178. Letter From the Secretary of State to the Chairman of the Senate Committee on Interstate and Foreign Commerce (Magnuson)1
Dear Senator Magnuson: Reference is made to your letter of April 11, 19572 requesting comments of this Department on S.1852, “a bill to amend section 402(b) of the Civil Aeronautics Act of 1938, as amended.”
The bill would provide that in the future no foreign air carrier permit should be issued by the Civil Aeronautics Board unless the Board should find that “the service of the foreign air carrier in the operation of the route will be primarily to meet the demands of traffic originating or terminating in the country of which such carrier [Page 481]is a national”. The Department of State recommends against the enactment of such a provision since it would serve as a precedent for restrictive measures by other countries to the detriment of the international air transport system of the United States.
It is a fundamental tenet of the air transport agreements under which the United States obtains, and grants, rights for the operation of international air services that the services to be performed shall be primarily for the carriage of traffic between the country of the nationality of the airline and other countries. It is an equally valuable aspect of those agreements that traffic between two foreign countries (generally referred to as fifth freedom traffic) may also be carried. The agreements contain provisions enabling a country which believes that the carriage of the latter class of traffic has become excessive to request consultation with the other country for the purpose of deciding whether such traffic is in fact excessive.
One of the major obstacles which the United States airlines operating abroad have encountered has been the desire of other countries to unilaterally determine whether such traffic is indeed excessive. Accordingly, it has been a matter of great concern to the Government of the United States to prevent such unilateral action on the part of other countries. Enactment of legislation such as that proposed in S.1852 would make further protection of United States airlines against unilateral action by other countries exceedingly difficult.
In this connection, there is enclosed a statement of statistics3 concerning the operation of United States airlines abroad. A statistical survey of 1955 traffic indicates that in forty-four countries United States airlines have carried more traffic not originating or terminating in the United States than traffic originating or terminating in this country. In several of those countries less than 20% of the passengers carried by the United States airlines originate or terminate in the United States, although in three of those cases the United States airline is carrying local traffic within the other country to supplement incomplete services offered by local carriers. In only fifteen countries of the fifty-nine countries covered do the United States airlines meet the test set forth in S.1852.
The statistics have been drawn up on the basis of numbers of passengers rather than of passenger miles, since this is the accepted international practice. Because of the long transocean flight between the United States and most other countries figures based on passenger miles would be more favorable to the United States carriers. However, the transportation of a comparatively large number of short-haul passengers by United States airlines between foreign [Page 482]countries is essential to the continuation of long-trunk services and round-the-world operations. In many countries the desire to limit the carriage of fifth freedom traffic by United States carriers is already extremely strong. If the United States establishes a precedent of restrictionism these countries would probably take similar steps.
In this connection, it is estimated that in 1955 United States scheduled airlines earned over two hundred and twenty-five million dollars revenue from international air transport. The estimated revenues of all foreign air carriers derived from scheduled services into the United States was approximately one hundred and nineteen million dollars. So long as the United States can maintain a system in which unilateral controls are not placed on United States airlines operations by foreign countries, there is an opportunity for this favorable condition to continue to exist. It would, however, be exceedingly dangerous for the United States to set a precedent that could result in widespread unilateral action to limit the carriage of so-called fifth freedom traffic by United States airlines.
While the statistics contained in the enclosed paper are derived from unclassified material and have not been classified by this Department, they have not heretofore been analyzed and published in this form.
The Department has been informed by the Bureau of the Budget that there is no objection to the submission of this report.
Acting Assistant Secretary
for Congressional Relations