The Future of Air Transport: An American View

by WILLIAM A. M. BURDEN

1

THE world will meet to plan the future organization of world air transportation. The British Empire Air Conference is over; the possibility of a preliminary United Nations or Anglo-American conference has been rumored for many mont hs. The results of such a meeting will depend on the attitude that the participants bring to the conference table.

The United States, as the world’s greatest air power and the operator of by far the largest air transport system in existence, and Great Britain, with her aeronautical skill, her far-flung territorial and trade interest, and her historic position as carrier to the world, are equally concerned that their national interests be safeguarded and that the framework of post-war organization be soundly constructed.

As a result, American and British citizens have been bombarded for the last ten months — Congresswoman Luce’s “globaloney” speech opened the floodgates — with a hail of speeches, articles, and books on the structure, organization, and future possibilities of international air transport. In England, Parliament has devoted days of debate to the subject without arriving at any more precise conclusions than has our own Congress in its preliminary investigations. Other members of the United Nations may have been less vocal, but one can be sure that at least in government circles they are giving the matter the most serious consideration.

The average American or Briton approaches the age of international air transport with complete confidence that its development will be competently carried out from the technical standpoint, but with no clear idea of what is possible or desirable from the political, the organizational, or the legal standpoint. It is hoped that this article may cast a little light on these various points.

Any constructive policy must be based on the realization that air transportation is a good thing, and that the more we have of it the better for the human race. An Aladdin’s lamp has now shrunk the earth to the point where every nation will be less than two days’ travel from every other. We must gear our intellects to this new tempo. The human mind must not become the slowest thing on earth.

Once international aviation reaches maturity, the government officials, businessmen, and pleasure travelers of the world will be in almost constant contact with each other to a degree never before possible in world history. Mutual understanding will make war something to be fought off. In fact, if air transport is allowed to develop naturally, it will be a boon to mankind. Let us recognize it for the miraculous gift that it is.

Our plans for the future must begin with these three premises: —

1. International air transport has been transformed by the war from a government-subsidized experiment into an economically sound transportation industry.

2. The growth of air transport does not constitute a military menace. Nor does the passage of foreign commercial airplanes over a country’s territory constitute a threat to its security.

3. If, therefore, restrictions are imposed on international air transport, it must be for reasons of trade policy — not because the airplane is an airplane.

The moment you accept the truth of that sequence, the regulation of international air transportation can be approached in much the same way that one approaches the regulation of any other form of international trade. Obviously, if air transport is to expand so as to serve the world public, it must be freed to a large degree from existing restrictions.

The most serious of these restrictions has been that the established principle of sovereignty over national air space has been used in a very narrow fashion. In contrast to the freedom granted to steamships, it has been impossible for transport aircraft even to fly nonstop over a nation’s territory or land for emergency purposes, much less to pick up or discharge traffic, without obtaining special permission from the government of the country involved. In order to relax these restrictions it has been suggested that various degrees of freedom be granted to commercial airlines as a “ natural right.”

The phrases used to describe these degrees of freedom must be carefully defined at the outset, for they have been loosely used and have given rise to a great deal of confusion.

“Freedom of the air,” that much abused term, would give any commercial aircraft the right to fly anywhere in the world and pick up and discharge traffic, much as merchant vessels have done. It would mean unlimited and probably uncontrolled competition.

“Freedom of innocent passage,” or “Freedom of commercial transit ” as it is sometimes called, would give commercial aircraft the right to cross foreign countries and land for refueling or emergency purposes without obtaining special authority. If they wished to do business in a foreign country, they would have to obtain special permission as they do now. This is a sine qua non of the intelligent development of international air transport. It can be achieved without any threat to the commercial position of the subscribing countries, and it is to be hoped that the major nations of the world will so accept it. Public opinion in both Great Britain and the United States appears to be favorable to it.

With these fundamental principles as a base and with these few definitions clearly in mind, we can explore the present problems and probable future of international air transport.

2

Air Transport Before 1939

Air transport operations between countries began immediately after World War I, and they began in Europe, where the distances were short and the geographical obstacles few. By the outbreak of World War II some 108,000 miles of intercontinental air routes were in operation and practically every independent state or major colonial possession had regular air connections with its neighbors. The

United States was the leader in the field; ours was the only country with lines that reached all the five continents.

TABLE 1

INTERCONTINENTAL TRUNK ROUTE OPERATION — 1938

The British services did not reach either North America or South America. The Germans provided only mail service to South America and did not reach Asia directly at all. The French services, though very extensive, failed in many instances to provide passenger accommodations. The Dutch were the leaders among the smaller European nations. Japan was just beginning to enter the field with a service to Indo-China. No Latin American country had yet begun international services on an extensive scale.

But despite the very extensive network of routes in operation, international air transport was still a comparatively small business. Fewer than 1000 persons flew between the United States and the Orient in 1939, and no more than 2000 flew between the United States and Europe. Only between the United States and Latin America was traffic really heavy; on these routes nearly 40,000 passengers went by air. Pan American Airways, by far the largest of the international air transport companies, flew only one-seventh as many passenger-miles as did the United States domestic lines. In 1939 there were only eight transport airplanes in the entire world capable of making a 2000-mile nonstop trip with significant pay load. Every international airline had to be heavily subsidized by its government.

Air Transport and Government

The business organization of international air transport was about what might be expected in an infant industry which was not only heavily dependent on state support but of acute interest to the military and diplomatic branches of government. Most European countries had already established the principle of state ownership of transportation facilities; and as Table 2 indicates, most of their international airlines were government-owned monopolies or at least had a substantial percentage of government stock ownership and government representation on the board.

TABLE 2

GOVERNMENT OWNERSHIP AND REPRESENTATION

United States international operations, on the other hand, were in effect carried out by a single privately owned company, Pan American Airways.³ Pan American was operated more nearly as a commercial enterprise and less under government control than any other international air transport company in the world.

The Acceleration of War

The war has already greatly accelerated the development of commercial air transportation. Highspeed transportation between continents has become a military necessity regardless of cost. The United States and, to a lesser extent, Great Britain have organized military air transport services on an unprecedented scale. A vast amount of operating experience is being acquired in a very short time. Long-range transport airplanes have been built by the thousand, and — of more permanent importance — the strategic routes traversing countries under United Nations control have been provided with landing fields suitable for large aircraft — a development which has cost hundreds of millions and which could not have been justified for commercial reasons for years to come.

By the end of 1943 the operations of the United States Army Air Transport Command and the commercial airlines working under contract to it alone will be ten times larger than those of all the airlines of the world in 1939, and the total volume of airplane traffic across the North Atlantic will be over a hundred times what it was in 1939. The final contribution of the war will be the development of new, larger transport types of planes, capable of carrying far heavier pay loads over long nonstop distances at a considerably lower ton-mile cost than present models.

The commercial services operating to Latin America and Europe are naturally limited in volume because of lack of equipment, but they are filled to capacity. Despite the fact that they are perforce operated with aircraft which were designed ten years ago, they are not only highly profitable but are for the first time completely independent of subsidy.⁴ Moreover, a ready-made travel market is being developed without cost to the airlines. Hundreds of thousands of soldiers and civilians are making longdistance flights on military or commercial services, which in peacetime they could have been persuaded to take only by expensive advertising campaigns backed by a long record of safe and efficient transoceanic air transport operation.

Even conservative economists are now convinced that with the improved aircraft which w ill be available after the war, international airlines on heavy traffic routes will require practically no subsidy unless the operating country has an unusually high cost level or unless more companies attempt to operate on each route than the traffic warrants. (Light traffic routes, some of which must be operated for strategic or other reasons, will need government help until traffic develops, but they will be exceptions.) This is a landmark in the history of international air transport. It means that, for the first time, the industry is capable of standing on its own feet.

3

How Free Is the Air?

There is a natural tendency to compare air transport, as the international travel medium of the future, with ocean transport, the present backbone of international trade. This has led to a comparison of the existing “freedom of the seas” with a hypothetical “freedom of the air.”

Since the early part of the nineteenth century the civilized nations of the world have generally removed all restrictions covering the entrance of commercial vessels into their ports. This has made it possible for a shipowner to start a steamship line to any port in the world, operating as many trips a year as the traffic and his own ingenuity in getting business permit.

This does not mean, of course, that the shipping nations of the world have competed on an equal basis. Prior to 1850 the British limited or prohibited the use of non-British vessels in trade between their colonies or between the colonies and the mother country. Since that time the British government’s assistance to shipping has been confined to limited operating or construction subsidies granted after 1929. The United States on its part has subsidized its shipping industry to meet the lower operating costs and labor standards of foreign ships and has forbidden foreign vessels to engage in our coastwise traffic (cabotage). But generally speaking, shipping companies have enjoyed a substantial degree of freedom of operation and world trade has profited thereby.

In contrast, the international arrangements in air transport before 1939 were characterized by their extreme restrictions. The air over the oceans has remained free, but the sovereignty of nations over their air space is an accepted principle,⁵ and their right to exclude foreign commercial aircraft from the air above their territory has been unquestioned. This right of exclusion has been exercised to a degree which has seriously obstructed the development of international air commerce. All nations have refused to allow commercial airplanes en route to other countries to pass over their territories or to land for refueling or emergency purposes without first obtaining special governmental permission. The right to conduct business in foreign countries, — that is, to pick up and discharge traffic, — which steamship lines enjoy without securing any special permission, could only be obtained after complicated government negotiations.

Air transport companies were completely at the mercy of governments. The rights which they requested might be denied if bad feeling existed, or they might be refused — and this was a more common cause — if the government from which the rights were asked feared that its own airlines would suffer competitively from the new service.

When operating rights were granted, it was customary to hedge them around with restrictive conditions. The granting government might refuse to let the foreign service start until its own airline was ready to fly a return service. At the very least, it might demand reciprocal rights to fly as many schedules to the country requesting permission as it granted itself. The possibilities of delay and restriction inherent in this method of controlling international air transport came to their full flower in Europe, where national animosities were acute and where air transport companies were to a large degree instruments of national policy. To quote a standard work, International Air Transport and National Policy, by Oliver J. Lissitzyn: —

The necessity to bargain for landing rights has exercised a retarding effect upon the development of world air commerce. Routes which are technically feasible and commercially promising have remained unopened. . . . Italy, at a time when Italian air transport was weak and highly unprofitable, refused to grant landing rights to the British Imperial Airways on their way to the east, unless the British company’s receipts on a certain run were divided equally with the Italian company, which had much less traffic. Iran compelled Imperial to shift its route to the southern shore of the Persian Gulf by insisting that in flying over Iran the company’s planes follow an inland route over mountains and deserts that was found to be too difficult and dangerous for utilization. Turkey barred all foreign air lines from passing over it in an east-west direction, primarily for military reasons, and as a result European services to southern Asia were deprived of the use of the shortest route. Turkey’s attitude redounded to the advantage of Greece, which, it was reported, required all foreign air liners passing over its territory to land at Athens and to coördinate their schedules with those of the internal Greek air services. Similar illustrations could be multiplied indefinitely.

The Possibilities for Obstruction

The experience of the United States in developing a world-wide air transport network clearly emphasizes how the pre-war system often operated to retard the growth of air transport. In the Latin American services which were inaugurated in 19291932, our government permitted Pan American Airways, with State Department assistance, to obtain the necessary operating rights. Most of the Latin American countries were eager to obtain air service at what in effect was no cost to themselves (the service was heavily subsidized by the United States and no subsidy was asked from the countries served) and at that time their air transport companies had not developed to the point where they could operate their own services to the United States. It was therefore not to their interest to delay the opening of the service or to restrict its volume; and Pan American Airways, as a private company, obtained unilateral concessions in every instance.

At present Pan American or its subsidiary, Pan American-Gracc, holds operating rights in every Latin American country. The terms of these agreements are not publicly available, but they are not believed to contain any limits on volume of operation. Partly as a result of this liberal approach, Latin America has enjoyed perhaps the best air service of any of the less densely populated continents.

Once air transport began to stretch out across the oceans on the major trade routes of the world, Americans became aware of the possibilities for obstruction inherent in the system. Negotiations for rights in the Pacific area were carried out by Pan American as a company, but the transpacific service operated to Manila for nearly two years before landing rights could be obtained in Hong Kong. During that period the people of China were denied the benefit of direct air connection with the United States. Australia refused to allow the Pan American service to New Zealand to proceed to an Australian terminus, presumably because the United States refused to grant an Australian company reciprocal rights. Japan refused to permit an American line to land in its territory.

In the North Atlantic the United States government carried out the necessary negotiations— and they were particularly protracted. Discussions between the United States, the United Kingdom, Ireland, and Canada were begun in 1935, but it was two years before permits for a reciprocal transatlantic service were issued. These permits authorized only two round trips per week each by an American and a British company, and required that the service be inaugurated simultaneously by the American and the British line. Pan American was ready to start before the British service, but it was not until May 29, 1939, immediately after the United States had obtained temporary landing rights in France, that Great Britain waived this requirement and permitted the American service to begin.

We on our part were almost equally restrictive in our attitude toward the European nations. In 1937 the application of the Dutch K.L.M. (Koninklijke Luchtvaart Maatschappij) for landing privileges in Miami was refused. This application was rumored to be the first step in an ultimate transatlantic service. Similarly, in 1938, applications of British and Dutch companies to land in Hawaii were denied “for military reasons.” Deutsche Lufthansa, which conducted over fifty experimental mail flights across the North Atlantic before October, 1938, claimed that it was ready to begin regular service but could not obtain the necessary rights from the United States.

Regardless of the rights and wrongs of these complicated international wrangles, it is apparent that the atmosphere in which international air transport was endeavoring to develop at the outbreak of the war was incredibly restrictive. It was restrictive largely because of certain fears and phobias which were the inheritance of World War I. These fears have increased during the present war, and other vague apprehensions have been added to them.

4

Air Transport Is No Threat

Such fears can only be dispelled by common sense firmly applied. We must begin by recognizing that the airplane is no longer a mysterious device fraught with unfathomable possibilities; on the contrary, it is a commonplace and accepted part of our daily life, like the automobile, the steamship, or any other transport vehicle.

The most commonly expressed fear is that future aggressor nations may build up huge air transport fleets which will in fact be military air forces in disguise or at least the basis for a large aircraft manufacturing industry which can easily be converted to building military airplanes. Such anxieties ignore the fact that civil and military design have sharply diverged and that the transport aircraft of the future will be no more useful as a bomber than the Queen Mary would be as a battleship. They also overlook the fact that the largest air transport industry that can be foreseen in the next decade or two will be very small in terms of military aircraft requirements.

In future wars, transport aviation will not be used for fighting purposes any more than it has been in this war. It will bear the same relation to the combat air forces that the merchant marine does to the navy. Civil transport types can be modified for military transport use, trained civilian personnel will provide a valuable nucleus for the expansion of military transport services, and, most important, the airports and ground facilities developed by civil aviation will be of great value to military aircraft in the same manner that civil ports and harbors are useful to naval vessels.

For these reasons the great air powers of the world will desire strong and flourishing air transport industries, but they cannot expect them to be of sufficient size to satisfy even wartime air transport needs, much less needs for combat aircraft. The Pan American Airways system, the largest international airline in the world, was operating a total of only 100 airplanes at the outbreak of the present war and employed but 350 pilots.

A great growth can be expected above this level, but as long as high operating costs restrict airlines to passenger and mail traffic, the industry cannot be of significant size in terms of military requirements. One airline president has estimated that 43 hundredpassenger airplanes could carry 400,000 passengers annually across the North Atlantic (80 per cent of the very heavy 1930 steamship traffic). Another authoritative forecast has it that the entire international air traffic of the world in the first decade after the war could be flown in the equivalent of 500 to 1000 forty-passenger aircraft. In contrast, the American aircraft industry is currently producing transport airplanes for the Army and Navy at the rate of 15,000 per year, and our total annual production of military aircraft will soon reach 100,000.

Those who fear that air transport may become a wolf in sheep’s clothing should note the German experience. If ever a country had the desire and the technical ability to use its air transport activities for military purposes, Germany was that country. Yet, contrary to popular belief, Deutsche Lufthansa, the German government airline, was not in any sense a military air force in disguise. At no time did it operate more than 400 airplanes in both domestic and foreign service. Yet the German aircraft industry was producing military airplanes at the rate of 1000 a month long before the invasion of Poland.

Although there was undoubtedly a certain amount of secret military aeronautical activity in Germany prior to 1935, the real building up of the German air force which took place subsequent to that date was done openly, American and British engineers being invited to observe the results. It is literally impossible to develop a large aircraft manufacturing industry without having other nations aware of what is going on (our own wartime aircraft industry is five times as large as our automobile industry was in 1929), and no international air transport development that can be foreseen in the next generation will be sufficient to support manufacturing facilities large enough to be of real military importance.

Future aggressor nations may attempt to build up their aircraft industries with hostile purposes in mind, but they can be prevented from doing so by direct control of factory construction, not by restricting air transport. The will to act in time against a potent ial aggressor even at the risk of war is the key to the problem, not the strangling of legitimate industry for fear that it may have remote military implications.

Fear of Espionage

It has also been suggested that commercial airlines offer unusual opportunities for espionage and that therefore every country must for its own safety exert strict control over the right of foreigners to operate commercial airlines across its territory. Here again the risk appears to be greatly exaggerated. Under present arrangements all countries are free to establish prohibited zones over strategic defense areas, through which all commercial aircraft, including their own, are forbidden to fly. As for nonprohibited areas, there was nothing under pre-war arrangements to prevent foreign private flyers, once they had obtained an entry permit, from flying anywhere at will. Surely such pilots have better opportunities for espionage than an airline crew or passengers. It should also be remembered that foreigners are free to ride on our airlines and that the Japanese, who were never allowed to operate an airline to Hawaii, succeeded in obtaining fantastically accurate knowledge as to the defense installations of that island fortress by other means.

Even in the political sphere, airlines during the last twenty years do not seem to have been substantially more effective instruments of national propaganda than other forms of infiltration. Much has been written of the German-Italian air penetration of Latin America — a penetration which it was my task to liquidate. Yet the ideological threat of the Axis airlines in South America was only one facet of a very broad campaign. By itself it was no more serious than the Axis trade campaign, the Axis campaign for influencing newspapers, or a dozen other different aspects of the same movement.

So much for the phobia that international air transport is likely to constitute a military menace. It is clear that security cannot be advanced as a valid excuse for restricting the growth of international airlines or forbidding foreign aircraft to pass over one’s country. The absurdity becomes apparent if we apply the same standards to shipping. Would the United States government dare to suggest that only two British ships a week could land in the United States because some of those merchant vessels might be giving training to naval personnel? Or would the British government dream of excluding American ships from Southampton for fear that they might spy on defense installations?

5

Economic Rivalry in the Air

What of that other major fear: that unless international air transport is controlled with the utmost care it may lead to “ruthless competition” and thence to an ultimate “economic war” between the United Nations?

It is hard to conceive of an argument which could be more specious. In a sense, of course, all international trade leads to friction. Even foodstuffs are in a way munitions of war. Yet the logical conclusion of this line of thought is that each nation should surround itself with a Chinese wall through which no commerce should pass. Complete lack of friction can only be found in a cemetery. Neither Great Britain nor the United States can be asked to call back its merchant fleets from the seven seas because their presence in foreign ports might conceivably lead to international antagonisms.

Those who foresee a serious commercial contest in the air arc alarmed lest the major powers of the world develop huge government-owned or government-controlled air transport companies backed by unlimited subsidies and operated primarily for national prestige regardless of the economic justification for the services they render. Since it is likely that the Axis powers will not be permitted to engage in international air transport until they have proved themselves capable of rejoining the society of civilized nations, such fears must apply principally to the United States, Great Britain, and R ussia.

These fears, strangely enough, are entertained most actively in England, where some persons feel that the United States with its immense financial power might conceivably engage in an imperialistic race for the control of international air transport, cost what it may. As far as l can judge, a very different view is held in the United States. Here our air transport operators think it quite possible that postwar Congresses, overwhelmed by a wave of economy, may not provide even the minimum support which will be necessary to keep an adequate international air transport operation in being. The fear is also expressed that our foreign competitors, because of lower wage levels, will enjoy much lower operating costs, and that American lines may find it difficult to continue without substantial financial aid. These apprehensions on both sides of the Atlantic are undoubtedly sincere though not, it seems to me, particularly well founded.

It is true, of course, that international air transport has been carried out in most countries by government-owned or government-controlled companies, and that in varying degrees, depending on the philosophy of the country in question, these companies have been sensitive to national policy, the degree of sensitivity varying from the German Lufthansa, which was in effect an agency of the government, to our own Pan American Airways, which operated as an almost completely independent private company.

But as air transportation grows and begins to carry a really important portion of the world’s passenger and mail traffic, I believe it will be operated along business lines. The industry will have become too important to the national economy to have its policies controlled solely by considerations of national prestige. Again an analogy can be found in the shipping industry. Although there was government ownership of a number of foreign steamship lines, or government participation in them; and although competitive prestige services were operated across the North Atlantic with such luxury liners as the Bremen, Normandie, and Queen Mary, shipping policy as a whole was determined by commercial interests. It was a secondary consideration that a merchant marine would be useful in time of war. Uneconomic services run merely to add luster to a nation’s position in the world were the exception.

A large part of the success of American air transport, both domestic and international, has been due to the fact that our airlines have been operated by businessmen, with a minimum of interference or control by government. To date, the performance of European companies, most of which operated under direct control of government departments, has been far from outstanding. High costs, an unnecessarily large number of different types of equipment, and average safety records have been the rule rather than the exception — a showing which can be attributed in part, at least, to the fact that essential commercial problems were approached from a bureaucratic or military rather than the business point of view.

The Alternatives to Competition

The devices which have been proposed to eliminate competition range all the way from the creation of an international World Air Transport Company to operate all international routes, to dividing the world into “spheres of influence,” each one of which would be served by the air transport company of a single nation or group of nations.

A truly international airline employing a mixed group of nationals of various countries seems clearly out of the question in the present climate of United Nations opinion. It has aroused no interest in the United States. Only in England has it been given serious consideration — and there only by a few specialized groups.

The second and less drastic proposal of dividing the world into “spheres of influence” or “zones” seems likely to create more difficulties than it will solve. Not only does it run contrary to the essentially world-wide nature of air transport, but it appears certain to invite trouble by dividing the world into watertight compartments. The idea of dividing traffic among the airlines of the various nations on a fixed percentage basis, regardless of the excellence of their service (as was done in Europe under the “pooling” system), will completely remove all incentive for improving the quality of air transportation.

To sum up, there seems no more reason to expect that competition in air transport will cause “economic wars” than that competition in shipping or other forms of trade will produce the same result. A substantial degree of competition between companies of different nationalities is not only inevitable in any international business but is necessary if air services are to develop in a healthy fashion, to improve their technique, and to serve the world public efficiently.

6

American Policy in the Making

In the United States, air transport is a concern of the average citizen to a much greater degree than in any other country in the world. Americans think in terms of what an expanding air transport industry will mean to the millions of our trained airmen who will be seeking occupations after the war. The effect of airline development on international trade is secondary in their minds.

The United States is in a unique position in that it alone had a large, privately managed air transport industry in operation for at least ten years before the war. In operating techniques, excellence of aircraft design, and soundness of government organization dealing with air transport matters our position is outstanding. Moreover, our air forces have made far greater use of air transport than have those of any other country. Important from the standpoint of our future policy is the fact that several of our larger domestic linos are operating outside the country for the first time, flying important transoceanic services under contract to the Army and Navy.

To supply planes for all these military operations, including the contract services, we are producing transport aircraft at the rate of 15,000 a year. Although most of these airplanes are not ideal for postwar international service, they are satisfactory stopgaps until new typos can be put in production. Finally, the United States has constructed large, modern airports along strategic air routes throughout the world. Over 2,000,000 Americans are serving in our air forces, and many of them hope to make peacetime careers in aviation after the war.

Air transportation is thus an established and accepted business in the United States, and we naturally believe that Americans will operate a very extensive international airline system after the war, and operate it along business lines. The air transport issues about which Americans are exercised at the moment involve both our relations with other countries and the internal organization of our own air transport structure.

We are vitally interested in the ultimate disposition of the important airfields which have been built on foreign territory during the war either by Americans or with American funds. This issue has been somewhat obscured by the common practice of referring to all these airports as bases, perhaps because the first that were constructed were built under the 1940 agreement with Great Britain for the construction of defense bases in the Caribbean. Although some of the airfields in question are located at such strategic points that they may eventually be developed into military strongpoints comparable with the Gibraltars and Singapores of the days of sea power, the vast majority of them will always remain primarily commercial airports.

Concern has been expressed as to whether we shall be able to use these airports for commercial purposes in the post-war period, and it has been suggested that we should retain sovereignty over them. Actually, it is the right to utilize these facilities, not ownership of them, which is important. We do not talk about owning the foreign harbors which are ports of call for our merchant ships. Similarly, we ourselves should certainly not welcome other countries’ holding sovereign rights over airports in the United States even if they had been built by our allies with their own funds. It is probable that the working out of international agreements for the use of these fields, or even actual international ownership, may prove a more practical solution. If the principle of innocent passage is accepted by the leading nations of the world, our aircraft will be able to use all airports in the countries subscribing to such an agreement, for stopping or refueling points, without further special agreements.

A further fundamental problem affecting America’s position in international air transport is the question of whether foreign operating costs, because of lower wage levels, will be so much lower than our own as to force us to subsidize our air transport industry as heavily as we have subsidized shipping. Conclusive evidence is not available, but the consensus of experts is that this will not be the case and that, because of the large home market provided by our domestic industry, and because of our superior operating techniques, we shall be able to hold our own in open competition, with a minimum of assistance.

On the home front there have been two burning questions: the possibility of government ownership or government control and the question of private monopoly. President Roosevelt reiterated his position in favor of private ownership as recently as October, 1943, and Congress, although it has not expressed itself formally, has never been sympathetic to government control of our air transport system.

Monopoly versus competition in United States owned international operation is still being vigorously debated. Competition in the foreign field as well as the domestic field is specifically recognized in the Civil Aeronautics Act, and the Civil Aeronautics Board is required to authorize competition if it finds that the sound development of an air transport system requires it. At present Pan American Airways and its subsidiary, Pan American-Grace, are the only companies holding permanent certificates of public convenience and necessity for foreign service to countries not contiguous to the United States. But the Board spoke definitely in favor of competition when in 1940 it granted American Export Airlines a temporary certificate to operate from New York to Lisbon.

There is at present a vigorous move on the part of our domestic airlines to enter the foreign field. The question of a United States terminus for Pan American-Grace (the present service from Buenos Aires terminates in the Canal Zone) is pending in a proceeding instituted by the Civil Aeronautics Board. A committee of sixteen domestic airlines has stated that “no rule or policy should be predetermined that foreign air transportation be developed through one company, through regional companies, or through any other chosen instrumentality.” Reports have appeared in the press that the Interdepartmental Committee on International Aviation Policy has similarly recommended that there be no monopoly in the foreign field.

Monopoly or Competition

The proponents of monopoly argue that the United States will weaken its position in world aviation by allowing more than one company to operate abroad. They oppose the idea of a very large number of American companies entering the foreign field, on the basis that the individual units would be too small to compete effectively with foreign monopolies — a quite logical assumption. However, they argue equally forcefully against a few American lines being permitted to operate internationally even if they were not allowed to compete directly with each other except on very heavy traffic routes. To support this position they cite the fact that Britain, France, Germany, and Japan operated under a similar system for some years, only to abandon it in favor of a single government company. They neglect to mention, however, that these single government companies were far less efficient in operating technique than our American domestic and international lines.

The believers in monopoly do not suggest that the present arrangement of one private company owned by a single interest continue, but advocate the formation of a single “community company” in which all American transportat ion interests capable of contributing will be allowed to participate.

Even such a company seems likely to suffer from the fundamental defects of monopoly. The arguments in favor of competition are many and compelling. Those who argue in its favor do not envision an unlimited number of American lines being permitted to enter the foreign field, nor do they propose that American companies parallel each other’s operations except perhaps on extremely heavy traffic routes such as the North Atlantic. It is argued that one American line might operate in the Pacific, another in Latin America, and so forth.

Technical advance, the lifeblood of air transport progress, is bound to come more rapidly if more than one operator is allowed to put his ideas as to equipment and operating technique into practice. Finally, it is difficult to see how a private monopoly could continue to conduct a public service business the size of our international air transport system without coming under direct government control and ultimately under government ownership. As a corollary issue the American steamship companies are eager to enter the air transport field, as are the British steamship companies, but the present Civil Aeronautics Act is very restrictive as far as such relationships are concerned.

The American policy in regard to freedom of innocent passage, the desirability of creating an international judicial body to control the economic aspects of international aviation, and other such matters, has not yet been made clear. However, the sixteen domestic airlines have endorsed the principle of innocent passage, and President Roosevelt in a recent press conference not only approved the idea but indicated that it had the informal acquiescence of Mr. Churchill.

It is for Congress to decide the final regulation of these issues and to determine the principles which will guide the international air transport policy of the United States. The President is of course especially concerned, and among the executive agencies the Civil Aeronautics Board is charged with the economic aspects and the Department of State with the diplomatic aspects of the problem. A special Interdepartmental Committee on International Aviation Policy, consisting of representatives of the State, War, Navy, and Commerce Departments as well as the Civil Aeronautics Board, has been studying the subject since January, 1943, and recently made its recommendations. The raw material on which policy can be formulated is available and it is hoped that it will not be long before a definite policy emerges.

7

Great Britain Decides

In Great Britain the approach toward air transport problems is in many respects quite different from ours. Until recently the public has taken much less interest in air transportation than has been shown in the United States. In the case of the officials, members of Parliament, and businessmen who determine air transport policy, nonaeronautical considerations often carry very great weight. The British are keenly aware of the importance of air transport development to Empire communications and Empire unity. Moreover, looking to the far distant future, they foresee a day when air transport may develop to the point where it will provide an important source of foreign exchange or “ invisible imports.” In the long run, no country has more to lose from international restrictions in all spheres than Great Britain, the only one among the major powers dependent for her well-being on a large volume of international trade.

As in the United States, there are many different points of view. For instance, there is almost unanimous agreement, except in government circles, that civil aviation should be removed from military control by transferring it from the Air Ministry either to the Ministry of Transport or to a new Ministry of Civil Aviation. There is doubt as to whether this can be accomplished before the end of the war, but the assignment of civil aviation problems to Lord Beaverbrook is an indication that air transport is to have more autonomy in the future. As far as corporate organization is concerned, official policy endorses the existing single government-owned company (B.O.A.C.), or “chosen instrument” as it is commonly called in England.

This policy, however, is opposed by a number of important groups, including the leading steamship lines, the Society of British Aircraft Constructors, and a few sincere and vocal Conservative members of Parliament, These interests feel that the development of British air transport will be seriously handicapped if a policy of government monopoly is continued. On the whole, strong forces for the “commercialization” of the industry seem to be at work, and over the long term they may have some effect.

To the extreme left of these proposals is the position of certain Labor Party groups which favor a single internationally owned and operated air transport company for the whole world, if possible — and if not for the whole world, at least for Europe. But the proposal is opposed by all those with practical experience in air transport problems and has lost much ground in recent months. It is generally accepted that American opposition would make it impossible of achievement.

The anxieties of the British as they face their air transport future are twofold. Their most immediate worry is that Britain will have no modern transport aircraft available in the immediate post-war period. This alarm is comparable in urgency to the American fear that the airfields which we have constructed in foreign lands will not be available to our commercial aircraft. Partly because of a joint policy that fighter production should be concentrated in England and multi-engined bomber production in the United States,⁶ no transport-type aircraft have been built in England since the war. In contrast, the United States is continuing a large production of multiengined transports which, though obsolescent in design, are still more suitable for post-war commercial operation than are converted bombers.

The British are naturally alarmed that, unless they are permitted to purchase American transport aircraft, they may have to carry out their air transport operations with unsuitable machines. A move to rectify this situation was begun in June, 1943, when the British government authorized the development of four new transport types ranging from a 260,000-pound 150-passenger transoceanic airplane to a 10,000-pound model for local services. However, the development of large transport aircraft is a slow process, requiring at least three to four years from the time the design is conceived to the actual placing of production examples in service.

A second and far more fundamental problem which the British face is the fact that because of the small size of the British Isles they have no important “home market” for air transportation, on which to build a domestic industry comparable to that possessed by the United States and Russia with their huge territories and large populations. Many Britons would therefore like to reserve as much as possible of the Empire traffic for British lines, possibly by classifying such travel as “cabotage” traffic, which would be automatically reserved for British companies.⁷ Such action would be at variance with the conception of the Dominions as sovereign states, and might not meet with the approval of the Commonwealth as a whole.

The problem of coördinating British air transport policy with that of the Dominions is not a simple one. Each independent member of the Commonwealth has one or more airlines of its own, though none of these lines has yet engaged in international operations on any considerable scale. Canada, because of her strategic geographical position, has perhaps the most important stake in the international field and also possesses the largest and technically most advanced of the Dominion companies. An Empire Air Conference was held in London in October, 1943, and once the results of this meeting have been digested, British policy will presumably take more concrete form.

Russia

The position of the other great world power — Russia — on air transport problems is far less clear. Russians are not given to widespread discussion of their policies in the public press. The large population and great continental reaches of the Soviet Republics offer magnificent opportunities for air transport expansion — opportunities comparable only to those of the United States. It would not be surprising, however, if the Russians concentrated for some years on developing their huge domestic market and confined their international operations to short-range services — say to London, to China, and perhaps across the Pole to Midwestern United States.

Though the Russian government has not expressed itself publicly, its past policy toward foreign visitors does not suggest that the Russians would welcome the idea of “ freedom of innocent passage,” which would permit foreign commercial aircraft to cross Russian territory. Fortunately Russia’s position in relation to the world’s future air routes is not so strategic that her failure to adhere to such a doctrine at this time would seriously impede the development of world airways.

8

For International Control

International aviation can be operated on an increasingly commercial basis. We can liberalize the pre-war attitude toward the establishment of new air services without relaxing the principle of national sovereignty over air space. All that is necessary is for the nations of the world to make mutual concessions to their common advantage, in the same manner that they permit merchant steamships to pass through their territorial waters. Once these general principles are defined, they can best be formalized by embodying them in a new world convention on air navigation.

Naturally we cannot expect to achieve at one leap the degree of freedom which it has taken merchant vessels four hundred years to attain. Complete “freedom of the air” in the present state of world affairs might result in commercial anarchy. Again, it might not be in our own national interest if American air transport operating costs should prove to be higher than those of foreign nations. For us as for others, complete freedom will be approached by stages. The first stage must be the acceptance of the principle of “freedom of innocent passage,” a principle on which there is every reason to expect that the majority of nations will be able to agree. This acceptance will be a most important step toward freeing air transport operations from unnecessary restrictions.

Despite any agreement that may be reached on innocent passage, it seems probable that arrangements for the picking up and discharge of traffic will continue to he negotiated between governments or between companies and governments. However, the principle must be established that nations should not prevent new international services from starting merely because they are not themselves prepared to run reciprocal services. In the same way it is to he hoped that future international agreements will not place fixed ceilings on the number of schedules that can be flown per week or per year.

It should further be recognized that the majority of countries with well-organized air transport industries of their own will wish to reserve their “cabotage,” or internal traffic, exclusively for their own airlines. The United Stales has followed this principle both in shipping, where coastwise traffic is restricted to United States vessels, and in air transport.

Assuming basic international arrangements of the type described, and further assuming that some international air transport operations will be carried out by government-owned airlines and others by privately owned airlines, we are then faced with the question of what type of international controls should be adopted to reduce the danger of competitive friction to a minimum.

As I said earlier, the dangers of such friction are much less serious than they appear to be at first glance. They arc most likely to occur as a result of a major power’s adopting an excessively liberal subsidy policy or indulging in unfair competitive practices. There is no simple solution to the problem. It would not only be unsound to attempt to eliminate subsidies, but it would probably be impossible. They have played an important part in the past in supporting light traffic routes until such routes can become self-sustaining, and they will do so again. Moreover, as in the case of the merchant marine, high-cost countries may have to subsidize if they are to maintain their airlines in competition with low-cost countries. Finally, since subsidies can assume a multitude of forms, direct and indirect, it will be very difficult to control them by international agreement. Fortunately, however, the deleterious effects of subsidies are subject to control. It should be possible to develop a system whereby heavily subsidized lines can be restrained from offering ordinary service at rates far below cost, offering luxurious accommodations at normal rates, or flying much more service than the available traffic justifies.

In the shipping industry such problems are handled by regular meetings of the representatives of the various shipping companies— the so-called conference system. Heavy fines or dismissal from the conference (which places a dismissed line at a serious competitive disadvantage) are the penalties for unfair practices. In Europe air transport companies have handled such matters through a trade association, I.A.T.A. (International Air Traffic Association⁸). In the United States a quasi-judicial government body, the Civil Aeronautics Board, has controlled tariffs, competitive practices, and similar matters since 1938 as far as domestic airlines arc concerned, but has not had similar control over our foreign operations. If international air transport is to develop along commercial lines, such matters may be controlled by a new international commission or by a modification of the shipping “conference system” of self-regulation with the provision that government observers attend the meetings of the conferences. Such observers would be in a position to exert governmental pressure if the pure self-regulation proved ineffective.

If the climate of world opinion appears favorable to a bolder experiment in international regulation, the soundest step might be the creation of an international Civil Aeronautics Commission with powers over rates and competitive practices. The powers of such a Commission would be delegated to it by the subscribing states on a basis which they consider fair and reasonable. The Commission would have to act in a neutral and judicial fashion. Its individual members could not represent the interests of particular countries any more than the members of our own Civil Aeronautics Board represent the states in which they were born. To achieve this end, the international Commissioners might be selected in a manner similar to that in which the judges of the World Court were chosen — a manner designed to ensure that they represented the interest of the world public rather than their own countries.

A body of this sort could perform very valuable services without infringing on the sovereignty of the states which subscribed to the basic agreement creating it. The Commission could not as a practical matter override a will of any major signatory power on a matter of vital importance, at least until such time as full confidence in its fairness and a habit of accepting its decisions developed. This initial caution would not prevent it from doing useful work. Despite the competitive nature of air transport, there are large areas in most transport problems where substantial international agreement already exists.

The Road Ahead

The way ahead is clear, once we rid ourselves of nameless fears and recognize that air transport is a business — not a weapon — and must be treated as such. If we are to have sense in transportation, we must relax the pointless restrictions which slowed the development of international airlines before the war, and accept the fact that there will be competition in air transport as there is in all forms of international business. We Americans have no need to fear such competition, either from the standpoint of our own world position or from that of the international friction which it may create.

In particular, we need not fear that the American air transport industry will be overwhelmed by foreign government airlines. History is not replete with instances of forceful administration or of rapid technical progress where government monopolies have existed; and those countries which place prestige above efficiency may suffer competitively as a result. If we throw our weight in the international scale for the organization of air transport along commercial lines, we can have confidence that the young Americans who make air transport their lifework will have the greatest possible opportunity to carve out careers for themselves and to build up a new industry for the United States which will be of tremendous world significance.