130. Memorandum From Acting Secretary of State Katzenbach to President Johnson 1
- Civil Aviation Negotiations with Italy
- That you approve our offering Italy a route package including, if necessary, a West Coast-Tokyo route, and our insisting on an agreement consistent with US aviation principles.
- That you approve our informing Italy that the United States is prepared to accept cessation of direct air services between the two countries rather than accede to a disadvantageous agreement.
The Air Transport Services Agreement with Italy3 will expire on June 1 as a result of Italian denunciation. Italy’s principal dissatisfaction with the present Agreement has been that it gave them no routes beyond the United States, whereas American carriers since World War II have operated to Italy and beyond. This led to a revenue imbalance, undoubtedly of concern to Italy ($51.9 million for the United States and $44.6 million for Italy in 1965). United States offers in 1964 and 1965 consultations to improve Italy’s routes failed because Italy wanted at the same time to introduce controls on the freedom and volume of US air services to Italy which we could not accept. Negotiations for a new agreement February 20 to March 8 made no progress. Italy is demanding a vast route package for itself—including routes both beyond New York to Mexico City and beyond Los Angeles to Tokyo—that in its entirety is just out of the question, and, at the same time, is insisting on cutting down possible routes that US carriers might serve under the present Agreement. Moreover, Italy has refused to discuss the operational principles until its route demands are satisfied.
During the Vice President’s recent trip to Italy, Prime Minister Moro indicated Italy’s great concern with our air negotiations, declaring that it was time to take a “hard political look” at them.4 Relevant [Page 272] political, economic and commercial factors have been taken into account in preparing the United States position. In view of the Prime Minister’s intervention, it was arranged with Italy to postpone the resumption of negotiations to May 2, so that we could ask you to review and approve this position. Essentially, we propose to offer the Italians a route package that includes the traffic rights they presently have plus a round-the-world route that they want very much. We will again offer them a round-the-world route via Miami to Mexico City and beyond, but if they reject this, we may have to give them instead a route via Los Angeles or San Francisco and across the Pacific to Tokyo. We would want, in exchange, route opportunities for our carriers similar to those we now enjoy, including affirmation of certain beyond rights that we are not now operating. We would also insist on an agreement based on established US aviation policy regarding capacity and other operational principles. Italy may continue to demand both the route beyond the West Coast and the route to Mexico. We are opposed to this because it is not justified on aviation considerations.
To preclude Italian miscalculation that the United States might be pushed into concessions on routes or capacity principles greater than we have contemplated, we believe it necessary to advise Italy that we are prepared, albeit reluctantly, to accept cessation of air services between the two countries rather than get into an agreement or an ad hoc situation inconsistent with US interests. We recognize that termination of air services would represent failure to reach agreement on essentially a commercial endeavor with one of our strongest supporters in all aspects of Free World cooperation, including NATO, Atlantic Community affairs and international monetary reform. Nevertheless, we believe that this approach is realistic, sensible and fair. If we cannot achieve an acceptable agreement, you would be asked to make a final determination on the cancellation of air services and would be presented with all relevant factors for your consideration.
This Department, the Civil Aeronautics Board, the new Secretary of Transportation and the US carriers all recognize that this negotiation is a particularly important one; failure to reach a new agreement would result in some possibly serious political repercussions in our relations with Italy, and could involve some transportation tie-ups. On the other hand, if the Italians—one of our strongest aviation partners—were able by denouncing the agreement to get us to make undue concessions on routes or on our fundamental capacity principles, our submission would be a signal to others to do likewise. (Spain has already told us officially that it may denounce its agreement to get what it wants, depending on what happens in the Italian negotiations.)
The three American carriers operating to Italy have committed themselves in writing to support cessation of services if an acceptable [Page 273] agreement cannot be worked out. It is also widely accepted that Italy deserves to be given good routes. However, Pan Am, Northwest and a few other carriers that hope to get into the West Coast-Orient market in the future (but not TWA), oppose the grant of a West Coast-Tokyo route to Italy. Eastern is violently against granting New York-Mexico City to Italy, but is less opposed to a Miami-Mexico grant. We believe the grant of either the Miami-Mexico route or the transpacific route from California is justified to get a good agreement with Italy. On the other hand, to go beyond what we are proposing to grant Italy would without question generate intense dissatisfaction and opposition from virtually all US airlines. A settlement along the lines I am recommending will cause some dissatisfaction, as mentioned above, but our best judgment is that there will be grudging recognition of its unavoidability, and little or no public criticism by our airlines.5
We have discussed this matter with Senator Monroney and the staffs of Senator Magnuson and the House Commerce Committee. They have indicated support both for a reasonably generous route grant and for any suggestion of cessation of air services that may be necessary.
- Source: Johnson Library, National Security File, Country File, Italy, Vol. 5. Confidential.↩
- There is no indication whether President Johnson approved or disapproved these recommendations.↩
- For text of the agreement, signed in Rome June 9, 1947, and entered into force that day, see 61 Stat. 4074.↩
- These discussions were reported in telegram 5115 from Rome, April 1. (National Archives and Records Administration, RG 59, Conference Files: Lot 67 D 586, CF 142)↩
- In a May 3 memorandum to the President, Francis Bator reported that at Johnson’s instructions he had checked with the major U.S. carriers on their views regarding negotiations with the Italian Government. On the basis of these talks he recommended and President Johnson approved “the State instruction, but tell them to hold off as long as possible before they suggest the Trans-Pacific route.” (Johnson Library, National Security File, Country File, Italy, Vol. 5)↩