800.796/562: Telegram
The Ambassador in the United Kingdom (Winant) to the Secretary of State
[Received February 29—10:15 p.m.]
1634. Reference Department’s 1362, February 23, 10 p.m.39 The Embassy has a copy of the British aviation agenda. The tone and emphasis of the agenda accurately and fully reflect the general British view of regarding their participation in the international aviation primarily as an adjunct of security rather than as a commercial enterprise. It also reflects the British apprehension that they may be swamped competitively by United States aviation and their consequent desire to guarantee themselves a percentage, even though small, of the available business. As the Embassy has reported, one of the apparent points in British policy is to bring their general weight, prestige, and probable strong position in whatever international security arrangements which may be made, to the support and protection of what they fear would otherwise be a second class aviation industry, both manufacturing and operational.
Specifically, they will probably want to endow the international authority with more economic power than opinion in the United States has given any indication of supporting. (Incidentally we learn that the air representatives of several of the smaller nations, such as the Netherlands and Sweden, do not look with favor on very much economic control being given to an international body, since their air aspirations exceed their relative political and economic weight.)
We are inclined to think (point (2) of the Agenda) that what the British chiefly mean by the regulation of uneconomic competition is an arrangement which might under certain conditions not permit the most efficient operators or manufacturers to translate their improved efficiency into lower passenger and freight costs, greater speed or improved service. This, of course, might mean that we might not always be able to take full advantage of our competitive position. We feel they will want to limit the allocation of routes on Empire services and perhaps restrict the operations of certain routes, such as the Atlantic, to a fewer number of countries than would normally wish to operate these routes. They may advance the principle that inter-Empire traffic be considered as cabotage. They interpret the United States Civil Aeronautics Act as preventing the opening up of traffic between the Canal Zone and the United States, etc., to non-United States flag operators. They believe that this is comparable to considering England-Newfoundland traffic, for example, as cabotage. [Page 394] We repeat that we do not expect them to hold to this view, but they will probably use it as a bargaining point.
While as stated in the foregoing, the British seek guarantees, they will want the arrangements sufficiently flexible so that if their manufacturers should really come forth with a super airplane and their air lines fly it super efficiently, they would not be unable to take advantage of these facts.
On the subsidy question there is of course a great difference of opinion. Beaverbrook’s office professes to be against subsidy. The Air Ministry is against it in principle but apparently for it in controlled form in specific cases. (Warner’s40 articles however have had a deep influence on Hildred.) The Foreign Office would probably exercise influence against too strict agreements against subsidy, but all are keenly aware of the dangers of subsidy races. The shipping companies which expect to engage in aviation say they are against subsidies of any kind, but this may be the result of their estimation that they have a better chance of having the subsidy taken away from BOAC41 than they have of getting one for themselves. (If the United States follows vigorously the principle that subsidy not be permitted except in limited agreed to and specified circumstances including prohibition of operating air service is [sic] at a loss even though unsubsidized by the Government, we think there is a good chance that the British will be forced to limber up somewhat on their desire to control strictly the connected matters of frequency and rates.)
If Beaverbrook makes his expected statement in the House of Lords against monopoly and against the principles of subsidy, it will probably mean that in his opinion, and perhaps in the opinion of the Government as a whole, the plans of the shipping companies, railroads, et cetera, to engage in aviation, which he has been encouraging, look sufficiently promising to enable the Government to modify somewhat its defensive attitude.
Section (3). This is a subject which should present no difficulty. The British are willing to contribute to the construction, maintenance and operation of international airports not only in their own territory but in countries unable or unwilling to meet the standards required. (This is in addition to responsibility for airports needed for international security reasons.)
Section (4) should cause no difficulty. There is some disagreement here as to what level the arbitration machinery should be on. That is, whether entirely governmental, mixed government-operator, or entirely among operators. They seem to think the latter would be too close to a possible cartel to be acceptable. With respect [Page 395] to section (5), that is freedom of the air, the comments on the entire agenda apply. For Empire reasons, the British are fully aware they must subscribe to a degree of freedom of the air sufficient to enable them to fly to and across the Colonies and Dominions for purpose of maintaining influence on the Continent. They realize they must also subscribe to a policy of sufficient freedom of the air to permit them to fly to and across the European countries, and to participate in developments there. Emotionally they link it to their traditional policy of freedom of the seas; furthermore, as a broad principle they are committed to it, even though their list of exceptions might be long and their fear of it great.
The question of international operating agencies is one to which the British have given much thought. As the Department is aware, a certain sector of British opinion would like to see all international aviation owned and operated by an international body. The British are fully aware, however, that even if such a doctrine would be acceptable here, which is improbable, it would not be acceptable to the United States. They do believe that for the Axis nations and probably for internal flying in Europe, at least for some years, an international operating agency is the only answer. (The air lines of the non-Axis European countries flying from Europe to points outside of Europe probably would not be included in the international operating agency. Thus Sabent, LKM,42 et cetera would only be affected insofar as their European services are concerned).
Under point 2 (International Air Transport Authority) most of the points previously mentioned are restated. Paragraphs (2), (6), (7), (11), (12) echo the restrictive tone running through the statement of general principles.
The British believe that a failure to come to at least some agreement in the preliminary talks and in the full international conference would be disastrous. It is probable that overriding all specific points and doubts, is the considered view of the Government that there must be some sort of Anglo-American understanding on the air question.
The agenda is largely the work of Peter Masefield, who came back from his trip to the United States thoroughly frightened by the potentialities of United States international civil aviation.
Many of the above remarks may need reappraisal and change of emphasis during the next few weeks; as we note them we will report currently on such changes.