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Declassified and Approved For Release 2013/04/29 CIA-RDP78-01617A004300030001-0 ory40 CIVIL AVIATION n -' A STUDY OF GOVERNMENT 2 " Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617A004300030001-0 [RESTRICTED CONFIDENTIAL The studies. contained in this volume were prepared at the rec_uest of the Presidentts Air Policy Commission. The Commis- sion desired to ascertain the salient features of civil air policy as they obtain in a selected group of eleven countries, presenting the widest possible range of political, economic and gec. raphic backgrounds. In order to maintain uniformity in preparation, the infor- mation eras collected on the basis of a questionnaire, of ithich a copy is bound at the end of the volume. The questionnaire may be opened at the side of the volume and. used concurrently in ex-- amin.;ne the individual reports, it has been a.ccording.y unneces- sary to repeat the individual questions in the body of the re-- ports. Omission in any report of an item included in the questionnaire indicates that the question was inapplicable to the respective country or that satisfactory information is una- vailable. Other di;encies have assisted Central Intelligence Agency in the collection of this data. The Department of State obtainer reports from the Air Attaches and other US representatives in the respective foreign capitals. The Office of the Director of Intel-- ligence, USAF, assumed primary responsibility for the collectio:.t of data on civil aviation in the USSR. The Library of Congress prepared a thorough report on civil aviation in pre-war GerWany. Central Intelligence Agency has supplemented this data with additional. information available from other sources? The opinions this study therefore do not necessarily reflect the views of agencies other than Central Intelligence Agency. A general analysis of the survey has been prepared by Central Intelligence Agency and placed as the first document in this volume. It gives an estimate of the significance of civil a-ri-' ation outside the US from political, economic and strategic points of view. CE TFAL INT LLIGENCE AGENCY 10 November 1.9h7 Document No. Q O/ I NJ CHANGE in Class. o 'RESTRICTE6' ^ DEOLASSIFIED .. Class. CHANCED TO; TS f q p DDA Memo, 4 Apr 77 H Y CONFIDEN~p i IALAuth: DD i REG. 77/1' .3 Date: iS d2 Y By: 11 f Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617A004300030001-0 SECRET, UNITED KINGDOM FRki:CF I'MINERLANDS USSR SliiiDM4 GREANY (PRE-i7AR) CANADA AItAZIL ARGINA SECRET ? Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 Declassified and Approved For Release 2013/04/29: CIA-RDP78-01617AO04300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 SECRET a of the world?s civil air establishment from the standpoint of Government policies and .procedures, The studies were prepared at the request of the President?a Air Policy Commission, for the pur- pose of ascertaining the salient aspects of civil aviation abroad as related to national policy under the widest possible range of conditions, - The survey, as expected,, has encountered civil air operations under extremely' varying conditions, The countries covered include great powers (UK and USSR), as well as small nations (Netherlands) and primitive economies (China, Peru), The survey has observed the development of civil aviation under totalitarian governments,(USSR, pre-war Germany) and under governments which have maintained an unblemished democratic tradition (Sweden)? Some of the countries are enjoying prosperity (Canada), while others (UK, France) struggle for their very existence to overcome the enormous dislocations of the war, ?any of the countries are situated advantageously across the natural arteries of world air traffic, while others (Argentina, Brazil) must attune their civil air policy to a more regional primary interest. These conditions,. as the survey confirms, exert a profound influence on the varied objectives being pursued throughout the world in the development of civil aviation. Civil air policy in a given country is dictated by 'a combination of political and economic factors, and by the country?s geographical position, and therefore advantages of innate aptitude and enterprise can only begin to operate after these basic conditions have set the stage, Regardless of the limitations or handicaps under which every country operates, almost universal recognition of the significance of civil aviation prevails. There is scarcely a country which would not imrediately expand its civil air activities if this were possible; Policy=makers everywhere appear to recognize that civil aviation is the most dynamic force in drawing the countries of the world physically closer for better or for worse, and that the total potential of civil aviation, including its ultimate military application, far transcends its strictly peace-time importance, As early as 1930, an official League of Nations report contained the statement that state participa- tion in European civil aviation was an act of politics rather then of economics. By 1938, the British had clearly understood the military, significance of civil aviation, as evidenced in the Cadmon report, which stated that the problem of the air is like "two sides of a single coin," that is to say, "the military aspect of aviation cannot fundamentally be separated from the civil aspect",. In 1940, the Germans were er:oloying civil aviation as a geopolitical instrument. A German geopolitician stated that "the ai.rplane"s speed and radius of action makes thinking possible in terms of continents," SECRET Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 SECRET There is fall realization by countries fearful of invasion, as well as by those which know that they may orb3 day be forced to engage in large-scale military operations, that the man who are organizing civil air transport today are establishing the means of carrying the armies of tomorrow. The keen interest displayed by military authori- ties of many countries in the progress of civil aviation in their ern and other countries, appears to be explained by such considerations. The eleven studies in this survey indicate that civil air policy is al- most directly controlled by the military in five of the countries, and strongly affected by military considerations in four others, Chile only in two countries is no control, by the military exercised. In this con- nection it is notevorchy that all of the eovntries having porerfua i.'dl- itary establishments permit them a measure of control over civil avia- tion. It might be assumed, by an observer acquainted only with civil air transport in the US, that this advance in transportation is being de- veloped primarily for the benefit and convenience of the private citi- zen who wishes to travel fast. on errands of his own choosing. The fact remains, however, that a. considerable part of the world's travelling popul.a~:ion is unable to make use of existing air transport for a variety of reasons. in the Soviet Union, for exastle, which operates, or at least , s several thousand transport aircraft, few "average citizens" travel by air, except on government businezs. Civil aviation is used as an important instrument of the state to further its extensive develop- ment plans. The USSR, .osrever, sometimes chooses to move groups of workors ostentatiously by air to recreational centers, an d occasionally transports a special mercy case on humanitarian grounds, with a7propri- ate propaganda treatn:rt. Circumstances of a quite different nature (small geographic area) prevent the general population in the UK from benefiting by personal use of the airplane, and it does not occur to the average Englishman that this facility will ever be, open to his. Surprisingly little private flying is being done in any country, and what little there is results primarily from government aid to :flying clubs and training programs. Civil aviation in most cases is not chat a country would like to have, but that it can afford to support. The principal limitations are: (a) inability to support unprofitable air transport operations, (b) :n- adequate resources for civil air development, such as lack of tra;sition in air transport operations, inability to develop a manufacturing indus- try, and absence of Empire interests or pretige requirements, (e) limita- tion7 created by the sovereign right of other countries to control their own air space. There are certain countries, Sweden, The Netherlands and Belgium, Y.Mch have succeeded in maintaining substantial positions in the field of international civil air transport, because their efficiency, coupled with a tradition in this activity,, has enabled them to achieve profit- able operations in spite of their obviously limited resources. The USSR occupies a peculiar' position in civil aviation. While it has vast and varied resources to support long-range international opera- ,tions and political objectives far beycnd its borders, it has seen fit to adopt a policy which has resulted in the containment of its large civil air establishment within the USSR. There may be military SECRET Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 SECRET significance in the fact that the USSR has been unwilling to assign more than a negligible number of its large fleet of air transports to. its badly equipped satellite airlines. While the rapid expansion of civil aviation within the USSR may be considered bertain, its anergnce into the field of international air. transport frill, depend upon developme,its in, the future which cannot no-vi be predicted. The survey does not confirm ray, superiority for particulsr,methods of establishing and implementing civil air policy. While there is a wide range of efficiency-and a corresponding diversity in organizational raatnods is disclosed., a comparison of methods as they affect,efficiencc could be almost meaningless. It is evident, for example, that the most ideal organizational charts could inc-'.- produce efficiency in a country like China which has existed for years on the verge of cailapse; whereas, the resources of the US might permit a preeminence. in civil aviation in spite of a certain degree of i.nafficiency of governmental organization. The survey discloses a wide difference in the degree of subsidiza- tion by governments of their civil aviation programs. The general con- clusion to be drawn is that most countries recognize that financial sup- port of civil aviation is justified to the extent required by (a) the .unwillingness of private capital to underwrite national-interest air developments, or (b) the inability of the \,country' s airlines to pay their oars :gay. Some countries are unable., however, to finance exten.- ,sive subsidization, and therefore the degree of support in a given, in- stance may indicate no more than tbn liquidity of a countries treasury. SECRET -3- Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 Declassified and Approved For Release 2013/04/29: CIA-RDP78-01617AO04300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 SECRET SECRET Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 t~ ~ Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 SECRET A. CIVIT. AIR. POLICIES 1. Civil aviation is largely an instrument of national policy. The state determines the policy directly for the companies, although the carriers are allowed freedom of action in man- agement and operational matters. Briefly, civil aviation is looked upon by the British Government as (1) a means of tying the Empire together; (2),a means of-showing the flag and spreading British prestige around the world; (3) an adjunct to the national defense in keeping communications open and providing trained men and available aircraft for transportation purposes in the event of war; (h) to a small degree, as a means of obtaining intelligence, and finally, (5) a means of carrying British mail and British business- men to further_British trade. V.hile lip service is given. to the use of the airplane as a means of enabling the com- mon man to have a better life, this scarcely figures in the basic policy. The present Government does not look upon civil aviation as an indispensable, or even highly desirable servant or convenience of the ordinary Englishman. 2.' (a) The Government promotes, or more accurately, supplies air transport for the reasons mentioned under (1) above. Since air transportation is nationalized, the Govern- ment sup'-orts and directs the three Gpvernment=owned carriers and prevents, restricts or discourages other forms of commercial air transport. Except for the charter companies which are discussed below, commercial civil aviation is a part of the Government. At the close of World ;:ar IT, British overseas air transport commenced a period of rapid expansion, re-establishing pre-war routes and.inaugura.ting.many new services. The current economic crisis, however, has caused drastic restrictions on foreign travel and it has been necessary to curtail the services of British Euro- pean Airways and to withdraw from other contemplated overseas air operations. (b) The basic law governing the operation of commercial civil aviation provides that services hot assigned to one-of the three corporations may be undertaken by pri- vate enterprise, provided they are of a non-scheduled character. These operators are numerous, but few are prosperous. The attitude of the Government toward them at first was somewhat hostile, but because the three corporations were slow in getting started, it was forced to let charter companies expand. The Government believed that there would soon be little or no place for the char- ter companies as soon as the scheduled operators were able to take over. The charter companies are still oper- sting, however, and even have an association, but cer- tainly are not encouraged by the Government. SECRET Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 SECRET (p) Little encouragement is given to private flying, In spite of numerous committees to promote private flying, and in spite of the avowed sympathy of the Ministry of Civil Aviation, what private flying there is in the -United Kingdom today exists through the determination and enthusiasm of a small group who look ppon it mainly as a sport, rather than a means of-getting somewhere, Most private flying is done through clubs, the members chartering the aircraft and instruction by the hour. These clubs are no longer subsidized, although they are allowed reasonable amounts of gasoline for train- ing flights. The ration for private flying for pure pleasure, however, has just been abolished altogether, in line with the stringent economies required by nation- al policy. Reasons advanced for the limited encourage- ment of private flying are,' nevertheless, that it helps to make the country airminded, gives an outlet to the manufacturers of small airplanes, and trains people 'in the rudiments of aviation for wartime purposes, (d) It is the basic' policy of the British Government to aid substantially the manufacturers of aircraft, On both the military and civil side, the manufacturers are sup- ported through direct orders from the Ministry of Supply, which does all procurement for the RAF and the airlines, and. contributes large sums to research, The most'importo ant Government contribution to the aeronautical industry .undoubtedly is the financing of new aircraft designs and prototypes, and the aid given in the form- of expensive experimental. equipment, It is difficult to determine, however, whether Government support of the industry through orders for operational aircraft to be used by its airlines exceed those which might be expected if all com- mercial air activities were in the hands of private opera- tors. Nor can a comparison of unit costs easily be made, Thus, the total amount of actual.Governmen'al subsidi- zation remains obscure. The reasons for the heavy sup- port given the aircraft manufacturing industry are: (1) national defense; (2) prestige, and (3) encouragement of the industry to design and develop new aircraft, the expense of ihich would not be justified by the small home. market, In a sense, the companies are nationalized since, with a few exceptions, their sole customer is the-Government, on which they also depend for priori- ties, power, material and labor, They are therefore to all intents and purposes a part of the Winistry of Supply, and the question of subsidization is somewhat academic, (e) The Government directly supports aeronautical research, both purely scientific and practical, for-reasons of nation- al defense and prestige0 Although some manufacturers en- gage in limited research on their own account, most of it is done directly by'the Government at its establishments;, such as Farnborougn and Boscombe Downs, ' SECRET, SECREI C (f) There is no evidence of any direct Governmental aid in. training eeronantical engineers, but opportunities for enpioyment in research are provided at the Royal Aerorau- ti.cul Institute at Farnborough; lndirn-ct oror-otion of eeronsuticcl engineering education is provided to a limi- ted extent through the government-aided aircraft turersA and by the program explained in 8. (g) The rAF trains its oren nilots and undertakes the training of foreigners fr r rany countries in the operation and care of British aircraft and equipment, The Air Forces of many European, Near Eastern and Eastern countries and the Dominions receive all or nart of their training in the United Kingdom, and the close collaboration of the Air Forces of these British allies in the last war continues. British- trained foreign pilots and technicians are operating civil aircraft throughout the world. This policy has promoted the sale of British aircraft and air equipment. The adonc tion of British equipment :rd training methods by many friend- ly foreign countries will make possible t?e c''rdination of aviation resources in time of war. The British Government, through its nationalized airlines, occasionally undertakes to give advanced training to foreign commercial pilots. Bri- tish pilots in commercial aviation have usually had prior training in the services, and receive advanced training with the airline corporations. (h) The policy of the Government is to encourage the export of aeronautical equipment. This is accomplished by special in- ducements tc further the sale of aircraft and engines, such as training courses, competitive prices, terms of payment, currency accepted, etc. The importation cif aeronautical equip- ment is discouraged, and it is almost impossible to obtain an import license for a foreign-b?rilt airplane or component. The use of foreign-built airer,.ft, however, is currently the most controversial issue between the aircraft industry and the Government airlines. The airlines insist that nresent nri- tish aircraft are inefficient and ups-iitable., and the industry claims that its hands have been tied by unrealistic Government specifications. (The British airlines, however, still use a great number of C-47's !purchased at the time of the Lend-Lease settlement. British Overseas Airways Corporatin? has six Corstellations and has ordered six Stratocruisers.) (i) The Government promotes the construction of airports for defense purposes. A few, such as London Airport, have also been constructed for civil purnoses, but the large number of war-built airfields are sufficient for present civil needs, and no new civil construction is being undertaken at this time. The construction and operati"r of civil airports is natinnalized under the control of the ?'iristry f Civil Aviation (the RAF and the Royal Navy operate and control their own airfields). There are very few private airports. I SEO ET Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 JC~RCI (j) The Government, tid'o'l)jli the _ iri.stry of Civil :aviation and the Air 1.inisti:', controls all air navigational facilities. These are nnintain.ed and operated by the :M and the ;.inistr?r of Civil. Aviation for British and foreiCn civil users. Duo to air traffic congestion over the UK, the Governnent has adopted a policy of country vide air traffic control and has announced the establishment of five Goographicai zones to be placed in operation shortly. In addition, the Government will operate special control zones over the major airports. 3. (a) The present British Government. elected on 'a platform of socialise, has proceeded to nationalize various-in- dustries, includinG civil aviation. Concccuently, all scheduled air carriers are completely owned and-operated by the Government. No privcte capital is, permitted to invest in British scheduled coru-jercial aviation. (b) With one exception, tht. ii.rcraft nnnufncturinG industry is noninally in pr_?-r.La ?:cads. A11 factor iprbduction, exclusive of export: of1~ is in effect controlled by the :iinistrg of Supply through its beiw; the sole cu.a- toner. In addition, the Government also controls the example of the deg,rce to which manufactirinc is con- trolled'by the Government, P. primate actiin; entire- ly on its am initiative recently aucccedcd in buildirC a small 100 hp. airplanc,. and in a booklet nnnouncins this airplane bor?.sted of the fact that it tics able to construct it without Government holm. (c) The Government has rcpcatodly'announced that T,,ritish? civil aviation could not survive the evils of nonopoly and has emphasized the competitive features of -the three airline corporations. Actually, hox:ever, there is no real competition for traffic between the carriers since they generally cover different air routep. There is, `therefore, opportunity, only for competition in operatic ; ef?ici.encyi such as in passenger comfort; reduced operat inG costs, or in the choice of air transport types to bd used. BSA;, has acclaimed the new Britisi} Tudor S7 which has been rejected by BOAC (both would'use American air- craft if permitted to do so), The Govor;uncnt'believes that the principle of dividing civil aviation anonG three corporations, rather than concentrating 'operations in onp, has proved beneficial in practice. It is significant, that all of the carriara are controlled by one :ai.niistiy of Civil Aviation and :oust co:speto an.;onc themselves for the equip- ment they receive from the Ministry of Supply. The Govern- ment has been vory,careful to encourage, as far as possible, the. rivalry between the three corporations. This has been borne. out in the Tudor aircraft controversy. (:1) Until the Ben:uda Civil Aviation Agreement, with the United States, the firma policy of the British 3b-,rer.-ciont was to protect i a roletive1j wok, carriers ncninst foreign ca-ipetition. It clans a restrictive policy and recitlted in SECRET. Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 cr(DCT Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 SECRET 0 restrictive agreements with other countries of like mind. British policy shifted at Bermuda and has :since supported a degree of regulated international competition about the samy as that su ported by The United 'States. The relative power of the United Stateso and even of the Dutch W Swedish airlines, is now so great, comnarod to the.Rritish, that there are some misgivings as to whether British aviation can survive under the governmental policy now in force. (e) Since the nationalized air carriers receive direct ad- vnnces from the Treasury and return a.ll receipts to the Treasux;, the size of the subsidy received cannot he accurately computed, and the financial results of their operations are obscured, British Overseas Airways Corpor- ation, however, is, said to, be losing money at the rate of some thirteen million oounds a year. British European Airways Corporation is losing three or four million. To date, the British Treasury has footed the bill for air services which the Foreign Office, )iinistry of Civil , Aviation, Colonial Office and other agencies of the Govern- ment have deemed to( be in the national into rest. It is now likely that Parliament will, conclude that too great an ex- pense is being'incur-ed for the dubious advantage of world- wide air services. The recent curtailment of some of these services may be followed by even sharper cuts in schedules. As stated prpviousiy, subsidization of the aircraft manu- facturing industry is car. _ed out mainly through the Govern- menus being the sole customer (except for exoort orders). The company directors are really managers of what might as well,be Government-o:med plants. The airports are, with very few exceptions, built, owned, operated and controlled by the Linistry of Civil Aviation, the Navy and the RAF, Therefore, there is no such thing as subsidization and aid to private or municipal airfields. The Air Training Corps of the RAF offers aviation educatidn and 'traj.ning to boys of pre-draft age., i (f) The policy of' the Government is to encouragd in every way the development of transport aircraft. For example, several million pounds hevy already been spent on the cont- roversial Tudor transports. The Ministry of Supply is det- ermined, however, regardless of past failures and the cost involved, to continue to sponsor the develo'iment of success- ful transport aircraft. The Government subsidizes the manu- facture of all of the eight types ;:.nd sizes of transports recommended by the Brabazon Committee. The Brabazon I. which has yet to', and the enormous hanger especially constructed for it, will cost several mi'.lion pound. (g) The stated policy of the Government is now firmly against the purchase of foreign air transports, although the un- availabili.ty of any adequate British types previously caused the Government to permit the purchase of six Constell- ations and six Stratocruisers, and large numbers of Douglas C-4'77s are still in service. -5- SE(QcT Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617A004300030001-0 SECRET, (h) With respect to the operation of foreign airlinos within Great Britain, the British are fair and scrupulous in according them the some treatment as their ovrn< :'mile foreign operators frequently object to British rules and regulations, they seldom complain of unfli.r disorini- nation. SECRET, At the close of World War II, the British did not favor unrestricted expansion of international civil aviation. The UK emerged from six years of war without single large air transport type capable of competing With UP, aircraft. (This' was partly due to a US- JK rrar??Mne r. ree- nent that the British should continue to develop their successful fij;hter aircraft while the US should produce hear] bombers and transports.) The UY,; consequently, promoted bilateral aGrcenents with -countries wflling; to reduce competition through the introduction of limitations on fli;;ht frequencies, rates and routes. In the UO". several large and well-equipped airlines desired to institute trnn.s- ocean, and even trans-world air routes at rates lorr enough to ensure a large volume of traffic. The Netherlands, France. Sweden, Canada and Australia also subscribed to this view. In February 1946,. the US and UK reconciled their differences at the Bermuda Conference, where a formula urns devised .which guaranteed to both parties fair and equal opportun- ity in the development of international air services. and formulated fair trade practices, including procedure for the arbitration of disputes. Although British fundamental air interests are still not identical with those of the US, British policy in bilateral and multilateral civil air agreements now agrees with that of the US. For the past year or more, UK and US representatives have worked together in international,nvihtion organizations without any impor- tant or continuing disagreements. The British are staunch advocates and supporters of all international organizations having to do with civil aviation, and through the skilled enterprise and knocrlodgc of their negotiators, play a '\ leading and influential role (second only to the'Unitod States) in those organizations. 4. Civil air policy is to some extent influenced by mil5.tarj air requirements, althou;,h the armed forces do not directly c::crcise any control over civil aviation. In the event of an emergency or war, however, the armed forces would immediately assume its controls The !Zinistry of Civil Aviation is staffed largely with active and former :.AF officers; the three corporations are staffed almost dntirely with former service crews, p5.lotc, and technicians. Cornunication services are partly o erated by the Air L.inistry (military). Locations of and change: in airports and navigational,sida? an well, as :Ioticos to Airmen etc. are approved or -disapproved by the A?r Ministry. The direction which research tni-cc --a largely, but not excl;.sively, 'influenced by military consic:orations. Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 SECRET (a) Civil air transport is not regarded primarily as a re- i:Soreenent of the nilitary air potential. It is primarily regarded as a necessary activity which Britain needs to ;:cop its prestige and influence throughout the world. Military considerations, of course, form a part of the foregoing. (b) 17hile the British appreciate the importance of civil air transport in creating a basis for the British air- craft manufacturing industry, this is not considered to be its primary significance. (c) The commercial advantages of sn active air transport establishment are only a contributing factor in deter- mining British. civil air policy. As stated, the British I look upon their civil,avirtion, not necessarily as assist- ing any one element, such as the MW, Navy*, manufacturers,. Board of Trade, or Foreign Office, but as one of many de-- vices on whic:: their ability to maintain a strong position throughout the world depends. All of the reasons mentioned under 4. existe and all of then add up to supporting the rvrorld position of the British. Their civil aviation will stand or fall with the strength of their general world position. It till not be, like XLII, a business which helps support the Netherlands, but will involve an expenditure like that of maintaining the Arm;/ or the iiavy. 5. The British restrictive civil aviation policy has, during the last three years, been changed and dominated by the more liberal United States policy. Some concessions, however, have also been made by the US to British policy. Thus, the two policies, once poles apart, are now p racticall;; parallel. 'iThile the Untted States, _'or domestic reasons, moved away from marked liberalise, the British became less restrictive because their extreme re- strietionism visa unacceptable to many other countries with which they wished to do business. 6. It is not possible to answer this question satisfactorily, com- pletely, or accurately. lben if detailed figures could be ob- 'tained,. they would probably be misleading. 7. Since the nationalization of British air transport, no private ovmership'in this industry can exercise the influence of a vest- ed interest on civil air policy. Furthernore, the I.:inistry of Civil Aviation is certainly not donineted by the managers it installs in the airlines. It is so sure of its ultimate power that it can and does allow the airline corporations a great deal of-managerial freedom. On the other hand, the ::inistry of. Supply its, to some extent, dominated or intimidated by the Society of Britis'. Aircraft Constructors, and particularly by some of the leading figured nmong the aircraft manufacturers. This is partly because these individuals constantly threaten to make a scandal over the very large amounts of money which have been spent for airplanes rhic'c hate never flown. Thus, in the manufacturer, the Ministry of Suppl 11nc a bcrr by the tail The forthcoming inquiry into the suitability of the Tudor aircraft SECRET Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 may force a change of policy in the ministry of Supply, and establish a new balance. of liovier between the airlines, the manufacturers and the :.:inistry of Supply. 6. The Government subsidizes aeronautical engineering educa- tion through many leading schools and emphasizes design and production of aircraft and engines, including propul- sion systems. The Government also directly sponsors the College of Aeronautics at Cran?iold, Bucks. This is a post-graduate college having at present 100 students pur- suine; a two-year course. The Governing Body of the College is appointed by the Minister of Education, and the College is fine ced by a "grant in aid" fron this Department.. The foes charged produce an income rhic:_ is a very small frac- tion of the total cost of the College.' The following Uni- vorsities also-provide aeronautical courses: and Queen i:azj College of the University of London Cambridge University Bristol University Glasgow University Southampton University College In common with all universities in the United Kingdom, the above institutions are financially supported by the Univer- sity Grants Cocenittee; the money coming directly from the Treasuiy. The Treasury itself, however, has no direct re- sponsibility in this field. the following technical col- leges have full-timo or' part-tins aeronautical courses (principally the latter): Ilortha-;pton Polytccuric, London fl nchester College of Technolop - Lcu,,;;aoroug'h College :.:erchant Venturers College, Bristol Kingston Technical College hull Technical College F'arnborouj;h I'oyal Aeronautical Establishment Cheltcnhrn Technical College Coves Technical College Guildford Technical College Portsmouth Technical College Coventry Technical College Gillingham Technical College Derby Technical College Southall Technical College Bradford Technical College Birmingham Central Technical College l'iolverhampton Technical College Glasgow Royal Technical College Belfast College of Technology These courses are of Higher National Certificate standard or beyond: The Higher National Certificate approximates university standards, but is narrower in scope. -The fees charged in Technical Colleges arc more or less nominal, "(RET Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 SECRET O the remaining costs being met by the Local Education Au- thority whic'i recovers en nvera:,;c of 55,10 of its expendi- ture by means of a grant from the finistry of Education. A very large proportion of students, both in universities and in full-time courses at technical colleges, are aided either by Local Education Authorities through their system of Major Awards", the utate under the state scholar- ship scheme. Un`i ersities, of.course, also have their own scholarships, but these are much fewer in number than the Local Ed:acation Authorities or State Scholarships. Genera ally speaking, it can be assumed that no i cividuals who are deemed capable of taking such advanced courses will be prevented from so doing by lack of means. The number of students is not determined by the Government except in the case of the College: of Aeronautics. This is really a post- Graduate school. It will have a student body of two hundred when it is organized and in full operation. The British Government has found by experience that the educational in- stitutiuns satisfactorily gouge their instruction to meet the rog,.irements of the aviation industry. It is accofd- inGly-unnecessary for the Government to interfere with the organization of this work, or to specify the amount of in.- struction to be Given in the various specialized, fields. In addition to this scholastic instruction, certain aircraft firms have apprentice systems and factory schools of 'their arm in which olenentar' courses are given in aircraft do- si n and )roduction. 9. The Government subsidizes r:lmost all aeronautical research in Great Britain - either throu;-h its own establishments, such as the National Gas Turbine Establishment, Aeronautical Research Establishment, etc., or through contracts with the various aircraft companies. Is certain phases of aeronauti- cal research demand specialized and expensive equipment, this is generally allocated by the Government to its own establish- ments. Airframe development and general tests, on the other hand, are carried out by the industry under Government con- tract. The UK has, and continues to carry out, extensive research in respect to Gas turbine and propellor turbine pro- pulsion for use in commcrci^.l aircraft. There is also a fairly extensive research progr:c; in the fields of nuclear fission and eontrollca nisciles. "wale priority is given to nuclear physics, the research on airframes probably had a larger budget. The budgetary grants Tor research contained in the Civil Estimates for 1947?=4945 are as follows; 1946-1947 1947-1068 s, 15,0S6o010 g. 9 0004000+ , This figure does not 1.'hcLud: h'e?;;,~t".'e:. Lein carried out by t;hb ._ristr/ of Sup].y for aircraft that Q-11 not be delivered in 1947-?1949. SECRET Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617A004300030001-0 SECRET . 0 I-inistr Of Supply 1946-1947 1047-1048 b 35,040,000 b 48,780,000 These figures include buildings, equipment, salaries, mate- rial and other capital expenditures by the. Government, as well as Governmental support of research by industry and colleges. b 290,000 b 370,000 Very little research is carried on by private enterprise, except by Vickers, which is the largest concern in the UK. 10. The Government subsidizes the development of most, though not all, new types of aircraft and equipment. The eight types of aircraft rocommnnded by the Brabazon Committee, for example, have been ordered by the Government and funds have been advanced to the manufacturers concerned. The method used by'the Government in developing new typos of ,aircraft is to produce the specifications and to collabornto with the manufacturer during the stages of design and con- struction, sucgesting and insisting on changes or modifica- tions as they become necessary. A company, however, VA-Lich is unable to Get advance orders and support from the Govern- ment, is free to develop its own aircraft if it haste necessary money and can got the materials. An example of a privately-produced aircraft is the Cunliffe Owen "Concordia", a ten-place, twin engine airplane. 17hile most of the cost of development is in one way or another borne by the Govern- ment, the manufacturers undertake on their own initiative a certain amount of development and experimentation. The cost of such activity is not necessarily a drain on a company's, finances to the full extent of the costs involved, because the greater part of the expenditures would otherwise be paid to the Government in the form of taxes on profits. Under the prevailing system the manufacturers are able to show a' great deal of individuality in design,despite virtual Government control. They have been hcmpered, on the other hand, by the more or less rigid and sometimes ill-considered, specifications and requirements laid down by the Government's airlines and the 11inistry of Supply.' 1. The.follovring agencies of the Government are concerned with civil aviation: L:inistrj of Civil Aviation - formed in 1945 and raised to full 10 SECRET Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617A004300030001-0 SECk-. i Cabi;iet r :atua in P_pri.i 1946. Under the Civil Aviation Act, 1946, the Ministry became responsible not only for British aviation Policy, but also for the operation of the three cor- porations, the airports in the United Kingdom and communica- tion systensd It will eventually be responsible ;for all meteorological in orm?i~1 on; Ministry of Sup? - took over the duties of the Ministry of Aircraft Production in 1946 and became responsible for the pur- chase of aircraft for the inistry of Civil Aviation and for aeronautical research; Air 1.inistry - controls the RAF and is responsible for all re- searc zt on' military type aircraft; Ilinis & of Education - has charge of the Government-sponsored College of Aeronautics and supervises courses in technical colleges; ' Board of Trade - in conjunction with the Ministry of Supply handles imports of aviation equipment and trade patters per- taining to aviation; Air Transport Advisory Council - established under the Civil Aviation Act of 1946, studies the problems of air transporta- tion and mares recommendations to the Minister of Civil Aviation;, Air Rej tration Board - formed in 1937, is an autonomous body which recommends the issuance of certificates of airworthiness for aircraft, and Air Safety Board - appointed by the ;.anistor of Civil Aviation -= 46 t3 o recommend safety regulations for commercial services and to investigate and report on accidents involving aircraft in the United Kingdom. 2. (a) and (b) are covered in 1. above.. (c) Civil aviation'is nov controlled by the I.tinistry of Civil Aviation and to some extent, in the matter of aircraft pro- curemont, by the Ministry of Supply. The Ministry of Civil Aviation cane into being as the result of vigorous and con- tInued criticism in,Parliament, particularly the House of Lords, of the manner in which civil aviation. was handled during the latter part of the ware Prior to the establish- ment of the Ministry of Civil Aviation, civil aviation had been handled as a section or department of the Air Min- i.stry, although in 1943 Lord Boaverbrook, who held the. Cabinet position of Lord of the Privy Seal, was charged with formulating British civil aviation policy and rep- resented the Government on this subject in the House of Lords. The proponents of a separate Iinistry of Civil Aviation argued that by the very action of-creating a separate SECRET SECREt ' Ministry away from the numbing and unsympathetic in- fluence of the Air i.tarshals, progress would somehow follow. ?7hen established, the Ministry of Civil r:via- tion found itself not only in control of civil aviation policy, but also charged Aith,operating all scheduled British air services. It was further obligated to take over, maintain and operate all civil airports, and to organize and maintain necessary communications and navi- gational facilities. Procurement of personnel for all of these functions likewise became the t:inistryos re- sponsibility. Thus, the Ministry of Civil Aviation assumed complete control and responsibility for all aspects of civil aviation, except for (a) the finistry of Supply's functions in procuring aircraft for the i'CA's airlines, and (b) joint responsibility shared with the Air Ministry for some of the -communications and traffic control facilities. During the war, BOAC was taken over by the Government and operated by the Air Ministry, so that there was a long period of virtual nationalization before the subsequent bill nationalizing civil aviation came into effect. Under the Coalition Government, a compromise plan was worked out with the air transport industry which established partly private and partly governmental ownership and control of the airlines. When the Labor Government came into power, this plan was modified to effect 100% Government ownership. No change was made in the division of air transport opera- tions among three corporations. The present organization of British civil aviation re- fleets the ideology of the Labor Government. Civil avia- tion was not nationalized in the UK through any conviction that it was peculiarly or inherently suitable for nation- alization or government o.aeration. It was nationalized for the same reason that coal mining, banks, etc., are nationalized, because the Government believes that nation- alization is a prerequisite to maximum efficiency in the operation of important utilities serving the public interest. The Government had been elected on this platform. 3. The opinion of even informed and normally unbiased people is colored so greatly by politics that it is difficult to obtain in the UK objective opinions on the efficiency of civil avia- tion as presently organized. Certainly, British civil aviation is in a very precarious state, but whether it would have'been equally so without direct Government control, under private enterprise, or under a single company rather than several, is debatable. The operating losses of BOAC and BEAC are alarm- ingly high. The principal causes of this are (a) the employ- ment of'unsuitable aircraft, (b) overstaffing of the operating companies, and (c) confusion created by frequent interference on the part of the Ministry of Supply, the Ministry of Civil Aviation and even of the Foreign Office in operational matters. These agencies appear to expect the transport corporations to make profits, or at least to keep their losses within reason- able limits, while performing uneconomic services with uneco- nomic equipment, c'~,CRET Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 SECRE1 (a) There are few private aviation interests in the UK, but they criticize bitterly the :inistry of Supply, the Min- istry of Civil Aviation, and the Government corporations for rank inefficiency. While their criticism is largoly justified, it undoubtedly reflects somewhat the natural resentment of private industry against Government controls. (b) The other forms of transportation pay little attention to aviation. as they do not consider it seriously competitive. Members of the shipping companies engaged in the South American trade are on the Board of. Directors of BSA:., but the forth Atlantic shippers remain aloof from aviation. The railroads are nationalized and reflect Government views. (c) Since civil aviation is a function of the Labor Government, the Labor Party does not criticize the management of civil aviation. ;:hen debates on the subject occur in the House of Lords or the House cf Commons, the Conservative Party, on the other hand, usually attacks the Government. The attacks are directed-primarily against Socialist economic theory and do not present any careful analysis of the Gov- ernment's civil aviation administration. (d) The armed forces, including the RAF, seem to give relative- ly slight consideration to civil aviation. (o) The General public in the UK is relatively disinterested in civil aviation and appears to have formed no firm opin- ions on the efficiency of Government control. The number of people who use airlines in the UK is very shall, and it probably never occurs to most Englishmen that they night some day use this form of transport. The usually fair at- tendance at air shows merely reflects the morbid appeal of dangerous exhibitions of acrobatics and low level flying. 4. Normally, conflicts between 'iinistrieo are decided by the Cabinet. In all matters of important international civil aviation policy, the Forhign Office always has the last word, and the Ministry of Civil Aviation accedes without argument if the Foreign Office objects seriously to arrjthing being done in the foreign avia- tion field. Friction sometimes develops between the Ministry of Supply and the Ministry of Civil Aviation over aircraft spec- ifications and procurement for the airline corporations operated by 14CA. The outcome of these conflicts depends mainly on two factors; (?a) the strength and personality of the Ministers and other top officials of the two Ministries, and (b) the politi- cal aspects of the controversies, which are decided at the level of the Party Council. In a recent controversy, when the airline corporations were opposing both the Ministry of Civil Aviation and the Ministry of Supply, the Ministries won round one by ob- taining a Cabinet decision against further purchases of American aircraft, thus necessitating the use of obsolete British types; round two, however, was won by BOAC in refusing (so far success- fully) to fly the aircraft assigned to them by the Ministry of Supply. This controversy has now been referred to a Special Board of Inquiry. There is a moderate amount of duplication in SECRET Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 SECRET 0 the functions of the various agencies handling civil aviation. Coordination between the Air Ministry and the Ministry of Civil Aviation with respect to airports, communications and traffic control is now adequate. On airporta whore both RAF and civil- ian aircraft are permitted, confusion due to dual responsibili- ties is usually avoided. As a rule, the RAF.operates such airy fields with the exception of services to civil aircraft and civilian passengers. 6. No plans for major reallocation of responsibilities in civil aviation appear likely of adoption, There is, nevertheless, constant agitation to remove aircraft procurement from the Min- istry of Supply and put it in the hands of the corporations. that is, the Ministry of Civil Aviation. There is also, from time to time, agitation to abolish the Iinistry of Civil Avia- tion and put it back as a bureau of the Air Ministry or make it part of the Ministry of Transport. Since the Ministry of Civil Aviation is still Lro;ring rapidly and has acquired considerable prestige, it now seems unlikely that it will be reincorporated in the Air Ministry. Within the framework of the Ministry of Civil Aviation constant regroupin;.takes place in an effort to streamline the functions of the various departments. Largo numbers of eommitteoc are appointed in an effort to innrovo intra-mi.nistorinl efficiency, but many of those merely draft reports and recommendations which appear to be given little or no consideration. C. PRDCIDUm ; AND :'tLouLATIOIJS 1. (a) As provided in the Civil Aviation Act of 1946, the Govern- ment assigns to the statutory carriers, through the minis- try of Civil Aviation, the exclusive responsibility for large areas of the world. The carriers, as a managerial responsibility, are free to determine stops and routes within the broad geographic framework assigned to them. They are required in axe case to operate routes considered by the Government to be in the national interest. (b) Geography is the main consideration controlling the grant- ing of a route to a particular carrier. Thus, IISAA, as its nano implies, is operating routes to South and Central Amer- ica and the West Indies; BOAC the North Atlantic routes and the long routes to the Doninionsj and BLAC.the routes to Europe, North Africa and within the UI:. MICA is extremely anxious to avoid the position of having only ono string to its bow: the Government has, therefore, retained the right to grant to ow oi' the other companies routes to "out of area" points if 'it believes that the designated carrier for that area is not operating effectively. It could also bstablish an additional company. (c) When a carrier is assigned an area, it may operate the nun- & ber of scheduled services it thinks economical with the air- (d) craft and equipment at its disposal. If the Govorrm'ont wants SECRET Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 SECRET more schedules to be operated for reasons of national interest, it merely asks the carrier to add schedules. If the carrier deems the routes unsafe, or the equipment unsafe for the routes, the management has the right to suspend. operations without prejudice. While the policy of the '.:inistrj of Civil Aviation is to allow the corporations the maxiriun amount of managerial freedom in conducting their business, the officers of the corporations are in a sense servants of the I:.inistry and are thus essentially subservient to the rrishes of the Government_ hew routes are established on the initiative of both the Government and the carriers. Generally speaking, the Ministry of Civil Aviation encourages the carriers to expand to the maximum practical extent in their respective areas. Carriers are entitled to institute new routes only within their respective areas. (g) Competition is not permitted over identical routes. There are a very few cases in which the nearby stops of BOAC on routes to Africa or Australia compete to some extent with the European routes of BEAC. .'(h) The carriers do not have certificates: the question of re- voking or revision of certificates is therefore not applicable. 2. Rates (a) Rates are fixed in the first instance by the three corpora- tions but are subject to the approval of the I.Ministry of Civil Aviation. International rates are usually arrived at through the International Air Transport Association machinery, while internal rates are submitted to the t_CA by L'BAC. (b) The Ministry of Civil Aviation has laid down the policy that minimum rates arrived at through the I.A.T.A. machinery should be based upon economic factors of the type detailed in the rates section of the Bermuda Agreement between the United Kingdom and the United States. On international ser- vices actual rates charged are in most instances higher than the I.A.T.A. minimum fares. These higher rates are based partly upon cost considerations but also reflect a tendency to charge what the traffic will bear. Internal rates are based primarily upon economic considerations and are geared to costs of surface transportation. On certain routes it may be sus- pected that political considerations enter into the rate structure. New rates filed by the corporations are processed in the Traffic and Tariffs Branch of the Directorate of Finance and Accounts in the L3nistry of Civil Aviation. The filing is accomplished by a letter from the. corporation to the Directorate and, after analysis, is either approved or disapproved by letter from the Ministry of Civil Aviation to the Corporation. SECRET SECRET 0 (d) The three British corporations do not compete directly over the same routes. Differences of rates between the three corporations, for comparable services, reflect differences in I.A.T.A. rates established for various areas. Rates are identical for different Classes of travellers or freight except to the extent that I.A.T.A. regulations permit special fares for children, etc.., and special discounts for special classes of freight. (a) Safety rules and regulations are issued by the IBnistry of Civil Aviation. They are published in Notices to Airmen, (b) With the exception of air traffic control around major airports, the rules are adequate and competently enforced, if judged by any reasonable standards. In matters involv- ing traffic control under instrument flight conditions, the British have neither the system nor the enforcement to insure safety fully up to the United States' standards. (The opinion has been expressed that "they still Co 3cmerrhat on the principle that there is a lot of air compared to airplanes and that collisions are acts of God.") (c) Safety regulations are undoubtedly enforced with impartiality. There is no substantiated record of any safety regulation being enforced to favor an individual carrier. It is generally recognized that at the international meetings at which safety. regulations are established under ICAO or otherwise, British delegates are skillful, persistent and flexible in trying to have the rules conform to British conditionse Once the rules are set, however, they are enforced equitably. 4. Inspection (a) The L.'inistry of Civil Aviation is charged with the investi- gation of equipment, personnel and accidents. The Air Regis- tration Board, composed of representatives of manufacturers, insurance companies, and the public, as well as the ministry of Civil Aviation, establishes the rules (except hero inter- national standards apply) for ailrorthiness. The actual work is done by a dopartuont in the i:inistry of. Civil Aviation. There are sub-sections for the examination of ground and flight personnel, for the annual and other inspection of aircraft and for accident investigation. Accident investigations are now held in public hearings unless the aircraft is carrying secret equipment. (b) These regulations are considered to'be adequate. They are competently and efficiently enforced. (c) Penalties apparently are not often necessary. Warnings are given and frequent violators lose their licenses. SECRET Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 SECRET- 5. Airports and Communications (a) Regulations Governing the use of Civil Airports are covered in Notices to Airmen. Some civil airports are open only to charter flights; others are open for daylight operations; others are restricted to scheduled airlines; a few are res- tricto4 to exclude aircraft over a certain weight. Any civil aircraft can use at any time those that are unrestricted, and special permission can usually'be secured to use any civil field. (b) The Linistry of Civil Aviation is taking over the operation of all civil airports. There are a fear which are still in private hands. The P.AF operates and maintains its orm fields as does the Fleet Air Ara. (c) The flinistry of Civil Aviation, in collaboration with the G Air Ministry and the General Post Office, operates ground-air (d) communications, navigational facilities, and point-to-point communications. The civil airports are being linked together with the control center in London and with each other on ,telotype circuits.' D. GEMRAL EVALUATION 1. There are sharp differences of opinion as to whether the British Government's policy for aviation and its control of civil air operations have achieved the best civil air es- tablishment of which the straitened British eoonony is now capable. The most controversial question is whether outright government operation of the air transport industry can possibly (a) satisfy the requirements of an aggressive British world trade policy and (b) adequately sustain Thpire.prestige. It is actually difficult to say whether British civil aviation would be any stronger under entirely private or mixed private and governmental control. Certainly British airlines would be in a much stronger position now if they had been permitted to purchase modern aircraft from the LB, but it is debatable whether the advantaces of this course would have outriciChed the consequent drain on the British dollar position and the blow to British pride which the inereasod use of foreign air- craft would have caused. In any case,'largely because of the requirement that British airlines shall use inferior British aircraft, the British civil air establishment has lost ground heavily in comparison with its stronger international competitors. Conceivably the use of inefficient and unsuitable British aircraft during the present period may later prove to have been warranted, provided this action keeps the aircraft industry alive and the industry rapidly perfects a satisfactory jet-propelled transport air- craft. It appears, however, that the latter possibility is too remote to justify the severs continuing difficulties which British policy has imposed on its air transport carriers. As a result of its deterioration, the British air transport es- tablishment reveals itself to the world as inferior to those SECRET SECRET 0 of other far smaller countries, such as the Netherlands and Sweden, which operate better equipped and more econom- ically operated lines than do the British. 2, British aviation suffers from the same problems which beset the entire economy of the country. If the British economy were sound, the industry would undoubtedly produce suitable aircraft sooner or later, and the interim purchase of US types would be no problem. In the specialized field of trans- port design the British aircraft industry is still suffering from a traditional weakness: the pre-war British aircraft industry was never able to develop a successful large conventio- nal transport. This may have been possibly due to the lack of a broad domestic market for such equipment. The output of labor in tho British aviation industry is far lower per race hour than in the case in the US, No solution of Britian's pree.ent civil air difriculties is to be expected until the current shortage.of man power is overcome and the produetiv't-y of available labor is increased. Several factors tend to mitigate the weakness of British Civil aviation. The excellence of British military aircraft has deservedly gained wide recognition throughout the world. The names iar.oaater, Meteor, Vampire, Spitfire, Hurricane, Tempest and Mosquito are universally known. Outside of informed circles, the world-as well as the British public, have accepted it as a matter of course that builders of these military air- craft can likewise produce a jet transport in short order, and that the nation which manned the RAF will be able to master the operation of tomorrow's aircraft, As a result, the British have had some success in persuading other countries not to buy American reciprocating engine civil aircraft with the argument that British jet types, which would make all others obsolete, were just around the corner. An additional advantage to British civil aviation lies in the network of colonial possessions throughout the world with which -no bilateral agreements are necessary. This was of some import- ance before the United States obtained a series of bilateral agreements, and would again be important if the current multi- lateral air transport negotiations fail and the United States has difficulty in perpetuating its bilaterals on a favorable basis. Another element of British strength is found in the small group of skilled British negotiators who can effectively pursue the precisely organized British objectives at bilateral or international air conferences. They are trained to not solely in the national interest rather than as exponents of special interests or pressure groups. Finally, BOAC has demonstrated in the only British operation using modern American aircraft (the North Atlantic route), that the British are able to orovide a service which appeals to the travelling public, and which compares favorably with other outstanding air services, --.-nt? Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 Purchaoos Aircraft Super:iso;. Rc-20arGS CIVIL' AIR POLICY' UNITED KINGDOM I4INIS'EBY OF CIVIL AVIATION - -~ ~r k A,tian Polit Appiovoa Ratoo Tsaues Pilots( Licenses y Operates Hstionaliaed Operates MRITISH OVERSEAS AlWAYS CORPORATION (Nationali) BRITISH EUROPEAN AIR1 AYS (Aationaliaed) IBRITISH SOUTH AMRICA14 AIM-myS (Nationalized) COUNCIL Adviaaa A1CA on Air Transport I?St~ttore ;U,?: REGIsTIUsTIO27 BOARD Recommends Airworthiness Cortifieates for Aircraft AIR SAFETY BOARD Reocmends Safety Rules Investigates Accidents Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 Declassified and Approved For Release 2013/04/29: CIA-RDP78-01617AO04300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617A004300030001-0 Ya_W Y B%9 b 1 6.B' 0 0 CIVIL AVIATION - FRAA'CE NOTE: The following information was not available, during the preparation or this study. 1. The most important development in French transportation since the war is the establishment by the National Assembly in August 1947 of `" a 'Supreme Transportation Advisory Board. The Board will advise the Minister of Public "orka and Transport on all transportation matters submitted to it, but may also formulate recommendations on its ovn .initiative. The Advisory Board's' immediate mission is to present, within one year, plans for the coordination of rail, highway, inland waterway, air and ocean transportation. It will include in its plans coordination of domestic transport with colonial and international transportation. The Board will study all social, technical, financial and economic matters relative to the organization and functioning of the various modes of transportation; it will also study matters concern- ing stock and equipment, technical and commercial development and the social, economic and administrative problems arising therefrom.' 2. The Supreme Transportation advisory Board is established under the Minister of Public corks and Transport and consists of 69 members, including representatives from various government agencies,. members of Farliament$ specialists from the large-transport organizations, employee representatives from the operating companies and public organizations such as tourist travel agonies. Seven permanent commissions are estab- lished under the Board, charged with examining questions of transport coordination. These are as follows: Rail - highway Rail - inland waterway Rail - air Rail - sea Highway a air Highway - Inland waterway Sea air s0 3. The Supreme Transportation Advisory Board is financed through a special fund provided by the Minister of Public Forks and Transport. The sum expended shall be reimbursed to the state by the various trans- portation operators under conditions to be set forth by decree of the fsinitater of Public "?orke and Transport and the 11inister of Finance. RESTRICTED. Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617A004300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617A004300030001-0 RESTRICTED CIVIL AVIATION - FRANCE A. CIVIL AIR POLICIES 1. The 'asic French policy.tor:ard civil aviation is reflected in nationalization of the :rincipal French air carrier and the major manufacturers of aeronautical equipment. French external air -olicy ha:: been coriparubl.e to that of the OF in that bilateral air agreements have been patterned on the principles esta lished betreen the U` and the UK at 1ermuda in February 1946.? Civil aviation is regarded as an instrument of national !?olicy. :since the ^iajor French airline is nationalized, as well as the principal aeronautical equipment manufacturers, the Government nay be said to ezercine complete control in the shaping of aviation policies. 2. (a) :?cheduled air transport except for secondary lines is performed by the gov rnment-o?ned corporation, Air France. Development of this company's cx=rvice is promoted to the extent required by Empire considerations, rational prestige, and on self-sustaining; routes to the extent indicated by tra?fic dem:.nds. In thin connection, it should be pointed out,, however, that the "inister of Transport has on occasion restrained expansionist tendencies on the mart of Air France until convinced that the organization has gained su.ficient rxperience to assume the increased service in a safe and sutisfactory.ranner. The Government promotes the development of Air France's services through the ;ranting of subsidies when necesoary to meet deficits. (b) Non=scheduled air transport services are not financially supported in any way by ,he Government. These private operators must secure permits rrom the ;secretary General for Civil Aviation and are permitted to operate as long as their services are not in conflict with the best interests of Air France. In neat cases the permits are subject to cancellation on short notice. C (c) Private flying is virtually non-existent. Private owner type aircraft produced in limited quantity, are very expen- sive and do not compare favorably with American typos. The Aero Club de France, active before the war in promoting Amateur flying, has had difficulty in reviving its activities, This has been due largely to lack of dollars to purchase light tmerican Aircraft such as the Piper Cub. (d) Virtually the entire French aircraft industry has been nationalized' since the ^ar (except for a few privately owned concerns). The extent of government promotion of aircraft manufacture depends on existing budgetary limita- tions. Under the Communist Air :sinister, formerly in control of the industry, the impression r:as created that the industry was more an instrument of ;arty politics than a producer of aircraft. Since the elimination of Communist control of the Air Ltinistry early in 1.947, an attempt has been made to stimulate production and remove the political influences that have dogged the industry in the past. These Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617A004300030001-0 plans for increased production;, however, probably will be seriously handicapped by the current campaign to reduce expenditures throughout the government in the face of the existing financial crisis. (e) It is the policy of the French Government to promote aeronautical research through government controlled and financed institutions. The Service Technique de l'Aero- nautique of the Air, Ministry and the recently created Office National d'Etudos et de Rechcrches Aeronautiques (which enjoy a certain restricted autonomy) are the principal organizations engaged in aeronautical research. The extent of their activities depends on Government appropriations. i.'uch importance is attached to the development of aircraft prototypes, propulsion units, guided missiles and helicopters. (f) The government promotes aeronautical education to the extent possible under budgetary limitations. The Eeole Polytechnique, the Ecole Nationale Superieure d'Acronaut,4c que and the Ecole Cehtrale are state-supported and are the principal institutions giving instruction in aeronauti- cal engineering. (g) The government undertakes the training of civilian pilots, navigators and other technical personnel at flight and ground schools, but only in sufficient numbers to satisfy the needs of the chosen instrument (Air France). The French Air Force hat a large training establishment which provides a reservoir of personnel available for civilian employment upon conclusion of the period of military con- scription. The tovernment in the past has furthered advanced training through the employment of American and Canadian flight crews who have indoctrinated Frc:nch crews in operating methods as well as-in the use and maintenance of modern equipment. The government also recently authorized the training of French personnel by US technicians in airport management and traffic control techniques in order to provide qualified operators to take over airports and installations built by UZ military forces during the war and acquired under a US-French Service agreement. (h) The government, through its representatives abroad, actively promotes the export of French aeronautical eouiorent produced by its nationalized factories. In awns cases it is believed that provisions for export salon of aviation-equipment are included in trade treaties, The recent rule of tour Languedoc French commercial transports to the Polish Lot :.irline may be an example of this policy, In addition, the Government maintains and finances the Office Francais d'Exportation de L'ateriaux Acronautiques (OFF.Ma). The import of aeronautical equipment is at a standstill except for spares for equipment already purchas- ed.. This is due to a lack of foreign exchange. (i) Civil airport development is the joint responsibility of the Direction des'Bases of the Secretariat General for 2 RESTRICTED Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 RESTRICTED Civil Aviation and the Bureau des Ponta et Chaussees of the 1tinistry of Public 7orks and Transport. The extent of Airport development is limited to such provisions as are made in the Government budget for this purposs, (~) Navigation facilities are installed and operated by the Direction de is Navigation Aerionno of the Secretariat General for Civil Aviation, These activities depend on budgetary considerations and the availability of foreign exchange. (Most navigational aids and radio communication equipment 'mast be purchased abroad). 3. (a) French air transportation was nationalized as of September 1944 by an ordinance rhich legalized the transfer of Air France stock ownership to the.tate. Approximately 4% of the stock is still hold by foreign interests and approxi- mately 36% by French private interests; Thusn Air France is in effect a government-controlled enterprise. Private- ly owned air carriers arc permitted as long as their service offers no competition to Air France; but no government subsidy is available. Foreigners tray oval a minor interost in such concerns. Although no notable additions have been made to the list of the nationalized companies under the 'Socialist Governments there has been no indication of a reversal in the nationalization policy, (b) The government nationalized the greater part of the air- craft manufacturing industry after the liberation of Paris .in World War II. There remain but two outstanding excep- tions: the previously owned Ilispano-Suiza ahd Broguet Corporations. (e) There is only one national carrier. (d) Air transport agreements have been concluded with several countries. These have followed the general pattern estab- lished in the US-UK agreement at Bermuda which provides a code of trade practices to allow a fair and equal opportunity for both parties to develop their services, but also provides certain conditions to safeguard their res- spective interests. The French, hor:ever, are fearful of competition from the Dutch and Swedes whom they regard as "the world's principal transporters of other people's traffic". 'In consequence, the French have not yet con- cluded air transport arrangements with either country for through services beyond Paris. (e) (?) (g) Before the shortage of foreign exchange becams so acute, Air France was permitted to order 25 DC-3-type aircraft, 15 DC-40s and 13 Constellations because no comparable French types were available and it was desired that the company not be placed at a competitive disadvantage. (h) :'ee 3 (d). At a tripartite meeting of French, British and RESTRICTED Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 RESTRICT 0 I Americans in London "eptember 1947, the French and US posi- tions with respect to the multilateral air transport conference now in progress at Geneva were apparently reconciled. France is a member of the International Civil Aviation Organization (ICAO) and Air France is a member of the International Air Transport Association (IATA)e primarily as a commercial, economic and political asset. r. ' e it is intended that eventually the manufacturing industry will supply all the needs of civil air transports,' its present inability to do so is not impeding the domestic or international operations of Air France which has gone into the foreign market (principally US) to acquire the most modern aircraft and facilities. Air France is, nevertheless, .utilizing French aircraft production to the fulless extent The armed forces do not influence civil aS.r policy, although civil air transport is regarded as a reinforcement of the military air potential. Civil air transport is considered' possible. It has already taken delivery of ten twin=engine Languedoc Transports and has placed an order for thirty more. Though not dominated by the views of any foreign power in* the matter of air transportation, France has nevertheless shown considerable willingness to cooperate with the US. As a member of ICAO, France is adhere to decisions of that organization. 6.' Published fi vres 'concerning the combined French military and civil aviation budget (fr. 447,871,47.5,000), while.indicating that a large percentage of the total amount has been allocated to civil aviation (cormercial air operations, maintainance of airports and facilities, communications, civil aviation schools and a small sum for the encouragement of private flying clubs), represent the extent of legal authorization for contemplated programs rather than the actual funds appropriated for expen- diture, Funds for certain activities, furthermore, appear in the report to be dispersed in such.a way that it makes diffi- cult a realistic analysis. :In short, the budget probably exceeds the maximum financial expenditures possible under the: prevailing economic crisis. 7. ?rhile'thero is no vested interest capable of exerting influence on the government's air policy, officials of. the government-owned Air France naturally endeavor to prevail upon the Government to accept their views. These views carry considerable weight. 8. fee 2 (f).and (g). 9. see 2 (e) and 6. 10. Most aircraft manufacturing is nationalized andsubject to direct Government control and financing through the Budget. Private companies such as Preguet are working on new develop- ment, This company, for example, has long been interested in helicopters and at the moment is receiving Government assis- tance in the development of a large cargo prototype. ' RESTRICTED Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 RESTRICTED B. CIVIL AIR OIOA2.'IZATIONS 1. Nutional Assembly (Supreme Transport Council); :iinistry of Public ":orks and Transports (lecretary General for Civil Aviation); Ministry of Foreign Affairs; Ministry or National Education; Office Francais d'Lxportation de i:Tateriaux Aeronautiques (OFL1dn); Air liinistry,` National scembly -- shapes aviation policy through legislation, and implements that policy t',rough ap- proprations, Supreme Transport Council -- under legislative action of the National Assembly, in August 1947 the Supreme Transport Council was created with the requirement that 7ithin the following 12 months it present a plan for the rehabilitation of T'rance's transportation, with a view to reorganizing and co-ordinating these services. Ministry of Public .?orks and Transports -- is respon- sible through the Secretary General for Civil aviation for policy-making, the economic and safety control of civil air transport, both scheduled and non-scheduled private flying, and in cooperation with The Air Ministry, is responsible for aircraft procurement for Air France, The Ministry of Transport in also responsible for the construction of airports and the installation and opera- tion of connunication facilities. The Ministry of Foreign Affairs -- deals With all civil aviation questions involving relations with foreign countries. Z7:e Ministry of National '3ducatio -- controls the State schools offering aeronautical training, The Air 11inistrv -- is responsible for the aircraft manu- facturing.industry and directs research activities and aeronautical education. (Fee also 2 (e) and (f). The OFEMA -- is responsible for promotion of export sales of aeronautical equipment. 3. (a) The statute on civil aviation has not yet been passed by the Assembly. ilence,some observers question whether or not current government decisions will endure. These, however, arc in the minority. Former private manufacturers are prone to criticize the activities of nationalized factories and the theory of nationalization itself. RESTRICTED Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 (b) As all forms of public transportation are nationalized, there is no competition between them. (c) The principal political criticism comes from the Communist Party, which is apt to criticize almost any policy in'the form- ation of which they play no part. Some segments of the more conservative public, which are opposed to nationalization, have likewise criticized government policies with respect to the aircraft manufacturing industry. 4. Them is little duplication between these agencies. The principal overlapping of functions has occured on the question of transport aircraft procurement, where both the Secretariat General for Civil Aviation and the Air Ministry are concerned. lay conflicts we resolved between the Ministries concerned, or failing that, the question m ' be submitted to-the Council of Ministers for final decision. - 5. Due to the present .delicate political situation in Fiance, it is impossible to predict whethyr.a reorganization of Government egen- cies concerned with civil aviation is to be'espected. C. PHOCF~S AND RECUI.ATICKS 1. Air Routes (a) The Secretariat General for Civil Aviation awards air routes. (b) All major-air routes are awarded to Air France, Secondary air routes are awarded to private operators on much the same basis as the Civil Aeronautics Board determines route allocations in the United States. (c) Carriers are required to confonu to safety regulations which in the main are patterned on ICAO. recommendation. With respect to Air France, a certain quality of service is expected and on its major routes the government's policy has been to restrict volume of operations until it is satisfied that the company's organization is equipped to render a satisfactory and safe service, Private operators are not authorized for service which would give any appreciable competition to Air France, (d) Air France is required to operate, certain Empire and national prestige routes which are uneconomic and which the management of the company might well prefer to discontinue. This company operates all of the scheduled international services and has certain latitude in deciding the priorities to be assigrxed to new routes. Last August, for example, Air Fiance inaugurated an air service Paris-Frankfurt at the suggestion of American services in Fdurope although this'service would not normally be included in a list of high priority services. New services may be inaugurated by Air trance only tdth the cpproval of the Ministry of Transport. Since non-scheduled operators are entirely private in character, the government has no compelling interest in authorizing these services. RESTRICTED Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 (e) See (d) above. (f) All carriers may apply for any new route,. but the well-known policy of the gpvernment deters private operators from apply (h) ing for routes which would clearly be allocated to Air France. In general, competition is not permitted over identical routes, although due to the current shortage of trained ground person- nel and facilities temporary authorizations have been granted to private operators to parallel Air France services, particu- larly between continental France and North Africa. Air France is the national instrument, hence the revocation of this authorization would require a fundamental change in policy and legislations The authorization for private carriers. is normally of short duration--in many instances subject to revo- cation on one months notice. 2. Rates (a) Most services being international, rates are fixed by the gov- ernment with due regard for minima established by the Interna- tional Air Transport Association. (b) Rates are based largely on economic and competitive considera- tions. 3. Safety (a) Safety rules and regulations are promulgated by a Secretariat General for Civil Aviation. In the main, these are patterned after ICAO recommendations, although specific regulations maa be promulgated as required to cover exceptional situations. (b) In general, regulations appear adequate. Some criticism has been voiced on the question of enforcement. This has not been due to any lack of good will on the part of the French, but more to'a lack of trained personnel and the lack of experience with regulations, based to a considerable extent on United States experience acquired in recent years when the French, due to the war, were virtually out of touch with modem air transport safety problems. Safety regulations are impartially enforced. Inspection (a) Standards for the inspection of equipment and personnel, for- merly in accordance with Commission Internationale de Naviga- tion Aerienne requirements. now conform to.tbose of ICAO in all instances where the former have been replaced. Accident investigations are conducted under the direction of the Secre- tariat General and, although not so formal. as those conducted by CAB in the United States, are approached with the sane attitude of impartiality. The results, however, are not germs erally published. On occasion it has been suspected that -7- Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617A004300030001-0 efforts were made to quiet further discussion when it was indi- cated that the pilot ties clearly at fault and it was feared that too much public discussion might give rise to political difficulties. Nevertheless, it should be emphasized that even in these instances high officials have made no effort to place the blame elsewhere. (b) Since most of these regulations are modeled on ICAO recommenda- tions, they are presumed to be adequate. They are enforced by the Secretariat General with all the vigor which a reduced budget and small organization permit. Airrort and Cocatione (a) Airport traffic control regulations are patterned on those recommended by ICAO. Large airports such as Orly and La Bourget are restricted in so far as possible to transport aircraft. (b) The Military service operates military airports and the Secre- tariat General to civil Aviation operates all civilian air- ports (except small private fields). (c) ICAO procedures are followed for comwunicationa. (d) The Secretariat General operates the communication systeh. 6. orts and Forms Air France is required to submit all of the usual operating and financial statistics such as required by CAB In the United States. .Other reports required are principally those prescribed by ICAO.. French-civil aviation ceased to exist during the war and the gov- ernment organization had to be almost entirely reconstituted after the liberation of France. As yet, the formal statute on civil aviation has not been passed. Therefore, technical requirements have been limited largely to those prescribed by ICAO. All reports on civil aviation are submitted to the Secretariat General where. they an coordinated and utilized in the shaping of new policies, the modification of. existing regulations, or additions thereto. 1. French civil aviation has made a vigorous attempt to reestablish its pre-war international position,. In the early post-war stages it was handicapped by the direction of a Communist Air Minister whose staff in the main was selected more for party allegiance than professional ability. Since its trensfer to the Ministry of Public Works and Transport.. Government civil aviation has made considerable progress toward achieving its immediate goal. To this end several missions and various important individuals have visited the United States and the United Kingdom, Active participation in ICAO is an established French policy and sincere efforts are made to follow the. recommendations of that organization. - Q - Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617A004300030001-0 C The Secretariat General :'ss honestly administered but the handicaps of an insufficient budge'.; and the lack of adequate trained person- nel have made it difficu;.t for the Secretariat to discharge all of its obligations in accordance with the high standards which the United States La aecastciaed to expect. In view of the shortage of equipment, funds and personnel, the government does a creditable job although on occasion American carriers, accustomed to CAA stand- ards, have criticized than results. Even the critics of the Secre- tariat General have not, however, impeached the good intentions or sincerity of effort of f.'u3t organization. 2. The greatest single fect)r impeding the development of French civil aviation at this time is the shortage of dollars, a circumstance over which the country has no control. Another important source of weakness is a shortage of skilled personnel adequately trained in current techniques. Th:'., latter is being overcome by sending groups abroad for training, imp::oving the training techniques in France, and studying new develojilents, regulations, procedures, etc. The manufacturing industry has long been known to be week with respect to the productina of aircraft engines. While France is attempting td remedy th:,a deficiency, steps have been taken to pur- chase American engines ,nrA arrangements have been made to manufac- ture the British Rolls .6,3yce "Nene? jet engine under license. General criticism of the industry has been on the basis 'of inade- quacy of production and inadequate promotion of the development of new types. Most of then: critics are inclined to take the position that all these ills cou't,d be cured by denationalization and the return'of factories to jrivate ownership. Air France recommenced operations after the war, on Janiuary 1, 1946. Until comparatively recent months that company?e aircraft mainte= nan.ce left much to be desired, More recently, however, the intro- duction of new personnel. into the organization and the tightening up of maintenance procedures in consultation with American factory representatives has brc!ught about a. substantial iurprovement to the point where it is 'believed to be entirely compatible with the requirements of safe airline operation. Financially, the-co pacy has made remarkable protxass considering the recent increases in wages paid plus the fact that the company is required to operate many route miles of uneconomic services to the colonies and depend- encies. Factors favorable to Frcnch commercial aviation'areI a long tradi- tion as a pioneer in the field .ond as a leading air power prior to World War II; considerable pre-war experience in long range inter- national aviation; an aircraft industry,wbich in th` past.has demon- strated its competency under conditions providing competitive incen- tive; a heavy investment in colonial and dependent areas, making the maintenance of rapid communications both politically and economic- ally desirable; and lastly, France's geographical position. kIithin three hours flight of Paris are twenty-three European cities. having a population exceeding 500,000. A large traffic potential is thus apparent. Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617A004300030001-0 V 0 CIVIL AIR POLICY FRANCE SUPRE4.1E TRAISFORTATION ADVISORY BOARD repares Plans and Al,&Ises the Minister of Public Varks and Transports MINISTIi'.?OF PUBLIC WORKS AND TRANSPORT Constructs Airfields: - Installs Aviation'Ca munication Facilities and Navigational Aids. Procures Aircraft for AIR FRANCE; SECRETARIAT OENF,RAL FOR CIVIL. AVIATION Operates Civil Air Fields Avards Air Routes Issues and Enforces Safety Investigates Aeoidr '1a Controls Air ^.:Sfio at civil Air- _ fields Isats^s Licenses to Pilots and C? - tificatea 'o? Riftrthiness for tjQ. Operates Aviataun Cahsunications? and Navigational Aids Controls-tine Nationalized Aircraft Manufacturing Industry. Directs Aviation Research and Education. OTHER FORMS OF 'T'RArMPORTATION Goverment- Owned All- Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617A004300030001-0 P Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 RESTRICTED Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 1. The basic policy of the Netherlands is to foster civil aviation as a national industry important to the overall economy of the country. This is in keeping with the economic tradition of the Netherlands as a leader in world transportation. Being a country of small area, the Netherlands considers civil aviation as an important contributor to national prestige and the Government has shown willingness to under- write any deficits which arise in operational costs and is prepared to relegate to a secondary position the question of profits. In the present European currency crisis, civil aviation acquires a greater importance through its production of foreign exchange. A basic policy for some time to come will be the limitation of commercial air operations to a single "chosen instrument" (Kai-Royal Dutch Airlines). In the field of international civil air policy the Dutch strongly support the most liberal international policy. Civil aviation is not used as an instru- ment of national policy to obtain other political objectives. The Government has the controlling steel, interest in KI2.. and is in a posi- tion to determine long range policy; however, in practice, the present Managing Director of the XW actually has a dominant voice in the de- termination of Netherlands civil air policy. In all other ways the company is operated as a private enterprise. 2. (a) The Government promotes scheduled air transport for purposes of national policy through the provision of capital investment funds which amount to more than 95% of the corporation's outstanding stock. (Pending legislation for a reorganization of the company allows for the Government's holding 515 of capital stock.) Be- cause KW, is a source of foreign exchange, it i2 accorded a privi- leged position by the Government in questions of allocation of materials and foreign exchange. (b) _All of important non-rchedcled air transport is conducted by KW. The Government has licensed one other carrier for non-scheduled .operations, but this activity is presently limited to local air taxi service in one-engined aircraft. (c) Due to the limitations of local aircraft manufacture and currency for the purchaso of foreign aircraft, the Goverment cannot give as much assistance as it could like to individ.::ls interested in private flying. It does promote the manufacture of gliders for private. flying. (d) The Government gives limited support to aircraft manufacture through subsidies and the allocation of raw materials and foreign exchange in an attempt to recreate a manufacturing industry; all attempts are limited because the greatest need -- transport aircraft -- are not likely to be produced locally for many years, consequently American aircraft will be relied upon to fulfill KU!, needs. (e) The Government promoter research through subsidies and loans to Government-supported research laboratories with a view to bene- fiting the manufacturing inc istry. (f) The Government includes acrona-itical engineering caarses in its curriculum at the :tote University of Delft to develop engineers; apprcaim:ately 100 student:: are pursuing these _tudies. Declassified and Approved For Release 2013/04/29: CIA-RDP78-01617AO04300030001-0 (g) The Government provides for the training, of'transport pilots through an Government-opcr::ted school pith an enrollrnter the air trap-port field. The majority opiniori approves the present policy because of its success in the past and the economic and operationtl.diffi- culties to be encountered in establi-hing new air carriers. 2.; The strength of the Netherlands' civil aviation lies in the?transporta- tion and air-mindedne's of the country, its excellent leadership and good operating record, its strong government backing, its liberal, progressive policies, and its posses:-ion of a good international airport (Schiphol) occupying a central locr.tion in Western Europe. The ::?eakness of the' Netherland:, civil aviation program is due to lack of foreign exchange, aircraft manufacturing facilities and building materials; conditions for RESTRICTED Declassified and Approved For Release 2013/04/29: CIA-RDP78-01617AO04300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 C.1 0 CIVIL AIit'I,.OLICX . NETHERLANDS MIRISTRY OF TRAP7SFORT AND POUTER I_ TUREE DEPARTh UI!S HAI.DLINf o'rwz FORi?:S of TRniSIP RIJKtUGATVAARTDIEI+ST (N "fh' ~3t,APDJ.S AFROI AL'fICAi. SERVICE,' Director General r ROYAL DU C i AlIRL?tcES {Goverxtont-Cmtrolled) Tr" CHNICAI? DIVISION Airfield Construction i Licenses - ]:imorthiness O2X icates MAIL & POLICY DIVISION Political. Matters Ecoramlo - Jhdioial Ittaas Intorna+lonal Conferences Radio dsYgti` ".~ Traffic Control Al '111ISTRATIVE DNISION Records - Personnel AoooUntiM Declassified and Approved For Release 2013/04/29: CIA-RDP78-01617A004300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 SECRET SECRET SECRET - A. CIVIL AIR PCiLICIhS 1. music policy of the as rc;;ards civil aviation is to create a lar,;e anc oificicnt air trans )ort s, ste..:, v.ihic!a .All not only au- able rn)ic: co..,aanication m.ton;; :idol,; seoaruLec sections of the Joviet ?.nion one titrt satellite countries, but ai 11 also act as a reser:'u or; unization r ntc? to uu~mont Joviet .aili Lar, air Soviet basic air iolicy, 1urtnenaore, sacrifices tae oevelop:aont of vo rlc-v,iLe air transport operations to t .w i:n:aodi ate military and civil :.Pecs -:.i chin the J:;J3. ueter.,iinaLion of iolicy and con-Acte control of all civil aviation are vested in the ;;overr4ont. vovornment control is eii'ectec turou it turec i:w oendont or; zatione, Baca controllin; so,.,.e as,ect of ooviet nun-military avia- tiott. i::eso or-,anizaLicns arc) Joravlcniyo :razncuuskovo Vuscus.),-.ovo : loca (;i ivr'--:.lain Ac:aini- stration of tao Civil rieet) uncor Lac :inistcr of Ar.aed :'orces Cjntrai oovict Council of the flsoaviakhiu (..ociet,i for the :'ro.uotiozi of Aviaticn anc ,C:aisLr,f) Administration of the :lev Sev:aor-)ut (::pin ;Cninistration of the .:ortnera .,ea 3oatu) to use of Joviet civil !tvi?.'tion as an iastrur.e::t of national ')Jlic is evicetlt in .:.any ways. inc tjnical oxu..71o is irovidod by the post::rir civil air a..rae;aonts t'utwuen the Jsi,.i and the aoviet satellite countries. (A ciscutsion of thasu a?re3.nents is con- tained in the reply to question ;..3.(h) of this report.) 2. Tie ouviet government controls all aspects of civil aviation. (a) The ;overm:tent plans ano controls tae ccvelo?:wont zinc expansion of scneeulec air transport. the tourtn Five-Year Plan calls for 115.000 kiloc.etcrs (105,900 statute idles) of air routes by 1950 (an increase of aporoxirtately 25; over 1940). the ;cost i..port.uit lines are to be oquip )ed for year-round and night flin;,. Sixtdon airiores -till b.t reconstructed for use cy heavy hin-speee planes. Ttenty air stations are to be built or rebuilt. the .",..ief'of the Jivil Air r'leet nas announced that an atto:not will be .;Lac., to increase oa:sen;cranc iroiJnt ' traffic v.-i_hin the next tv.o or three years to oi_;ht to ten Limas the ?)rev:ar fi;urc. it is estimated that in 1S'40 civil aviation mac a turnover oorfor.:raaoe of 34.000,000 ton-kiloutotors (21, 1W.000 ton .Alas), carried 49,000 .aetric tons of froi;;ht 82K and 309,000 ;)asson.;aro. his would inc.icate an annual .;oai for Ate ne!ir future of aorc than 300,000,000 ton- kilo.:.dters (13c,oo0,000 ton .ail?ts). n:,urly 500,000 tons of frci,ut am bar;,;'age, and anroxisatcly 3,000,000 oassen1ers. SECRET Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 SECRET 0 (b) Control of non-scheduled air trans,ort is maintuined by trio ;overn:aont ttirou,;h all throe civil aviation or?anizutions. Tim s:aall aircraft units of Lao various ninistrios, v:uich perform non-scucCuled orerati-ons, are detailed to those var- ious ministries from the JCVF and the Osoaviakni:n and aro considered to bu actually a part of their parent ori;anizutions. Tao majority of the air ooorations undertaken by the _,ortriern Sea Route are probably non-scheduled in character. ?(c) Private flying, as it is known in the United States, is non- existent in the J;3a. There is hotovor, a system oC flying clubs controlled by the Jsoaviakhiia, which night be compared with the ;ivilian ?ilot 'iraininc Pro;,ra:n of the United otates. (c) All aircraft manufacturing in the Soviet Union is controlled by the ::inistr, of Aviation Industry. A certain a:aount of supervisory control of tiro aircraft industry is also maintain cd by the ...inistr,; of Ar:aod i'orces, State Planning Conuaission, and Acade::4? of Jciencos, and the ...ain Administration of the Civil jr riFleet. the dcuree and score of the control exert-:d uy these ageuci:a, iioiacver, is unknown. Inc industry, which hau expanded to the aaximuia possible dur;roe during C;orld ;,ar 11, has gone tiirougn a period of readjustuant. this mignt be con- sidarec as govornmont reatr'tint on aircraft manui'acturing. The incustr; has erobabl,- reduced its Production quantitatively and is now operatin3 at neacoti:ne levels. Tao cesi;n and procuc- tion of large and medium size air transports is progressing. (o) An extonsivo research pro;,rarn is quite evidently in progress. Large numbers of ;;errnan scientisLs and technicians, together with +;ersrur rescarcri facilities, nave been integrated in this ?ro;ra:a. T:e pro,;ra:n is dir-cted by the leading :soviet scient- ists. Shore is evidence of emphasis on jet and rocket oro- pulsion. (Eight cifferont types of jet aircraft have been identified.) Principal control of all basic scientific research in the Soviet Union resLe with the 1caderr./ of Sciences. This organization is responsible for formulating the Five-Y;ar plan asit affects scientific resoarch. (In addition, the :'min administration of the Civil Air fleet is s:)ccifically char--ed with the devnlop.acnt of all non-nilitary aircraft, and has its own aeronautical research instituto.) Tae Acace:ay of ~cicnoos is also rasoonoible for determining tad relative priority of all scientific development. A curisideruble amount of this rescare i actually is carried out by Lilo research in- stitutas of the .:inistry of Aircraft industry.' Aeronautical r.iseare:r is also carried out by institutes subordinate to the :_inistry of Armed rbrces. Aeronautical enginccrin? ed,icatio:i is procably controlled by the ::inistry of ..izher .,ducation. The training of pilots and technicians for the GVF is under- taken in schools of the Civil Air Fleet. The following list snows the location of Civil Air Floct Schools in 1944. It is not knovin t et:ier all those schools are now in operation; there has presuuably been a reduction In the training program with a consequent cleriination of' some of t.iose centres. SECRET- Location of Civil Air Al:aa '. L:.a S ~C;1 habarovsk llz izak Frunze Gorki lssyk-::ul Syr-liarinskaya SECRET. :'uoirno C SC OVt ..:endow-. 'us ?ino :ovosibirsk Pe nza Sterlita..tak Sverdlovsk ras .kent Trainin., of forci?ners is liStited to tuose of 77rovon rolitical reliability" fro.;, tae ,oviet satellite countries.. (h) Control of all ox?ort and i.,:pori, trace is exercised by the Soviet ?overnsent turou,;n the ;inistry of eoreii;n Traco, iriricn ordinates this activity with tine ;tuts Planning Cotntzission and tae .inistr3 of Ioroi;;n Affairs. L.aports arc of two typess (1) standard electronic equi?rraont for use in aerial navigation is required in quantity and obtainod under trade' treaties; and (2) auiencec :aodols of aircraft and po;:er units are required in li:aiL.d quantity for exouriatontal 7ur-)osess they are obtained uncor inoivioual contracts. (:Sri'tisa jet -rupelled aircraft and 7o::ar. units have been ?rurchasod and 96 manufacturers nave been a ,roached thouch r:itaout success.) ;xport of aeronautical equi naent is v;r,r li:aited. Transport aircraft and warp carts ha .'o been authorized for ex)ort only to trio dopeucent satellite cou:_trioc and only in ::e,:;li,;iblo qunntiLies. The ,;ovorr.::ient controls and ro_,oL es the doveloo:aent of all airports and air navi.;utio::nl facilities. An a::tbitious iro; rata of.air:)ort construetio., includ.iac tao installation of navi;a- tional aids, is contained in the current Soviet ive-Year Plan. (see sub-para.,rn?xr (a).) '.lost of the airports of the Soviet Union are controller: by t:te .nilit:tr? forces; however, there arc airfields of a purely non-:ailitary nature vrhica are con- trolled by the Civil Air 4'leet, Osoaviakhi.a, and the iortaern Sea :acute. Air navi-ation facilities are boliev>-r;r:Firoly C^r;1 r1 il9.rc3 L:?*: c, '?;-r; ov4rc.ii i:t'spsiuu t.-as to demonstrate ijonie. )]'r^2?z Ctrl I'Coj?a :'lore :JOizod iron '01; Jutah and 13,:1Cir.nsu .,,,r cortre.ct 1,ich neutral S..".teerland, t11,: 1u1I7 :1:ac !;C-.i's r:ns. DC-3"s were kept ".breast of the 1::Jcat C I,t ii i)cug l_:.s ft otory changes throughout the Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617A004300030001-0 (h) For Lufthansa and the International Air Transport Associae tion and Lufthansa?s operations of foreign airlines, see A. 3 (a). Germany regulated Ito air traffic and commercial relations with other countries throve separate treaties. These so-palled Aix Traffic Conventions wore all prectie cally identical, end generally followed the C.I.N.A. Con. vention. Although Germany, like the United States, was never a party to that convention, these separate treaties were often described as preliminary, end.were provided with cancellation clauses. , Such separate treaties were concluded by Germany with Staitzerland(September 11+, 1920), Denmark (April 25, 1922), The Netherlands (July 2''4, 1922) Norwzor (January 23, 1925)0 Austria (u y.19, 1935), Sweden May 29, 1925), arenas t 22, 1920), Belgizn (bMay 29, 192 1]),, Czechoslovakia (January 22, 19" I (Map' 20, 1927), Great-Britain (June 29, 1927). S o epa1,a (December 9,.1927), Poland (August 23, 19 ), United States (May 31?, 1932) Hungary (January 13, 19331 Yugoslavia (September 3n 193 ), Greece (AOvember 9, 193 $. Portugal (Afarch 11, 1937). and the Union of South Africa (March 17, 1937)9 1 Of the various international conventicas plated by Germany, the Warsaw Convention of October 12, 1929 is the most im- portant. On January 12, 1937, the Second Convention of May 29, 1935 (me Bose Convention) regarding the Unifica- tion of Rules Relating to the Precautionary Attachment of Aircraft cams into force,-together with the Act regarding the Inadmissibility of the Precautionary Attachment of Aircraft. The other Rome Convention, relating to Damages Germany. it, The administration of both,civil and military aviation by, one ministry indicates how completely they were allied in the German point of view. Germen civil aviation,, strictly speaking, was not influenced by military aviation; it was merely another aspect. The lufthensa was a secondary Air Transport Service for.the Luftwaffe; the air sport movement was .pre-military training for the Luftwaffe; ib the absence of personal flying or coaLoetitive air transport, the aircraft industry had no recourse but to the Luftwaffe. What will be said in this paragraph about civil aviation as a re- inforcement of the military potential is not confined to Germany alome. The British Cadmon report of 1939 states that nthe.prob.- lem of the air is one - two sides of a single coin : and the military aspect of aviation cannot fundamontally be separated from the civil aspect". The civil aviation of any-country is an auxiliary of the military in that; (1)'it maintains a system of high speed communication for government and industry, An both peace and war; (2) it justifies the existence of a system of lighted and radio equipped civil'airryaye; and (3) it creates an organization of highly trained personnel. caused by Aircraft to Third Parties on the Sufa: e, was not ratified by Germts?yy. The International Sanitary Convention for Aerial, Navigation signed April 12, 1933 was in force in -31@ ? UNCLaSSIfiED ? Declassified and Approved For Release 2013/04/29: CIA-RDP78-01617A004300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 who can be drawn upon for military use, The relationship be- tween the peace time maintenance of the aircraft industry and civil aviation is, of course, a fundamental one. It is' eluded herd because German civil aviation'after. 1933-was not an important customer of the aircraft industry, although perhaps its best advertisement, Since the volume of transport operation deterfuinsa the extent of the contribution civil aviation can make in any of those respects, it is doubtful if German civil aviation was regarded by the Nazis themselves primarily as a successful civilian counterpart ?of the Luf tvafFe. Part of the answer is, probably, that Germany valued its civil aviation as an immediate political activity of great potential, commercial value. German students of air transport repeated the classic statement of the 1930 League of Nations:rspart that state participation in Etrcpean civil aviation is an act of politics, rather than of ec n a ice. Indeed, Walter Fahl says that .&U trans- portation is an act of politics, but that air tranaporto more than any other form, is an act of high politics; The phraao,'high pol- itico, had connotations for the Nazi mind that require definition. It is, in essence, the politics that Clausewitz meant when he said war is the continuation of politics by other moans. The Nami con- - tribution was to stress,the converses "peace is the continuation of war by. other means". German aviation certainly was not economic in what the Fazis called the "narrow" meaning of returning dividends on capital in-. vested. There is no doubt, however, that the ultimate aims of Gorman expansion in South America, for example, were broadly eeon- omic,.with the purposes of attaining markets and rav'materiale. This trade campaign was also a political enterprise. For W.Burdcn days, in his "Struffle for Airttays in Latin America", "under the Nazi regime, foreign trade became so regimented as to constitute for all practical purposes a part of. government activity. The full force of the German government was consequently thrown behind the propaganda efforts designed to help the trade program and increase the prestige of the P.eich". . 5. German+a. civil aviation was under the nominal, supervision of the Council of Ambassadors from 1919 to 1926. Froa,the Paris conven- tion of that date until Germar.:.ent of that Province. The subsidy will probably be discon- tinued after this fiscal year,' . .. a The Canadian lost Office Department, cdntrary~ to American prac- tice, has succeeded to a lar-e extent in freein itself from bein', used as a vehicle for subsidy naynent. Last year the Post Office entered into contracts with the carriers by which it agreed to pay one and one-half mills per pound mile, on a de- creasin;; yearly scale, for the transportation of mAl. RESTRIC`S Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 Although this rate is some four or five times higher than that paid in the United Mates for similar services, it is never- theless not regarded as a subsidy because postal revenues ex- ceed the payments. However, the Post Office has been forced, in a number of instances, to revert to the old system of pay- ments per mile for a guaranteed minimum. One or two of the routes of Maritime Central Airways, and at least one route operated by Canadian Pacific, are paid for at the rate of 50? per mile flown with a guaranteed minimum. The two large Cana- dian air carriers are in a very favorable position, however, in that they each have parent companies who absorb their losses. In the case of Trans Canada Air Lines the operating losses are made good by the Canadian Government, while Canadian Pacific Railways, by means of unsecured loans to Canadian Pacific Air Lines, absorbs any loss its subsidiary may have. The only-subsidization of aircraft manufacturers which occurs in Canada is discussed under paragraph 2 (d). The extent to which the Canadian Government subsidizes airport construction is discussed in paragraph 2 (i). Such subsidization of education and training as is done in Can- ada was discussed under paragraph 2 (c) and (g). (f) The development of transport aircraft in Canada must be divided into two categories, namely, large transports and small, or "bush" transports. Canadian Government policy, and the reasons therefor, is outlined in paragraph 2 (d). (g) Until mid-1946 all large transports used in Canada were imoorted directly from the United States. This statement should be quali- fied with the observation that all DC-31s currently in operation in Canada were war surplus C-47 aircraft which were converted in Canadian plants, and mostly by Canadair of Montreal. :aedixim sized and small transport types, which are used largely ,in bush flying, are generally of Canadian manufacture, although some.American types are being used. Of the Canadian product, most are Norseman, although recently both De i;avilland and Fairchild have produced their own small transports, namely, the Seaver (which is just now coming into production and is a 4-5 place aircraft), and the 'r'usk,-, which is a some:-.hat larger and morq versatile ^achine, although considered to be under-powered. There are some converted .vro-'.nsons and a fern Do !;avilland Dragon Hapides in service. The Canadian Government has no par- ticular policy with regard to the use of foreign aircraft ex- cept that since the war ended its general policy has been to prohibit the importation of second hand aircraft in excess of 6,000'lbs. The current shortage of dollars, of course, acts as a deterrent but the tariff, generally speaking, does not. (h) Although Canada has bilateral air transport agreements with the United States,, the United Kingdom, Australia, New Zealand, Ire- land, :dewfoundland,,Portugal and Sweden, only American, British and Australian air transport companies presently operate into the, Dominion. The air carriers operating services into Canada -7- RESTRICTED are as follows: Northeast Airlines, Colonial Airlines, Amer- ican Airlines, Northwest Airlines, '.estern Airlines, United Airlines, Pan American Airways, British Overseas Airways and Australian National Airways, which is soon to become British Commonwealth Pacific Airlines. All Canadian air transport agreements are bilateral in nature and cover four-Freedoms operations only. Canadian Government officials have indicated privately that, pending the outcome of the Geneva Conference on a multilateral air transport agree- ment, Canada will conclude a limited number of Fifth Freedom arrangements, but only where this is to her advantage. Canada is not interested in exchanging Fifth Freedom rights on a multi- lateral basis. Canada is the headquarters of the International Civil Aviation Organisation and the International Air Transport Association, both of which have their :-lain offices in Montreal. The Domin- ion Government has ratified the Chicago Air 6;avirati.on Conven- tion. It is also a member of the loosely dra,;r- :irpire Air Conference ::which, in general, exchanzos views on 3mpire civil air problems but is without power of action. Canadian civil air policy is influenced,.to some extent, by military air requirements. Not only is civil air transportation of vital im- portance to any Canadian wartime economy, but the civil -establish- ment is capable of providing a considerable number of trained person- nel to meet wartime demands. That Trans-Canada Air Lines and the Royal Canadian Air Force should both order the same general type of four engine transport is an indication of the integration of civil and military air policy. The fact, also, that the ground establish- ments and facilities of Trans-Canada Air Lines are in many instances former, or still existing, R.C.A.F. stations is yet another indica- tion of this fact. Naturally, the aircraft maintenance establish- ments of the civil air carriers are available to the R.C.A.F. in time of national emergency. The military establishment does not, in a precise definition of the term, control civil aviation. The Canadian Government does not oper- ate in that fashion, but all matters of national policy are deter- mined by the Cabinet in the light of the over-all existing facilities and requirements of the nation. It might be said that Canada has always attempted to ;work out her own civil air policies, but nevertheless these have been influenced considerably by the diverse developments }which have taken Place in the United States and In the United Kingdom: in many respects, the example and success of the former has had a trreater' influence on Canadian developments than that of the latter. This is no more than natural in viers of the proximity of Canada and the United States and the fact that so many of her present air transport operators re- ceived much of their early,training in the United States. The re- lationships which exist between United States and Canadian operators have always been close and cordial. Again, this is no more than natural in view of the many trans-border routes which have been in operation for the past ten years or more. British carriers, of course, have not had the same advantage as their American colleagues. Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617A004300030001-0 The British have never understood the Canadian.civil aviation prob- lem, whereas the Americans have had similar experiences and problems and therefore can meet Canadian requirements. In addition, there has been very close and effective liaison between the various Government departments handling aviation problems in the United States and in Canada. As a matter of fact, the Canadian Air Transport Board, which was created in 191;4, was patterned very closely after our Civil Aeronautics Board. The Civil Aviation Branch of the Department of Transport is a small counterpart of our Civil Aeronautics Administration. Despite these similarities, and despite the close relationships which exist in almost all fields, Canada has evolved her own methods of meeting her civil aviation problems. Ac- tually, Canada cannot at present support more than one transconti- nental operator and, in view of factors already cited, it is not surprising that this happens to be a Government owned chosen instru- ment. Similar instruments already exist in Canada's rail and ocean transport, so that air transportation conforms to a general pattern. Government ownership of transport facilities existed in Canada long before it was seriously contemplated in the Mother country. `f:hile it does represent a degree of socialization it. is only moderately so, and was the most expeditious method of accomplishing a desired result. To state it briefly, Canada's civil air policies have, in recent years,, followed a "middle of the road" course between the complete free enterprise which exists in the United States and the state socialism which presently exists in the United Kingdom. In most civil aviation conferences which have taken place since 1914 Canada has striven to reconcile the conflicting views which have generally existed between the United States and the United riingdo:n. 6. The Canadian National income for 19h6 was approximately 9.5 billion dollars. The national budget for the fiscal year ending 31.:tarch 1948, is approximately $42,110,000,000. The total appropriation for nation- al defense in Canada for the current year is about '1240,000,000, with the Air Force being allotted about $60,000,000 of that sum. The total appropriation for civil aviation development for the current fiscal year is ~16,280,500. During 1946, scheduled air transport operators in Canada spent $21,171,229. This was F?774,159 more than their income. The entire loss was attributed to Trans-Canada Air Lines and was absorbed by the Canadian Government. Mail revenue for scheduled airline oper- ators was ;;5,262,101, although this is not regarded as a subsidy but rather in the nature of payment for services rendered. . 0 Statistical information on non-scheduled carriers is only frag- mentary. However, according to the published. statistics, non- scheduled operators had expenditures totalling $1,305,35h, which was ;;5,115 more than their receipts. Reported mail payments to non- scheduled carriers amounted to only 4,',5,759? The Canadian Government nays a nominal subsidy to the Royal Cana- dian Flying Clubs association, which amounted to only $5,000 this year. Details as to expenditures of the Flying Club are not avail- able. Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 0 So far as is known, there are no Government expenditures for air- craft manufacturing other than orders placed with Canadair and Avro. The DC-13-1's, 2L of which are being purchased by the R.C.A.F., are contracted for at the fixed price of :54.0,003 each. T.C.A,'s order of twenty DC-Lr.-2's are contracted for at ;1660,000 each. There is no information that the Canadian Government has made any advances to Avro in connection with its order for turbo- jet fighter aircraft for the R.C.A.F., although it probably has done so. Neither i's there any information as to the expenditures of the several aircraft companies themselves, since they have never published any statements. The Civil Aviation Branch of the Canadian Government makes a grant of ?25,300 to the National Research Council for civil aviation re- search. The only other grant, aside from that given the Flying Clubs and Air Cadet League, is a small sum to the University of Manitoba for an unspecified purpose, oh ich may be, however, to fos- ter aeronautical engineering education. The Canadian Government makes a grant of *25,000 to the Air Cadet League of Canada. Actual annual expenditures of the League are not known. As pointed out in paragraph 2 (c) and (g) the League under- took a program of flight training for a selected group of not more than 100 cadets during the last year. This program is to be ex- panded as time goes on. The budget estimates for the current fiscal year covering the con- struction, maintenance and operation of Department of Transport air- ports total 0,733,876, or approximately half of the entire appro- priation for civil aviation purposes. There is no information as to how much may have been spent by municipalities or private enter- prises, such as Canadian Pacific Air Lines, in the construction and -maintenance of airports other than those owned by the Department of Transport. The Civil aviation appropriation for air navigation facilities, that is, the Meteorological and Radio Divisions of the Department of Transport, amounted to C1,227,910 and '3,1L1,626 respectively. There is no information as to private expenditures, if any, for air navi- gation facilities. 7. Since Trans-Canada Air Lines is Government owned and controlled, al- though operated as a private company, it exerts considerable influ- ence on Canadian civil air policy. The Minister in charge of Civil Aviation regards Trans-Canada Air Lines as "his baby." He leans heavily for advice on the President of Trans-Canada Air Lines in all matters of domestic and foreign civil air policy. For example, the Air Line can and does make its desires known to the Air Transport -Board, the Department of Transport, the Post Office and external Af- fairs and very often gets its way in such.cases, but only insofar as such desires do not conflict with overall Government policy or contravene the air regulations. An instance of such pressure came to light last year when American Airlines had a charter to transport the pea crop from Toronto. T.C.A., if it had had the spare aircraft, could have prevented American from being given a charter permit by the Air Transport Board, in order to carry the crop itself. There are other examples ;:here the wishes of the Canadian carrier have 10 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 ..~QIRIcTIED been taken into consideration ;There Canadian originated traffic was involved. In the broad sense of the term, there is no aeronautical education in Canada. There are, of course, a number of exceptions. Some of the universities give aviation courses, but so far as is known none of them grant degrees in this field. Reference has already been made to the activities of the Royal Canadian Flying Clubs Associa- tion and the Air Cadet League of Canada. The annual grant of t5,000 to the Association, which now has very close to fifty member clubs, can hardly be called a subsidy. The enrollment in the As- sociation is made up entirely of private citizens, most of whom en- gage in flying activities for purposes of sport. , The Air Cadet League has a semi-official status in that it is spon- sored by the Royal Canadian Air Force and most instruction is pro- vided by R.C.A.F. officers. The peacetime membership of the League is confined to 15,000 Individuals, all of whom are young boys of .high school age. Their league activities are extra-curricular and do not form a part of the high school course. The annual grant of 1,25,000 a year may be considered a subsidy, as well as the fact that instruction is provided free of charge by R.C.A.F, officers. The League is a movement very similar to the Boy Scouts, complete with uniforms and summer camps. The greatest stress so far has been in ground school activity and nre-flight training. The League has just embarked on a program of flight braining which it hopes to ex- pand in the future. As already indicated, and except for odd courses, there is little or no aeronautical engineering education in Canadian colleges and universities. 9. The Canadian Covern*nent and private industry both operate aeronauti- cal research and development facilities. In the former case, the National Research Council of Canada is the aria of the Canadian Gov- ernment engaged in this type of activity. According to the.29th annual report for the fiscal year 1945-46, the National Research Council expended 5,1,582,111.58 in research activities, of which apt proximately $1,200,000 was supplied to the Council by Parliamentaiy appropriation.' However, of the total expenditure the amount at- tributable to the Aeronautical Research Committee was only "38,250.23. During the past year the Council engaged in wind tunnel tests, ex- perimented in aero dynamics, balancing of aircraft control, did a 'large amount of work on the aero-dynamic design of a tail-less glider, and conducted a variety of tests for the R.C.A.F., and other Government departments and industry on such things as rain, snow and wind gauges, tests on axial flow compressor blade sections and tests on new aircraft of Canadian design. Tests were also made on aircraft and allied instruments, for wing flutter and for electro- thermo de-ici,ng'of aircraft, wings and propellers. The Council also did some experimental and testing work on radio aids to air naviga- tion, but there is no indication as to the cost of this activity. In the private industry field both Canadair and Avro manufacturing plants have aeronautical research facilities of their'own. The lat- ter is said to have imported quite a few experts in the field of aeronautical engineering from the United Kingdom, vhile Canadair has been drawing on the Annierican market for experts in this category. -11- RESTRICTED, Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 0 However.' there is no indict! tign as to how many are employedq the extent of the research, the facilities avail ble or the cost of the activities. ?.pro, as noted, is .orking on a turbo-jet fighter and a turbo-jet transport, but no detailed information is yet available. The tendency is to reduce governmental expenditures for all types of activity from their wartime n=.ak, This applies also of funds available to the Research Council? There is no ..ray of knowing whether th" i manufacturers are increasing or decreasing their expenditures for research and daveiopment, ::vro is probably receiving financials as well as technical assistance, from the Hawker .;iddeley group of aircraft manufacturers in inland, with whom it is affiliated, If this supposition is correct, then Avro is at least semi=independent of Canadian Government orders and the research and d--velopment connected til3fe:;ith, In any event, aeronautical research and development activities in Canada are ona small scale ':rhen compared with the United States, 10, The use of Government o:?med plants by both Avro and Canadair may be termed a subsidy, As in-l'.cated earlier in this reports the development of the new turbo jet aircraft by,Avro is dependent largely on orders placed by the Canadian Government, al thou--gh the company may be doing 'york also for its affili::ted companies in the United Kingdom, So far as is known, Canadair has no n w types of aircraft under dwelopr ent, but the PC-41-1 rind 2 was developed and financed by the Canadian Government, Since Canadian Govanement orders are important to both companies, it seems safe to assume that the i'-ominion Government carries some weight with the respective managements, In the small and medi= 'aircraft field it is believed that the manufacturers are independent and do not rec>.ive any subsidy or financing from the Governments Such research and development as they do engage in appears-to be on their ovm initiative and is done to meet eristin.a conditions and, demands. 1, The Cabinet (including the Privy Council) The ienartment of ixt'ernai Affairs The Department of Transport The :sir Transport hoard The T;apartment of National Defense for Air The Air Cadet League The National aescarch Council :toyal Canadian "'lying Clubs Association Soaring Association of Canada The =Ir Industries and Transport Association 2. (a) The Cabinet (including; the Privy Council) determines all national policy with regard to Canadian. civil aviation, Inasmuch as the Cabinet represents the Government in power its decisions may be regardecl as final even though it may be obliged to go before Parliament for authority to implement the decision, Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 The 1'?epart?cent of :xternal Affairs, as may be supposed, handles all matters of a foreign relations nature as they effrct civil aviation, and hence corresponds to our Department of 3tate6 The Civil Aviation :ivision of the 1.enartmont of 1'r?.-,nsnort co-responds to our Civil Aeronautics administration, As.such, its activities embrace the entire physical side of aviation, For example, it o;rns and operates -cost of the airports, it controls the, federal airways and the facilities attached thereto, it resisters and licenses air-- craft and grants licenses to airmen, etc, ' Air Transport Board is patterned after our Civil Aeronautics Board. Thus, it functions are economic and judicial, It operates under the terns of the ;aeronautics Act of 1927, and came into being in 19U4 whenthe."let was amended, it grants licenses to carriers to par?orm all scheduled ahd non-scheduled flying in Canada provided these services are, in its judgment, in the rublic convenience and necessity, Carriers file operating statistics, tariffs and schedules .;ith the Air Transport Board. Department of National Defense for Air, of course, means the itoyal Canadian Air Force, whose functions are believed to be self-explanatory. Air Cadet Lea:;ue, as stated aboveb is a semi- civilian and junior arm of the Its primary function was to train young man as a junior. volunteer reserve which -could act as an aircraw feeder? Its paacetime function is to make available a basic training in aviation that erill better fit :.a:aadian youths for careers either in the 33rvice, in civil aviation, or in other walks of life. The National tesearch Council and its functions have been described in para;ra:t A,9, lto~al Canadian `'1!.~np~Glubs r'ssociatioxi has already been mentioned in para,'rarh P,,2. Its activities are centered in the field of private flying, :":here it conducts fairly extensive private instr,mction? Soari . Association of Canada is a new and very small organization which, to some extent, is associated with the Air Cadet Lea;ue, and therefore with the R.C.A.F. Its purpose is to acnuaint and instruct the youth of Canada in the operation of motor less aircraft. Air Industries and Transport Association is an Industry group composed of both naiufacturers and operators, Its main purpose is the solution of o13?- RESTRICTED Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 . RESTRICTED common industry problems and to act as an industry liaison i:ith the various branches of the Canadian QoverrLnant. 4 (b) Obviously, all the Luoartmcnts and a?antics of the Federal Government came into being by reason of acts of Parlianant, and some of than many years ago. The newest ;;ov:rnmr,ntal ag.ncy is the Air Transport Board which was brought into being when the karonautics Act was anended in 19h4. The National lasearch Council was also created by an act of Parliament and was established just after :iorld I air Cade L,a'ue was farmed in 1941. It was authorized in Novimbor 191iO rsi -ie-.:ns of an Ordor in Council, and was ;-ranted a ':onirion charter on April 9, 1941. o? al Canadian Flying Clubs :association was established about twenty years a;;o and operates under a Dominion charter, :,oaring Association of Canada did not come into existence until the spring o -1944-, It also operates under a Dominion charter. Air Industries and Transport Association was formed in 1934. t is a priva~~ association, unincorporated, and therefore does not op=rate under a Dominion or Provincial charter. (c) The establishment of civil air agencies in Canada has followed a fairly lo,ical pattern, with one important exception. The .'inistsr in Charge of Civil Aviation, is IIr. C.D. Howe to was formerly Minister of !'ransrort, but for the last three or four years has been Minister of 3econstruction and Supply. Since :?:r. Howe is a very strong figure in the Canadian Government, he was powerful enough to take the civil aviation establish-ent of 'the ',en1rL^:nt of ' raasnort, as yell as the Air transport 1.card, .,dth him :;lien he want to the I:epartmont of :'reconstruction and Supply. That has created an anomolous situation and the iaputy :5.inist4r of 7r nsport reports. to the Minister of Transport on all matters except aviation, on which he reports Lo the :.sinister of ;?aconstraction and Supply who, for such purposes is referred to as the :'inister in Charge of Civil Aviation. The Air Transport Hoard, which is semi independent, reports directly to Lr. 'lowe. ;.tr. Howe has always had a great p::rsonal interest in civil aviation, and over since he first became a member of King's Government. Ile has been largely instrumental in the creation of Trans-. Canada Air Lines and also in the development of all national and international civil aviation policies during the past ten years, As a matter of fact,, Mr. Hove is civil aviation in Canada, and ho has powers which are much broader than anything held by any civil aviation official of our Government. Q$$STR'GTEO v Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617A004300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 Originally, what is now the Civil Aviation f: of the i;epartment of Transport was a _ Branch of the._-~partnent of National ;?efense, Ho?:ever, in 1936, :,hen civil aviation was com,,encing to be well established, parti.cul-rly in the Canadian Northrcest, and when serious consideration was being given to creating a transcontinental air route,, it was found. tht the civilian problons confronting tin Civil itrench were beconinpg so i:reat as to Justify a switch from the military to a strictly civilian depart^ent o.1 the Gov' rnnento It .,.,as then that the :'enart^.ent of Transport was created with civil aviation as one of its functions and no change, except as noted above, has taken place. since that time. C So far as is known, there has n wer been any serious public criticism of the aviation set-up of the Canadian Government except that which, is directed against 1',r, Horsey his policies, and the power which he exercises over civil aviation in Canada. Public'opinion in Canada is not well informed on civil aviation matters, '. fro 1loi:e's political opponents, namely, the Progressive Conservative Party and the CoC.F, Party, are not only uninformed, have no civil aviation program of their own,, or are split within their owq groups as to what policies should be followed. The Progressive Conservatives, are the largest minority party and' while they are opposed in general to Government ownership and to the type of broad powers which Mr. Howe wields, they lack direction and cohesion, with the result that their opposition is completely ineffectual, The C,C.F. Party, which is ctaite small, has a program which calls for the complete nationalization of all air transportation in CCanada, The. Liberal Government has stolen at least sons of the C.C.F. thunder by the creation of a Govarnnont owned chosen instrument. (a) The large aviation interests. appear, on the surface at least., to be satisfied with the present Government policies and the way in -which the Jovernent agencies function, The snaller aviation enterprises are so widely scattered and so menerally lacking in funds that most of them are not even nenbers of the Air. 'T'ransport Association,' which does engage, once in a while, in a mild sort of lobbying to promote aviation. (b) Competitive forms of transportation iii. Canada. mean primarily the railroads, and both of these own airline subsidiaries. There has been a. conflict of interest between the Government owned chosen instrument and Canadian Pacific Ur Lines, This arose in 191414 when the Government declared its policy that T.C.A. would en?a;e in. all mainline and international operations. Canadian Pacific Air Lines, through its managements declared publicly that it had every intention of 'articipating in -15- RESTRICTED Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 RESTRICTED international operations, and that it would fi;;ht the Government on this issue? The ,9ov,~rnment thereupon passed a l,,; re;uiring that the railroads divest thgmselv.3s of airline o::nership within a specified priod. after the termination of the war, while this had no effect on T,C,A,, except as a paper transaction, it was vital to Canadian Pacific, particularly since the Government announced that 'it intended to break up that carrier into several small operating companies, It is reasonably certain that the =overnnent was not anxious to carry out this polio*, but it did use it as a club to beat Canadian Pacific into sub- miscion to the Govern amt's pre :ram, which was finally accomplished in the: sprint; of 19x7, _-'t that time a conpl?tely now mama ement, acceptable to the L:anadian Government, took over the operations of Canadian Pacific nir Lines, Since then., on the surface at loast,'rel:ttions have been cordial, although there is some reason to believe that C,P.A. has not yet coripletely given up hope o' securing international and mainline routes, (c) The attitude of the political parties has already been discussed earlier in this paragraph. (d) There has never been any public expression on the part of the armed forces that the. other agencies of the Government are not fulfilling a useful function efficiently, and in the public interest, Since, by its very composition, the Canadian Joverrr ent is a :cell knit unit and one D-.-apart- ment does not take action to which another interested agency is opposed, it is safe to assume that the armed forces are in agreement with the Government?s general program and- conduct since they have a voice in its determination. (e) The Canadian public is woefully uninformed on civil aviation matters and policy. It is but seldom that there 'is even any -editorial comment on this subject. The most air minded nn;soaper in Canada,, the 'ontreal Janette is pkrha_ps the dnly vocal instrument in the country which constantly ;;oes on record as being opposed to the Qovernment?s -:hole civil aviation policy. There are no indications that the Gazette9s one man crusade is bearing any frii t, 4. There is little overlapping or duplication in the .Canadian Government, largely because it is a small and relatively closely integrated organization. Occasionally, there is some overlapping, for example, between the Privy Council and the ::epart.ment of ') ternal Affairs. This is due primarily to the fact that Lr, Hose is vary close to the Privy Council, whereas he is rather remote from the Department of xternal Affairs. Usually those two agencies keep each other well informed and up to dater with ':xternal Affairs adapting itself on civil aviation matters: to :'r, Ho:^rets decisions. If there is any conflict, and this applies also to all other agencies handling civil aviation, it is resolved at the Cabinet level. RESTRICTEn Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 5, So far as is 'norm there is no consideration bein;; t'iven at pre Sent to abolishing, reor Snizing, or combining existing ag-:ncias or creating n3w Ones. C. :OC;, UR 3 Z) i 7;U:.'TIO S. 1, Air 3outes. (a) The sir Transport Hoard, after hearings awnsds air routes to designated carriers in accordance with the terms of the ` .aronautics Act, as amended. Decis-ens of the board must be approved by the rinister in charge of Civil .aviation. (b) In general, public convenience and necessity, and fitness, willingness and ability are the viding principles which determine the granting of a route to a particular carrier. In the case of all mainline and internati'?cal routes these are awarded, in almost a routine and roforma manner, to the Government?s chosen instrument, Trans-=Canada Air Lines, and public convenience and necessity are presumed to exist. Other Canadian scheduled and non-scheduled operators must show public convenience and necessity, accept that the Board has porter to waive this shoing in the case of certain non scheduled m .ra+,ors, provided they satisfy the 'oard that the proposed com-,rcial air s=.rvice vrould be in the public intorest. Foreign air carriers nay operate into Canada provided a ? bilateral a;;ree?rent e:d sts between Canada and the carriers' respective country setting forth a s?3cified route, and provided also that the carrier has been designated by its ,;overnment to operate the route and that it has applied, through diplomatic channels, to the Air Transport Board for a license. In such cases, the existence of a bilateral agreement presupposes public convenience and necessity and the carrier is required merely to show that it is owned and controlled by nationals of the designating country and that it is fit, willing and able to perform the service. (c) The carrier must abide by the terms of its license. In general, these specify routes to be operated, the type of service to be performed and the duration of the license. The license must conform to the provisions of the Aeronr:utics Act and to such rules, regulations, ?tco issued there under. It must obtain an operating certificate from the Uepartnent of Transport .;ithout which it cannot corn-ence the service, It must file schedules with the :ioard, as well as any subsequent amendments thereto, and also its tariffs and charges, The Board has the right to raj act these if they are considered to be unjust or.unreas enable or if they are unduly discriminatory, pr:fer:ntial or prejudicial. In general, licenses are not transferable and amendments may be made only by way of written 3ndorserlents, duly signed and scaled by the Board, All licenses are required to provide security, by insurance, bonds or otheruiso to the satisfaction of the Board, RESTRICTED 17 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 RESTRICTED respecting liability to passengers and risks of _ public liability and prop:rty'damage, (d) :accent ,with resnect to main line and international routes, carriers''arc flee to apply for any scheduled route or to operate non-scheduled services from any particular base, (e) 14ev, routes are established, when they are of a main line or international nature, by consulatation and agreement between Transa.anada Air Lines and the Canadian Government, Other routes,, and non- schedulad operations, are generally left to the initiative of the carrier, New routes are not proposed by the 3ovarnment, except in case of main line and international services, Since these are reserved to Trans- Canada Lines, no other carriers may aplly, Competition is not permitted over identical or similar routes, nor are non-scheduled operators permitted to operate to'two or more points on a scheduled route, The Aeronautics Act provides that, -,here in the opinion of the Isoard a carrier has violated any of'the conditions attached to its license the Board may cancel or suspend the license. Any air carrier w=hose license has been cancelled or suspended may appeal to the ...inister, The Board also has powers to suspend, cancel or amend any license or any part thereof where in the opinion of, the Board, public convenience and nacessi.ty so ra^ui.res, 2, Rates, (a) Under the tern -r ff s of the :'aonautics Act, and subject to the approval of the Governor in Council, the "oard may make regulations respecting traffic, tolls and tariffs, and ' for the disallowance or suspension of arlr .tariff by the ':oard, the substitution by the licensee o a tariff satisfactory to the Board or the prescription by the Board of other tolls in lieu of the tolls so disallowed," In other words, the Hoard has very broad po.nrnrs with regard to the determination of tolls and tariffs, although their original cre:jtion is left'to the carriers, (b) Neither the Aeronautics Act nor the Board's regulations respecting comanrcial air services are specific as to the bases on which tolls and charges shall be deterimined. The regulations say: "The Board nay determine and prescribe what are just and reasonable, individual or joint tolls, or may prescribe what is the maximum or minimum, or maximum and minimum toll to be charged, and -what individual or joint classification, rule, regulation, terris and conditions of carriage, or practice shall pr:wail in respect of the services RESTRICTED Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 performed-or to be performed by air carriers," In view of these broad powers it'may be pre- sumed that economic, competitive, political and social considerations all enter into the determination of rates and charges, and as they are reviewed or finally established by the Board, (c) ;bile in the first instance rates may be determined by the carrier, they must be filed 'pith the Board and, so long as they are deemed by the Board to be just and reasonable and not discriminatory and, so long as they conform to the Board's regulations, they will be approved by the Board in the light of the economic and other factors involved. In other words, the Board, while it has. broad powers, does not fix the rate in most instances, (d) Under the Board's regulations respecting com- mercial air services, discrimin.,itory rates of any kind are prohibited, Sa?etY, (a) The. Department of Transport, in accordance with the Aeronautics Act, issues Air Regulations which govern and control aircraft operations, including safety requirements, These regulations are enforced by means of field inspectors and the Royal Canadian Mounted Police, who are familiar with the regulations, (b) The Air Regulations, which follow very closely similar regulations of our. Civil Aeronautics Administration, are believed to be adequate in the light of present standards and practices, While they are competently enforced this can be cone only by means of spot checking in view of the large size of, the country, the small and scattered population, and the limited number of enforcement officers, (c) Safety regulations are enforced imno n4-0 It 4. Inspection, (a) No aircraft may be flown in Canada unless it has been registered a ith the Cepartront of Transport. It cannot be registered until it is certified as airworthy by the Minister in charge of Civil Aviation, The Department of Transport inspects and licenses all equipment, examines and licenses all operating personnel and investigates all accidents in accordance with the Air iegulations, As noted above, these re,lalations conform to, or are identical with those issued by the U. S. Civil Aeronautics Administration, (b) The regulations are believed to be adequate in the light of present experience and established practice, and they are fairly and adequately enforced by the Department of Transport. RESTRIICTED (c) Licenses may be revoked or suspended and, in the case of flagrant or repeated violations the individual may be arrested and prosecuted. Specifically, the Aeronautics Act states: "Any person guilty of violating such regulations shall be liable, on summary convictions to a fine not exceeding ,4,1,000 or to imprisonment for a term not exceeding six months or to both fine and imprisonmant.". In such cases, cancellation or suspesnion of the license would be automatico 5, AiTpcrts and Comr;mnications. (a) Regulations governing the use of airports are issued by the Department of Transport in . accordance with the terms of the Aeronautics Act as supplemented by the Air leguLitions of 1938, amended. The regulations, in general, follow those in force in the United States. (b) The Dominion Government, through the Department of Transport, operates all main line airports. There is one known exception., viz., the city of Edmonton operatesits own airport which it has taken over from the Department of Transport. Some airports, particularly along the Northwest Staging Route, are under the control of the Royal- Canadian Air Force, although they are used for some civil air purposes, principally by Canadian Pacific Air Lines. Smaller airports are sometimes operated by the municipalities, or by the carriers themselves. - (c), Canadian procedures with regard to communications follow established international practice and conform to those in effect in the United States. (d) The communication system is operated by the Radio Division of the Department of Transport. 6. Reports and Forms. (a) The Air Transport Board requires air carriers to & file with the board returns with respect to their (b) capital, traffic, equipment, working expenditures and any other matters with relation to the oparav tions of commercial air services. All scheduled air carriers submit such detailed reports monthly aild annually. These reports are studied and evaluated and are published monthly by the Dominion Bureau of Statistics. Nonscheduled operators, because of the special conditions which surround this type of operation, report to the Board on a. less frequent basis. Their reports are consolidated and published by the Dominion Bureau of Statistics in a monthly sum total. None of these reports are published in detail, nor is the material which any of the carriers file with the Air Transport Board open for public inspection. It is not believed that these reports play too great a part in administering civil air policy. 'RESTRICTED 20-- Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 RESTRICTED They have been established so recently that they can have had no great effect in the granting of direct financial aid, but this is due largely to the fact that most scheduled operators do not wish to be dependent on. the whim of Parliament for a yearly vote of a direct subsidy. Neither do the reports so far play any great part in assuring adequacy of service, (c) Both the Air Cadet League and the Royal Canadian Flying Clubs Association hold annual meetings at v+h ich their annual reports are made public, The Government usually sends observers to these meetings and., where it is possible to do sow lends encouragement to the improvement of education and standards, . (d) The National Research Council publishes,an annual report but since this is a Government agency it is a case of Government reporting or, one of its own activities* (f) and (g), (h), (i), (j), The Department of Tramp ort is responsible for all matters under these headings, As already noted, its regul:~t:ions.are closely patterned on those in force in the United States, D. GBN.IRAL 3VALU;'.TICN; 1, Generally speaking, the Government?s civil air organizations, policies and rules of procedures are considered to be sound, honestly administered and fairly well adapted to the capacities, aims and requirements .of the country's commerce, security and industry, There is some difference of opinion as to whether Government rules of procedure are progressive enough and, in view of the favored special position of Trans--Canada Air Lines, they may not always be regarded as strictly equitable, As indicated earlier., the Canadians follow a middle of the road policy with regard to civil aviation, That is to say they have both Government ownership and private enterprise, The middle course never satisfies the extreme right or the extreme left, and so there are some who criticize the Government for having gone to far, and others for not having gone far enough, There can be no question, however, but that the. average Canadian, so far as he is aware or interested, is satisfied that present policies and organization meet the Dominion?s requirements, Most Government bureaus in Canada are understaffed. Certainly the Department of Transport and Air Transport Board could use more field personnel. Budgetary restrictions., however, do not permit this, In addition, most of the scheduled operators vould like to, see ,Government assistance in the form of mail pay, but the Post Office Department objects to being used as a subsiclortance, the airlines determine standards of operation and implement these determinations. The Government, largely due to the civil mvar, is unable to appropriate funds for the development and expansion of the scheduled carriers, and hence has not been able to develop a broad program of promotion, development and expansion of scheduled air transport. Scheduled air transport in China is limited to trio carriers, the China National Aviation Corporation and the Central Air Transport Corporation. The China National Aviation Corporation is 80;s government-owned with a 20% partici- pation by the United States carrier, Pan American Air- nrays. The Central Air Transport Corporation is under- stood to be wholly owned by the Chinese Government. Recently the ::tinistry of Communications has actively sup)orted the civil airlines in their requests to other government agencies for sufficient foreign exchange to procure essential maintenance equipment and for increased allocations of gasoline. While the Ministry has been able to influence other government agencies to allocate to the civil airlines urgently required foreign exchange and gasoline, oil, etc., to maintain minimum operations, the needs of civil avia- tion can generally be said to be subordinate to govern- ment requirements for the prosecution of the civil war. (b) The Government dove not promote, nor in any manner support the development of non-scheduled air transport services. On the contrary, it would appear that the Chinese Government will not permit operations of this types reserving all carriage for the trio scheduled operators. An exception to this is the China National Relief and Rdhabilitation Air Transport Company, largely financed by UNRRA-C'cat,A, vihich is permitted to carry revenue passengers and cargo on its return trips from inland points following inland movement of relief cargoes. 'chile there is no Tarr in China which prohibits private, the :Xinistry of Communications has not thus far approved any applications for permission to fly private aircraft. The newly formed Civil Aeronautics Administration has not yet drafted regulations to control private flying or established a functioning division -:Inch could examine and license private pilots am' planes and regulate private flying. The Chinese Air Force has in the past vigorously op,)osed private flyin-. Col. Tai, Administrator of the Civil Aeronautics Administration, is now engaged in draft- inG a regulation which will permit and control private flying. He plans to establish flying clubs under the direct supervision and control of the Civil Aeronautics Administration. While a Chinese citizen, under Col. Tai's _~ltAFIDEUTI ' Declassified and Approved For Release 2013/04/29 CIA-RDP78-01617A004300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 CONFIDEfdTIAI 0 proposal, c6uld arm a private personal plane, he mould have to malce it available to a Civil Aeronautics Administration club for' the use of all of its ne:cbers. Col. Tai has indicated dissatisfaction ::nth this ap>roach to the establishment of private fly.In`- T:ithin China, but has stated that due to the civil war and the attonc:" ._, unsatisfactory economic conditions, he would have to settle for "what in could get", indica- tin;; that under his proposals, private would at least cot a limited start in China. (d) There are believed to be.tuo small aircraft plants in China, in T hich the Chinese Government is manufacturing its a,-.n training .lancs for military _>urposos. These planes are constructed under the supervision of the Bureau of ;ircraft Industries of the Chinese Air Force. The first plant, at Kunrsinc;, has thus far produced one prototype hT-6under a license acquired from Boeing Aircraft. In another plant, located in Formosa, China expects to produce a-3oeing trainer plane by late November. The aircraft produced at these plants Trill be used for military purposes. (g) The training of pilots and other technicians is largely conducted by the Chinese Air Forces assisted by the United States Army Advisory Group. Practically all of the Captains flying planes on the civil airlines are foreifners (A.meric ns or Canadians). Native Chinese fly as co-pilots. The Chinese technicians of Chinese National Aviation Corporation and Central Air Trans- port Corporation, the major Chinese civil carriers, are supervised by Americans. The Government does not directly supervise the training of pilots or other tecluiicians for civil pursuits, nor does it directly sponsor civil aviation training programs. l:o grants are believed to be made to foreigners. (h) China does not export. aeronautical equipment, and imports practically all of its civil airline equipment from the United States. Duo to the extensive require- ments of the military, it is only T.'ith considerable difficulty that the civil airlines are able to obtain sufficient foreign exchange from government sources to import essential maintenance requirements. (i) China has not developed a long-range plan for con- struction of essential airports. Practically all of the desirable airports in China are controlled by the Chinese Air Force. The Civil Aeronautics Administra- tion, horevcr, ;.ith limited funds, has been able to construct a stop-gap international airport at Shanghai.. Recently- there has been some evidence' that the Chinese Air Force Till relax its control of c..rtai.n airports and that the Goverrunont may make available to the Chinese Civil Aeronautics Administration sufficient funds to reconstruct these airports and render them suitable for civil operations. CON r1DENTIAL Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 The air navigation facilities of the country arc inade- quate to moot its present needs. ChLtse iational Aviation Corporation, Central Air Transport Corporation, C:.ank :sir Transport, and the Chinese Air Force all have their mm navigation -facilities and while the Civil Aeronautics Acmi.nistration has t?ttempted to coordinate the activities of the agencies o crat nr these facili- ties an,, establish a nct:orl, under its control, clue to lack of funds and insufficient co::ipetent personnel it has been unsuccessful. 3. (a) The t:o domestic scheduled air carriers Tire largely armed by tin (Iovernment. The Central Air Transport Corporation is urrierstood to be 100 ' C?overn.~ent .):,fined, and the Chinese national Aviation Cor:cmation is 30' Government Mmed. The United :;tacos carrier, Pan American A'dmmys, arms 20:: of the stock of the Chinos,: flational Aviation Corporation. It is thus apparent that govern nit annership is favored, while foreign rticipation is permitted. The non-scheduiled relief carrier, C', 1,_-. Air Transport Corporation has bee financed trio-thirds by U TL^ .-Ci R and one-third by ;rivate capital. It is a matter of record that the Great China Aviation Corporation, r.hich Purchased equi;r ;ent rdth r:'rLich to start scheduled operations in Chem, and. received a license tin . anistry of Ca.viunications on October 1, 191j5, to omr;.te scheduled services, was not per- mitted to initiate operations. The permit it had obtained from the ; lnistry of Co: r :unications was sif se- quontly declared null and void by the Executive Yuan without explanation. it r:ould thus appear ;:hat China viii], not pomit, at least for tine present, substantial private ornership of scheduled civil air carriers. (b) The Government, through the Bureau of ,Urcraft Industry of the Chinese Air forces, arms the two small aircraft man.ifacturinr plants which are known to exist. Duo to lack of natural resources and skilled pcrsonnel - supervisory, administrative and technical - China u ill probably find it difficult to attract private capital and "knor-how" to manufacture aircraft hem. (c) The competition botpen the two national carriers is as severe as could be expected bet::ten private air lines. Facilities, equi.ment nd stations are duplicated. tlrrourhout the country. The Government endeavors to protect the national airlines. against competition fro::, foreign carriers (see 3. (h)'). The only imam direct subsidy extended toathe national airlines has boon granted to the Central Transport Corporation in the operations of its route from L-ncho:r to Tilu:a. The Go ernnont was forced to subsidize this h- Declassified and Approved For Release 2013/04/29 CIA-RDP78-01617A004300030001-0 Declassified and Approved For Release 2013/04/29 : CIA-RDP78-01617AO04300030001-0 0 operation for political as ~.?cll as econo::ic masons because contact by air rrith this northern area must be, in the absence of an alternative mode of transportation. As all Gasoline used on this route north of. Lanchrovr must be florin in, the route could not be o- rated without the subsidy. IIo subsidy is ;errn:rn to be m tended to aircraft manu- facturers. Tins far, C: 50,000,000,000 has been appropriated by the Civil Aeronautics Administration for its use. the major portion of which was cxpendo:, in the inalrove:annt of one international airport at Sh