171. Letter From the Secretary of State to the Director of the Bureau of the Budget (Hughes)1
Dear Mr. Hughes : In accordance with the request contained in the letter of January 10, 19562 from the Bureau of the Budget, the Department is pleased to express its views regarding the foreign relations implications of the Civil Aeronautics Board decision in the Large Irregular Air Carrier Investigation (Docket 5132 et al.) as set forth in Board Order No. E–9744, November 15, 1955.
The United States interest in the orderly development of international air transportation is shared by many foreign governments. Most of these governments attach special importance to questions of air transportation between their respective countries and the United States, its territories and possessions. These governments have their own policies regarding the respective roles of scheduled and non-scheduled air carriers on international routes. Over a period of time, a degree of international understanding has been reached and a similarity of practices developed. For instance, scheduled air services between two countries generally are governed by a bilateral air transport agreement, which includes principles for controlling fares, routes, and levels of service. A definition of a scheduled international air service has been adopted by the Council of the International Civil Aviation Organization (ICAO) and accepted by most of the participating governments, including the United States. Individual governments (including the United States) require foreign carriers to [Page 465] obtain permission for each commercial flight which is not provided under an air transport agreement with the government of the carrier concerned.
The proposed Board policy differs from the policies of most foreign governments in several material respects. In general, it would eliminate the traditional requirement that irregular carriers provide irregular (i.e., non-scheduled) services. The most significant innovation is that which would permit such carriers to provide a type of common-carriage scheduled air cargo service. If supplemental United States carriers establish international operations which foreign governments consider as scheduled services within the ICAO definition, such governments may insist that the operations be brought within the provisions of the air transport agreements. A delicate situation already exists regarding the levels of United States flag carrier services under air transport agreements with many countries. It is the considered opinion of this Department that efforts to obtain foreign approval for expanded operations by supplemental carriers should not be made if such efforts would have an adverse effect on essential services which should be operated in furtherance of the national interest.
The probability of opposition to the expansion of United States supplemental air carrier operations to foreign territories is increased by other factors such as: the freedom of each supplemental carrier to undercut IATA (and each other’s) rates; Board approval, under its 1955 Trans-Atlantic Charter Policy, of contract flights which are not considered as bona fide charters by some foreign governments; a question as to whether foreign operators could obtain from the Board permission to establish supplemental service to the United States on a fully reciprocal basis; and Board requirements for charter flight applications by foreign operators more burdensome than those of foreign governments for similar flights by United States operators. In addition, if more than a few of the forty-nine applicants which Order E–9744 would authorize to inaugurate supplemental service on an interim basis attempted to obtain the necessary permission from other governments, a chaotic situation might result.
It is urged that (except in respect of transportation between places in the same territory or possession) Stay Order No. E–9894 remain in effect until the Board reaches a final decision as to the type of authorization to be granted and the individual applicants to be given such authorization. The Department then will be able to appraise more precisely the foreign relations implications and determine the extent, if any, to which the Government should be prepared to press foreign governments for approval of expanded [Page 466] operations by United States supplemental carriers where such pressure might impair United States air transport relations.