Foreign Relations of the United States, 1952–1954, General: Economic and Political Matters, Volume I, Part 1

911.5200/12–1854

The Under Secretary of State (Hoover) to the Chairman of the Civil Aeronautics Board (Gurney)¹

confidential

Washington, December 18, 1954.

Dear Mr. Gurney: In response to the Board’s request for this Department’s views on the Trans-Pacific Certificate Renewal Case (CAB Document 5031 et al.), the Department sent a letter to the Board dated September 29, 1953² in which the various aspects of the case of interest to this Department were reviewed. This letter was supplemented by a letter dated May 13, 1954 and another dated November 15, 1954.³ In view of the lapse of time during which this case has been under consideration and the developments that have taken place during that period, it is believed desirable to restate the Department’s comments on the case.

The Trans-Pacific Renewal Case, affecting as it does operations of United States air carriers over a broad area of the world, is one in which the application of the general policy of the United States Government with regard to the development of international air transport service is of importance. It is the general policy of this Department to favor competition between U.S. carriers in international air transport services. However, experience has shown that in the international field area competition is preferable to route or point-to-point competition. The Department wishes to reaffirm its support of this principle.

As is well known, geographic and political factors in the Pacific area have made impossible the type of area competition feasible in other parts of the world. Nevertheless U.S. carriers have been able to establish competitive services and to experience satisfactory relations with the governments of the countries served. The Department believes that such services should be continued so far as such continuation is compatible with the maintenance of a reasonably economic air transport system. Such service is a demonstration of U.S. interest in and contribution to the economic development of the areas served.

On the question of certification of any U.S. airlines to points on the China Mainland, the position expressed in the Department’s letter of May 13, 1954, opposing such certification, is reaffirmed.

This case also involves the question of linking Trans World Airlines with Northwest Airlines by (1) renewal of the presently inoperative portion of the Trans World Airlines certificate for service beyond Bombay to Calcutta and Far East points and the addition of Tokyo, or (2) the extension of the Northwest Airlines route beyond Tokyo to Hong Kong, Bangkok and Calcutta. The Department, after weighing the value of competition between U.S. carriers against foreign relations problems which would arise in seeking such traffic rights, does not believe that a second round-the-world service should be created at this time.

However, if it is concluded that economic or military considerations justify the second round-the-world service, the Department calls the following factors to the Board’s attention. Current relations with India indicate that the establishment of a connecting point between Trans World Airlines and Northwest Airlines in that country cannot be accomplished in the foreseeable future. Although a certificate providing for a connecting point outside India would be less disturbing to the Indians, difficulties would be encountered in obtaining the desired traffic rights, particularly should such certificates require conclusion of arrangements with the United Kingdom for service to Singapore or Hong Kong. Furthermore, any additional U.S. carrier service operating in direct competition with the Philippine airline is likely to encounter serious resistance, especially with reference to fifth freedom traffic. This is also true of new service competitive with the Indian airline as long as the United States airlines enjoy traffic rights in India.

Aside from operational problems a carrier’s relationships with the governments and people in the area which it serves affect the reactions of those governments and people to the United States as a whole. Withdrawing Northwest Airlines from the places where it has developed good-will and favorable relations and, in the case of Korea and Formosa, substituting a new carrier, would leave at best a period of uncertainty and a need for especial care in replacing the loss.

The Department brings the above foreign relations considerations to the attention of the Board in accordance with its request in order that it may have them available in its examination of the case. The Department is fully aware, however, that these views represent only a few of many considerations which the Board must take into account in determining this case.

Sincerely yours,

Herbert Hoover, Jr.

1. Codrafted on Dec. 14 by H. Alberta Colclaser, Chief of Air Transport Relations, and Edward A. Bolster, Aviation Division; redrafted on Dec. 15 by Special Assistant to the Assistant Secretary of State for Economic Affairs Radius.
2. Ante, p. 419.
3. The letter of May 13 dealt with the question of certification to points on the China mainland; the letter of Nov. 15 reaffirmed the Department’s position concerning the Trans-Pacific Certificate Renewal case previously expressed in the Secretary’s letter to Ryan dated Sept. 29, 1953. Neither the May 13 nor the Nov. 15 letter is printed.