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

Attachment

INTERNATIONAL ASPECTS

The policy of Internationalisation announced and supported by the
Commonwealth and New Zealand Governments [1] 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 [2],
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.