Current Economic Developments, Lot 70D4671

Extract From Bulletin No. 208


Commonwealth Aviation Trends Matter of Deep Concern to US

We are seriously concerned over the possible effects on international civil aviation policies of the sharp veer from Bermuda concepts reflected in current aviation developments within the Commonwealth. There is some evidence that these developments may place pressure first on the UK and then on the US to recede from the Bermuda formula to a more restrictive type aviation bilateral—which would hamper US civil airline operations greatly and would destroy the general world-wide aviation pattern along Bermuda lines as accepted by most states.2

British civil aviation officials have asked our views on the dilemma confronting the UK with respect to Commonwealth aviation matters.3

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The Australians are firm in their policy of anti-Bermuda and, without consulting the UK, have just negotiated an aviation bilaterial with Pakistan calling for 50–50 traffic division and have agreed to an Indian proposal for joint aviation discussions along the same lines. India, too, is adamant on the 50–50 capacity split and the reserving of India-Pakistan traffic for carriers of those countries. In preliminary talks with the UK, India has taken the position that Bermuda does not work, that US carriers and KLM have carried far more traffic to and from India than is justified and that it plans to renegotiate with the US and the Netherlands soon in order to correct this situation.

The UK claims that it strongly wishes to avoid giving in to the opponents of Bermuda type air agreements, particularly now that the US has brought Canada into the fifth freedom camp.4 Every effort will be made to achieve a Bermuda type agreement in each case. However, the UK is bound by its practice of reserving the right to conclude other arrangements with the Commonwealth. In the case of India, the UK is anxious to avoid any action which might strain the slender ties binding India to the Commonwealth. In the event the Indians will not give on the fifth freedom issue, the UK will insist that the agreement not become effective until after renegotiation of the US-India bilateral. In our view, this step would have the same effect as if the UK and India were jointly attempting to force the US from the fifth freedom field under the Bermuda principles.

US–UK aviation discussions in 1946 clearly recognized a Commonwealth policy regarding division of traffic between Commonwealth nations—but it did not apply to other than third and fourth freedom traffic between two Commonwealth countries. British extension of that policy to include fifth freedom traffic rights insofar as other than Commonwealth countries are concerned appears to us seriously to threaten Bermuda principles throughout the world.

We are expressing our deep concern to Australia over its recent restrictive agreement with Pakistan and our surprise that the freer competitive provisions of the Bermuda formula, inherent in the US-Australian type agreement,5 were not followed. We frankly admit our concern over seeing any nation agree to division of traffic on a predetermined basis, considering that such agreements erroneously sacrifice the concept of competitive growth of the transport industry to a doctrine of greater security of operation inherent in predetermination of traffic.

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  1. “Current Economic Developments” was a weekly secret summary of events and developments relating to the conduct of the foreign economic policy of the United States, as seen and compiled by the officers of the divisions and offices of the economic area of the Department of State. It was published by the Policy Information Committee of the Department, and disseminated to concerned Departmental officers and diplomatic missions and consular posts overseas.
  2. The references are to the bilateral air transport agreement concluded between the United States and the United Kingdom at Hamilton. Bermuda on February 11, 1946. For texts of the several instruments signed or initialled at that time, see Department of State Treaties and Other International Acts Series (TIAS) No. 1507, or 60 Stat. (pt. 2) 1499; for documentation regarding the negotiation of the agreement, see Foreign Relations, 1946, vol. i, pp. 1450 ff. For a useful discussion of what is meant by a general world-wide aviation pattern “along Bermuda lines”, see article entitled “Bilateral Air-Transport Agreements Concluded by the United States”, by Joe D. Walstrom, Department of State Bulletin, December 22, 1946, pp. 1126 ff. Essentially, the Bermuda-type agreement barred arbitrary restrictions in carriage capacity, number of flights, and perhaps most importantly the right to set down and pick up passengers and freight at intermediate points between the termini of a trunk route (known as “fifth-freedom traffic”). It was the hope of U.S. policy-makers that the U.S.-U.K. Bermuda bilateral agreement would become the model for other states concluding bilaterals, and that ultimately, when a world-wide aviation pattern emerged along Bermuda lines, it would be possible to hold a general aviation conference to conclude a world-wide multilateral agreement based on Bermuda principles.
  3. The documentation in the Department of State central indexed files relating to the issues described herein, is scattered and sparse. Two basic file series are 741.0027 (aspects of U.K. aviation) and 741.4527 (aspects of U.K.-India aviation).
  4. A United States–Canada bilateral air transport agreement was concluded on June 4, 1949; for text, see TIAS 1934. It was of the Bermuda-type, and was considered by the Department of State to be of especial significance, as it was believed that Canadian non-adherence to such a bilateral had strengthened the opposition of other countries to the Bermuda principles.
  5. A Bermuda-type bilateral air transport agreement was concluded between the United States and Australia on December 3, 1946; for text, see TIAS 1574.