Memorandum of Conversation, by the Chief of the Division of Aviation Affairs (Morgan)
During an informal chat with Sir William [Hildred] on the afternoon of February 9, he voluntarily brought up the question of Fifth Freedom traffic and said that he hoped it was clear that the American Delegation fully understood the interpretation which the British put on the phrase “Fifth Freedom traffic”. He said, that Fifth Freedom traffic to the British meant all pick-up traffic between foreign nations [Page 1478] all over the world, and they were interested in the manner in which such traffic was picked up since it could be expected to have at least an indirect effect on competitive operations nearly everywhere. At the same time he said the British fully recognized that in the bilateral agreement with the United States, they could only put in provisions affecting Fifth Freedom traffic carried between points in British (or United States) territory and points in third countries. They had no intention of trying, through the bilateral agreement, to regulate the carriage of Fifth Freedom traffic between points in two countries, neither being in the territory of the United States or in the territory of the United Kingdom.
I told Sir William I believed that was the understanding of the American Delegation of the British position. We also felt that the references to Fifth Freedom traffic in the bilateral agreement applied only to points in one of the two jurisdictions and points in third countries.
At the same time I said that the American Delegation recognized the very important precedent that was being established through this bilateral agreement and foresaw the possibility that many other nations would wish to adopt the same principles with respect to the transportation of Fifth Freedom traffic. To that extent the bilateral agreement would indirectly affect the carriage of such traffic between points outside of the United States or the United Kingdom. To this Sir William readily agreed.
I then went on to say that a good many of the difficulties which we met with respect to certain provisions and conditions in the agreement, were due to the strong possibility that we would have to incorporate those same provisions in other agreements in the near future. Thus we were, in a sense, although not directly setting the pattern for a sort of multilateral air transport agreement.
It is also my recollection that Sir Henry Self and Sir William expressed themselves in practically the same terms during the late evening meeting of the two Delegations on February 9.