there was little or no hope of obtaining landing rights at
Hawaii'.

In considering what reply we should give to the British
Government's enquiries, it must be appreciated that although we
and the other Governments concerned may be loath to and in fact
would refrain from a course of action that would finally debar
U.S. interest from the South Pacific, nevertheless we should not
acquiesce in a refusal of British use of Hawaii when we have such
a good bargaining counter in the permission for landings in
Australia and New Zealand which are essential to any American
service into the South Pacific. It therefore seems that we must
use these counters and at least threaten at the appropriate time
to withdraw permission for the American service to New Zealand and
perhaps actually withdraw it unless U.S. Government can be induced
to permit the use of Hawaiian Island[s] for a British service.

For Cabinet decision. [11]

J.V. FAIRBAIRN