800.796/7–1645

The Chairman of the Civil Aeronautics Board ( Pogue ) to the Secretary of State

My Dear Mr. Secretary: As you are aware, we have been convinced for some time that the ability of United States air carriers to conduct an economically sound air service in the foreign field is conditional upon their ability to carry traffic not only between the United States and foreign points but also the so-called “Fifth Freedom” traffic between foreign points located on our long international routes. We have felt that it is of the utmost importance that every effort be made to obtain this right from as many foreign nations as will grant it. Without these rights we doubt that our foreign operations will attain a development commensurate with our position as a leading world power; and without these rights, whatever size our foreign operations may attain, we fear that it will be necessary to support them with subsidies of such size as to constitute a heavy drain on the Federal treasury.

In the period which followed the Chicago Conference we were hopeful that other nations would find it in their interest to adopt our position at that Conference and to accept the International Air Transport Agreement under which the signatories exchanged operating rights without withholding the right to carry “Fifth Freedom” traffic. As you are aware, however, only six of the fifty-four nations present at the Chicago Conference have unconditionally accepted this Agreement and of these only China and the United States can be classed as nations of first importance. It has become evident, therefore, that [Page 1462] we will probably not obtain the right to engage in “Fifth Freedom” traffic on other than a very limited basis under the authority of this Agreement.

The possibility that the International Air Transport Agreement would not gain general acceptance was recognized by the Department and the Board at the time of the Chicago Conference and as a result bilateral agreements providing “Fifth Freedom” rights over specified routes on a reciprocal basis have been offered to many countries, with the hope that each such country would exchange with the United States rights which it felt inadvisable to exchange with the world at large. As the negotiations for these agreements proceed, however, it is becoming increasingly evident that we are by no means sure of being able to make the agreements necessary to the inauguration of this country’s international route pattern. We had been hopeful that the economic benefits which an American air service would bring and the right to conduct a reciprocal air service to the United States would be sufficient consideration for the grant of air rights to the United States. Although these benefits are undoubtedly attractive, their attractiveness is apparently not persuasive enough to overcome the reasons which many of these countries have against the carriage by United States airlines of traffic to and from their territories. It should be noted also that a strong factor in the expressed reluctance of those countries which are under British influence—particularly the Near Eastern countries—has been the active effort of the British not only to keep these countries from granting “Fifth Freedom” rights to the United States, but also to delay the granting of any operating rights until British airlines are in a stronger competitive position.

It therefore appears appropriate and necessary to see if there are any other legitimate means at our disposal which we can use to secure the necessary operating rights. In the case of France, which for some months has been reluctant to sign our proposed bilateral agreement, but which at the same time has repeatedly indicated a desire for transport aircraft, the Department has suggested to the Board, and the Board has agreed, to take such joint action as is necessary to make available to the French certain C–54 aircraft on the condition that the French accept the terms of our proposed agreement. We have welcomed this proposal in that it has seemed to us that there should be a close relationship between the satisfaction of French desires and needs, on the one hand, and on the other, the grant by the French of operating rights, including “Fifth Freedom” rights, in favor of our airlines. If the allocation of C–54’s to the French can be effectuated, we are very hopeful that it will result in the consummation of the agreement. The Department has also proposed to the Board, and the Board has been happy for the same reason to agree, that certain other C–54’s be made available to the Dutch upon the condition that the Dutch with [Page 1463] draw their reservation to the “Fifth Freedom” provision in the International Air Transport Agreement.

If the Department and the Board are correct in believing that this type of approach will prove persuasive with the French and the Dutch, it is obvious that it can also be used to great advantage with certain other countries which have also expressed a reluctance to grant “Fifth Freedom” privileges in a bilateral agreement. We refer to such countries as Portugal, Belgium, Egypt, Iraq, Iran, Lebanon and Turkey, with which negotiations over bilateral agreements have been in progress for some time. Although these countries may not desire aircraft to the same degree as do the French and the Dutch, we assume that they may be seeking something else from the United States which at this time only the United States can furnish and for which their need is as great as is the need of the French and the Dutch for aircraft. If the French agreement can be concluded by making available to the French a few C–54’s, it seems to us that it is equally probable that our agreements with the other countries referred to can be concluded if the satisfaction of some of their needs is also made conditional upon the signing of an agreement.

In like manner, we suggest that if Great Britain should continue over our protest to assert her influence to block our attempts to conclude bilateral agreements, the Department could, to equal advantage, make the satisfaction of certain British needs conditional upon her agreement to cease interfering with our attempts to secure these agreements.

In this connection we wish to make it clear that we are, of course, not suggesting that supplies or services which are furnished those countries for purely relief purposes or for the purpose of prosecuting the war against Japan be withheld for the purpose of concluding the air transport agreements. We do recommend, however, that the filling of the other requirements of the countries referred to be closely related to the conclusion of the bilateral air transport agreements.

We are hopeful that the Department will be able to employ this type of approach on a wide scale so that if it becomes necessary to accept less than “Fifth Freedom” rights in any country, the Agreement will have been concluded only after whatever proper bargaining power we may have with respect to that country has been fully employed.

Sincerely yours,

L. Welch Pogue