March 17, 1944


On the orders of the day:


CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

Co-operative Commonwealth Federation (C.C.F.)

Mr. S. H. KNOWLES (Winnipeg North Centre):

Mr. Speaker, may I direct the attention of the Minister of Munitions and Supply to what I believe to be a series of errors in an answer to a Question of mine as found at pages 1508 and 1509 of Hansard for yesterday. Those answers had to do with the price of aluminum. They read, in part:

To the United Kingdom: Base price, -16 cents per pound; Escalator price, first quarter, 1943, [DOT]055 cents per pound.

I am sure the minister will agree that what was intended was 16 cents per pound and-

Topic:   ALUMINUM
Subtopic:   REFERENCE TO ANSWER TO QUESTION ON MARCH 16
Permalink
LIB

Clarence Decatur Howe (Minister of Munitions and Supply)

Liberal

Mr. HOWE:

Make it read dollars instead of cents, and it will be all right.

Topic:   ALUMINUM
Subtopic:   REFERENCE TO ANSWER TO QUESTION ON MARCH 16
Permalink
CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

Co-operative Commonwealth Federation (C.C.F.)

Mr. KNOWLES:

I checked the matter, and I find the error is to be attributed neither to Hansard nor to the King's Printer, because what is printed in Hansard corresponds with the typewritten copy given to me yesterday.

Then, when the minister is checking that answer I wonder if he would compare it with the material he placed on Hansard on March 10, at page 1346, where he tabled the correspondence with the Aluminum Company^ of Canada, Limited, with regard to the reduction in the price of aluminum. In the correspondence it was indicated that information was in the possession of the Department of Munitions and Supply regarding prices to the United States and Australia. In the answer given yesterday the statement is made that no such information is in the possession of the department. Will the minister reconsider the answer to the question?

Topic:   ALUMINUM
Subtopic:   REFERENCE TO ANSWER TO QUESTION ON MARCH 16
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LIB

Clarence Decatur Howe (Minister of Munitions and Supply)

Liberal

Hon. C. D. HOWE (Minister of Munitions and Supply):

Obviously my hon. friend has all the information there is on the subject. There was evidently a mistake of a decimal point in preparing the answer. My hon. friend knows that this should be sixteen cents, not one-sixteenth of a cent per pound. As far as the price of the metal to the United States and Australia is concerned, we know the base price but invoices are sent direct from the company to the purchaser and we do not know the operation of the escalator clause which is determined by the offices that purchase the aluminum.

Topic:   ALUMINUM
Subtopic:   REFERENCE TO ANSWER TO QUESTION ON MARCH 16
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ST. PATRICK'S DAY


On the orders of the day:


LIB

Daniel (Dan) McIvor

Liberal

Mr. DANIEL McIVOR (Fort William):

Mr. Speaker, I am sure it is with mingled feelings of regret that we who are away from the land of our birth join with other Irishmen

in celebrating the passing of that great missionary, Saint Patrick. When I think of how the former leader of the opposition, the late Doctor Manion, cabled de Valera to open up bases to assist the allies in their struggle for peace and fair play; when I think of how our own Prime Minister refused to enter into negotiations with de Valera and politely told him, according to the interpretation I put upon it, that he should tell the Germans and the Japanese to go home out of there; when I think of the golden opportunity Eire had-

Topic:   ST. PATRICK'S DAY
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?

Some hon. MEMBERS:

Order.

Topic:   ST. PATRICK'S DAY
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LIB

Daniel (Dan) McIvor

Liberal

Mr. McIVOR:

-to tell the world that they .supported the cause of freedom and fair play.

Topic:   ST. PATRICK'S DAY
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WAR APPROPRIATION BILL


PROVISION FOR GRANTING TO HIS MAJESTY Am FOR NATIONAL DEFENCE AND SECURITY The house resumed from Thursday, March 16, consideration in committee of a resolution to grant to His Majesty certain sums of money for the carrying out of measures consequent upon the existence of a state of war-Mr. Ilsley-Mr. Bradette in the chair.


DEPARTMENT OF MUNITIONS AND SUPPLY

LIB

Clarence Decatur Howe (Minister of Munitions and Supply)

Liberal

Hon. C. D. HOWE (Minister of Munitions and Supply):

Mr. Chairman, in presenting the war estimates of the air services branch, it is appropriate that I give hon. members a statement of the views of the government on civil aviation, both domestic and international. At this time the subject is one of unusual interest to the house and to the country. It is well known that the necessities of war, during the past four years, have brought about more in the advancement of the science of aviation than would have been accomplished in a generation of normal progress. The exploits of our airmen overseas and our vast air training plan have contributed much toward making our people air minded. Our accomplishments in the building of military aircraft also have contributed to that end. The need for maintaining rapid communication with our troops overseas has forced us to undertake a transport service across the oceans and to improvise equipment for that purpose. The urgency of war production has caused many business men who were formerly unfamiliar with air travel, to become new customers of our commercial air lines. _ _ _

During this period of great activity of air travel, we have been devoting our manufacturing capacity to building war planes, as have all other allied countries. We have been wholly unable to provide new equipment for our air lines, such as would satisfy the increasing de-

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mands for travel accommodation. Trans-Canada Air Lines had been, operating for some two years prior to the outbreak of war, and had only sufficient equipment to meet the then very limited demands -of the travelling public. To-day, Trans-Canada Air Lines has but little more equipment than when the war began, and is unable to purchase suitable new equipment. When Canada was called upon to provide a mail and an official passenger service across the Atlantic ocean, it could obtain planes for that purpose only by taking Lancaster bombers from our own production line, and converting the bombers for transport use. The result is that the demand for air travel, both inside Canada and across the oceans, greatly exceeds the supply.

To lay a foundation for the present discussion, it may be well to trace, very briefly, the history of civil aviation in Canada.

In the early 1920's, pilots who had received their training in the last war obtained planes, and commenced services into areas of the north country that were then difficult of access, except by air. These services were supported, for the most part, by the mining and petroleum industries. Through the years, these services were extended into air Imes, each serving a series of isolated communities. A substantial part of their revenue was derived from the carnage of mail, and in this period our Post Office Department took an active part in supporting and encouraging so-called "bush operations".

In 1927 a movement was sponsored by the government to encourage the more rapid development of transport by air. Flying schools were organized, across Canada, for the training of pilots, and municipalities were encouraged, and assisted, in the development of local aerodromes. Direct government support was given to flying clubs, and the Post Office Department continued to provide mail revenue for those who were pioneering air transport routes.

In 1930 a change of government occurred, and the attitude of the government toward civil aviation was altered. In the early 1930's many air mail contracts were cancelled. Appropriations for government assistance to civil flying were cut, and civil aviation received a severe setback. However, in 1933, for the purpose of relieving an acute unemployment situation, the government commenced a project of building a series of airports across Canada, by day labour, to form a transcontinental route for military planes. For reasons that I could never understand, the aerodromes were located at thirty-mile intervals and, although civil aviation in the United States was then highly *developed, the plans called for airfields suitable only for small, single-engine planes.

In 1935 the present government came into office, and was confronted with a situation that demanded a clear definition of policy toward civil aviation. Work was in progress on the government's chain of airfields. Municipal airfields, that had been built in the late twenties were not being used. Two alternatives were open; the government could undertake a programme for developing a comprehensive system of transport by air, to serve all parts of Canada, or it could confine government activities in this field to regulation, and let private enterprise plan its own expansion. The former alternative was chosen.

Plans were under way to merge the Department of Railways and Canals with the Department of Marine, to form the Department of Transport, and, with the consent of the then minister of national defence, those plans were enlarged to provide for moving the control of civil aviation from the Department of National Defence into the newly formed Department of Transport. Accordingly, a bill creating the Department of Transport was approved by parliament at the session of 1936.

On being appointed Minister of Transport, I lost no time in laying plans for an expansion of civil aviation in Canada. To acquire a background for doing so, I visited the United States, and travelled over its airlines for the purpose of making a study of air transport, and the facilities required in that connection. To provide a grouping of services directly related to transport by air, the air services branch of the Department of Transport was created, to include the newly acquired civil aviation division, and the meteorological division and the radio division of the former department of marine. The new branch was placed under the direction of a capable officer of the department, who was instructed to expand all three services to meet the requirements of a coast to coast interurban air transport service, following the latest American practice.

The Trans-Canada Air Lines Act was presented to parliament in the session of 1937. The intention of the government had been to unite the strongest transportation interests in Canada to undertake this new venture in transportation, and with that in view I approached the Canadian National Railways, the Canadian Pacific Railway company, and Canadian Airways, Ltd., the latter being by far the strongest of the air transport companies then operating. These companies were invited to provide the needed capital for, and assume the ownership of, the airline company, the government to assume responsibility for building adequate airports and the necessary communication system. Each of the three

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component companies was to share equally in the ownership of the air line, and each was to have two directors on a board of nine, the government to appoint three directors on account of its investment in airports and communications.- The financial provisions were the same as those finally adopted and now in force, which made the company a nonprofit organization that was also protected against loss of its capital.

The Canadian Pacific Railway Company and Canadian Airways objected to having three government directors on the board, and at the last moment these two companies withdrew their support, with the result that the Trans-Canada Air Lines Act provided for full ownership of the enterprise by Canadian National Railways. It is worth while stressing the fact, at this time, that the Canadian Pacific Railway Company and Canadian Airways were each offered one-third participation in the Trans-Canada Air Lines enterprise, and that both refused- to participate in a company with the identical financial arrangements that now apply to Trans-Canada Air Lines.

The newly-formed Trans-Canada Air Lines lost no time in organizing for operation. The president of Canadian National Railways was made president of the company; three other directors of the railway were appointed directors of the new company; and three directors were appointed from the government service, two from the Department of Transport, and one from the Post Office Department. The directors chose a general manager in the person of Phillip G. Johnson, now president of Boeing Aircraft Company, and one of the leading business men in the United States. Mr. Johnson had1 been a pioneer in transport by air in -the United States, and was perhaps the man best qualified by ability and experience to plan the new system.. He came to Canada, at what was for him a very nominal salary, and spent two years here as operating vice-president. His ambition was to make Trans-Canada Air Lines the finest air transportation system in North America, and although he returned1 to the United States in 1940, his influence on the management is still very noticeable.

The work of building a chain of modern airports and of gathering and training an operating personnel was pressed forward- vigorously, with the result that Trans-Canada Air Lines was placed in operation early in 1938. Traffic built up very rapidly, and Trans-Canada grew until at the outbreak of war its services extended eastward from Vancouver to Moncton, southward from Toronto to New York and from Vancouver to Seattle, and northward from Lethbridge to Edmonton. In the early war years, military requirements made it

necessary to extend the service eastward to Halifax, and from Moncton to Sydney and on to Newfoundland, and westward to Victoria. Increasing traffic has made the line an outstanding financial success. Its safety record is the best of any air line operating anywhere. Had it been possible during the war years to provide equipment to meet travel demands, the financial position of the company would have been still further improved. At the moment, if we could double our equipment, indications are that we would have every seat occupied.

While the development of Trans-Canada Air Lines was in progress, an effort was made to improve the position of the bush lines, which had been left in a greatly weakened position by government action in the period from 1930 to 1935. While these lines were supported by renewed postal subsidies, they operated under conditions of unrestricted competition, with the result that, as soon as an operation was profitable, a second, and perhaps a third, operation would be undertaken by other owners over the same route. In an effort to protect the lines against cut-throat competition, an amendment to the Railway Act was introduced in the Senate in 1937, when it failed to pass, and in the House of Commons in 1938, when it duly became law. The effect of this legislation was to allocate routes to companies then in the field, and to prevent competition on these routes from newly-formed companies. At this time, sixteen separate transportation companies were licensed for commercial operation in Canada, using 244 commercial aircraft, of which a large number were flown and operated by their owners.

The first year of the war saw a sharp curtailment in gold mining operations, particularly those in remote areas, with the result that traffic for these independent airlines was sharply curtailed. I think I can say that the operation of these air lines, many of which were financed by public subscription, had never been profitable. With the curtailment of traffic before mentioned, these small operators were faced with the necessity of either finding a buyer, or of closing down. At this stage, the Canadian Pacific Railway company entered the field of transportation by air, and bought the stock of all the independent operators, thus obtaining by the end of 1941 a monopoly in the field of transportation by air except for Trans-Canada Air Lines. Since then, one new company has entered the field in the maritime provinces, namely, Maritime Central Airways, this being the only operation not owned either by Trans-Canada or by Canadian Pacific Air Lines.

War Appropriation-Supplies

The building of the Alaska highway was the cause of great activity in air transport in a territory that was being served by Canadian Pacific Air Lines, and that company was assisted by the United States Army in obtaining new and modern airplanes, from United States sources, with the result that the equipment of the company was augmented considerably at a time when all other air lines on this continent found it impossible to buy new equipment. Canadian Pacific Air Lines has continued to give service to the points formerly served by its component companies.

The preceding statement brings us up to date on the position of transport by air within Canada.

It had been contemplated that Trans-Canada Air Lines would be a non-competitive, nonprofit system of transportation by air, planned to avoid the duplication of services that were the outgrowth of competitive building for profit in the field of surface transportation. The Trans-Canada Air Lines Act contemplated that Trans-Canada Air Lines would operate all the principal routes parallel to the international boundary, as well as Canada's interest in all international routes, and these on a non-competitive basis. The field of routes into Canada's northland, as well as the field of air service in the settled areas complementary to the Trans-Canada operation, was left to private enterprise. The reason for this is not hard to explain. Trans-Canada was to be a high standard operation, competitive with paralleling transcontinental air transport services in the United States. Canada, having one-twelfth the population of the United States, could support one service of this type, as against three similar parallel services in the United States, but, obviously, to have a second coast to coast service in Canada would be wasteful and unjustifiable. Service to the public must be the paramount consideration, and it seemed obvious that the cost of a noncompetitive, non-profit service was the lowest that could be offered the public. An impartial analysis of the situation to-day leads to no other conclusion. However, the newly formed Canadian Pacific Air Lines lost no time in challenging the non-competitive position of Trans-Canada Air Lines, and in reaching out for new franchises; this at a time when it alone seemed to be able to buy new and modern equipment.

To clarify the situation, the Prime Minister made a statement with respect to policy as to domestic and international aviation in this House of Commons, which is reported in Hansard of April 2, 1943. The statement sets out with great clarity the views of this government, with respect to future development of

.' ' " "

both domestic and international aviation. The policy then enunciated continues to be the policy of this government.

This statement of policy, I regret to say, failed to bring about confirmation to government policy in the development of privately owned air services within Canada, nor did it "end intervention of private interests in the international field. It is becoming obvious that ownership of airways by our two competing railway systems implies extension of railway competition into transport by air, regardless of the government's desire to avoid competition between air services. In the old days, competitive railway building developed pressure methods for obtaining new franchises. Such methods must not have a place in the development of our airways.

The government desires the rapid development of air transport services in order, among other reasons, to offer post-war employment to Royal Canadian Air Force personnel. Canada's northland was pioneered by small operators, who were content to enlarge their operations only as warranted by the development of the area they served. The government believes that feeder line operations, and pioneer lines into our northland, can best be developed as small operations. Our returning airmen will not be satisfied, in entering this new field of employment, to serve only as salaried employees. In this new medium of transportation, there must be a place reserved for small business enterprise.

Accordingly, after full consideration, the government has decided that the railways shall not exercise any monopoly of air services. Steps will be taken to require our railways to divest themselves of ownership of air lines, to the end that, within a period of one year from the ending of the European war, transport by air will be entirely separate from surface transportation. In the meantime, no new air routes other than government operated routes will be allocated to airlines owned by any railway or other operator of surface transportation. The term " surface transportation " includes railways, shipping companies, and highway transport companies.

The United States Civil Aeronautics Act of 1938 provides that no common carrier (that is, surface carrier) shall own, manage, or operate any air carrier, unless specific provision has been given by the civil aeronautics board. Apparently, the principle is well established in the United States that surface carriers are not permitted to engage in air transport business. I mention this to indicate that the problem which has arisen in Canada is not new on this continent.

War Appropriation-Supplies

In speaking in the House of Commons in the debate on the Trans-Canada Air Lines bill, reported on pages 2216 and 2217 of Hansard of 1937, I gave the following reason for making Trans-Canada Air Lines a subsidiary of Canadian National Railways:

"After the consideration of these matters, the government has decided that its agency for transportation, the Canadian National Railways, should be the means of organizing this company, just as it was used as the means for operating such shipping as the government owned and the means of operating other government transportation facilities. . . .

I think we are getting the best features of government ownership without the obligation of direct government operation which in the past has been troublesome."

While I have had no cause to regret the step taken at that time, the entry of a privately owned railway into the field of air transport, has made it apparent that the advantage of government ownership "without the obligation of direct government operation" does not compensate for the disadvantage of introducing into air transport the competitive methods of the railways. Therefore, it will be necessary to divorce Trans-Canada Air Lines from Canadian National Railways and operate the former as a government company. Canadian National Railways have given splendid administration to Trans-Canada Air Lines, and personally I regret the necessity for the separation.

At the moment any expansion of Canada's civil aviation, except to meet urgent war requirements, is unwarranted, if for no other reason than that all available equipment is now required to operate existing services, and new equipment is impossible to obtain without diversion of effort from the war. A paramount reason for halting expansion at this time is that the young men, who should have a prominent part in any such expansion, are overseas on combat duty. We can all picture the resentment of these men if, on their return to Canada, they found that all profitable air routes had been preempted in their absence.

However, even though immediate expansion is not possible, it is not too early to plan for an orderly and rapid expansion of our domestic aviation when the proper time comes. To this end, the air services branch has been studying traffic possibilities in all areas of Canada, for the purpose of planning new air routes that will justify airline operation. Alternative plans are now being studied to determine a method of allocating these valuable franchises, in the best interests of Canada, and of our returning airmen. I am confident that the proper moment for undertaking expansion of our air services will find us not unprepared. *

[Mr. Howe.l

Prior to the war, Canada had a small, but active, airplane construction industry. The need for providing training planes for our air training plan, and later, the need for building combat planes, has expanded this industry enormously. * The industry is now devoting some attention to post-war transport airplanes. One airplane, of pre-war Canadian design, the Noorduyn Norseman, is still the outstanding single-engine transport plane of the present period, and is now being manufactured in large quantities for war transport purposes. Several units of the industry are at work on designs for transport planes of larger size. We have come to the conclusion that the task of designing a four-engined plane, suitable for both post-war domestic traffic on transcontinental routes, and for international traffic, is beyond the present capacity of our industry, having in mind probable limitations of time. Therefore, we have acquired the rights to build a plane that is considered by our experts to be the probable best plane of the next five years at least. Wh-ile the building of this airplane will be undertaken immediately, the plane will not be released to our airlines until new planes of similar type are released to domestic airlines in the United States. Therefore, I think I can say that needed steps have been taken to protect Canadian air transport against its post-war airplane requirements, and this by planes to be built in Canada. A vigorous airplane construction industry is an essential complement to Canada's post-war aviation' plans.

The present machinery for allocating new air routes, and for regulating rates and _ schedules on these routes, is being studied in the light of the experience of the past several years. The government believes that the present machinery can be improved as an instrument for dealing with the developments of the post-war period. It is proposed to establish a new board, to be called the air transport board, which will confine all its activities to air traffic, and which, in addition to performing the regulatory duties now lodged with the board of transport commissioners, will be charged with the responsibility for advising the government on ways and means of bringing about a rapid and well-planned expansion of transport by air. The proposed board will examine the needs for new commercial services, and make recommendations for their establishment and expansion, in both the domestic and international fields; receive applications for new services and issue commercial licences; establish tariffs and regulate rates; examine the ownership, financial structure, operations, and financial position of car-

War Appropriation-Supplies

riers; make recommendations for needed financial assistance; advise the government on matters affecting the operation of existing aerodromes; report on the need for new aerodromes; and perform such other allied duties as may be determined.

It is felt that the creation of a board, to be concerned solely with transport by air will ensure prompt attention to all matters, affecting air transport, that may call for consideration by the government, and be of great assistance to government, and to private enterprise, in the post-war period.

The end of the war will find Canada with some 200 airfields, built to modem standards, and of dimensions ample for serving domestic and international traffic. These aerodromes are, for the most part, adjacent to our centres of population, and many of them are now interconnected by communication services of the type necessary for day and night operation of airplanes. New airfields will be required from time to time, but lack of suitable airfields will not interfere unduly with the establishment of new air services. A chain of modem airfields extends from coast to coast, serving practically all our larger centres of population. Another' chain of airports extends northward to Alaska, while still another extends eastward to Labrador and Newfoundland. We are in a happy position in the matter of airfields for our post-war civil aviation.

I now pass on to a discussion of international aviation.

In the field of international aviation, the geographical position of Canada is one that demands that Canada be given an important place among the nations of the world. The short international routes between the centres of population of the northern hemisphere, almost without exception, pass over Canadian territory. My colleague the Minister of National Defence for Air (Mr. Power) has given hon. members a graphic statement of the part that Canadian airmen are taking in the war against the axis, in many combat areas. The young men so engaged will be internationally minded. In the post-war period, an aggressive air policy can provide an occupation for many of those pilots, navigators, radio electricians and airplane mechanics who are now carrying the war into enemy countries.

Surely this is a field that can offer opportunity, adventure, and a new challenge to the energies and minds of our fighting airmen.

Hon. members may wish to know exactly what Canada's position is with regard to international air transport agreements binding upon Canada. For this reason I will include a brief resume of the present position in this respect.

Canada was a signatory in 1919 of the multilateral convention on the regulation of aerial navigation which came into force in 33 states, and of various protocols amending or supplementing this convention from 1920 to 1929. These agreements dealt largely with air regulations, and there appears now- to be general agreement that this whole field must be brought under the control of a new and expanded international authority.

The first major agreement regarding the actual operation of international air services, however, in which Canada participated, was the agreement between the United Kingdom, Canada, Ireland and Newfoundland, in 1935 and 1936, providing for the initiation of transAtlantic air services. Under this arrangement, the British company, Imperial Airways, now known as British Overseas Airways, was to carry out experimental flights on the north Atlantic route, to Canada by way of Ireland and Newfoundland. Subsequently a joint operating company, owned by the United Kingdom, Canada and Ireland, was to be established to carry on a regular air service. Imperial Airways was to be the majority shareholder 'n this joint company, and was to control commercial, technical : ,nd operating matters.

While the United States was not a party to the arrangement, the four governments concerned agreed that in return for landing and transit rights in the United States for Imperial Airways, or for the joint company, each government would grant transit and landing rights to Pan-American Airways for a north Atlantic service. Each government also agreed that it would not, without the consent of the others, grant similar rights on this route to any other companies over a period of 15 years.

The facilities required under this agreement, which includes airports, radio and1 meteorological services, and other aids to navigation, have been provided by the countries concerned. Canada, by special wartime arrangement with Newfoundland, has taken over Newfoundland's responsibilities in this connection. The service envisaged by Pan-American at that time is in operation, and permits have been granted to Pan-American Airways by t'he governments concerned.

On the other hand, while certain experimental flights were undertaken, after some delay, by Imperial Airways, no regular British services were established on the north Atlantic prior to the war and the joint operating company was never set up. Meanwhile, various other transatlantic services have been, and are being, established outside the agreement, to meet wartime exigencies. American Export Airlines is operating a regular commercial air transport service, under temporary wartime

War Appropriation-Supplies

permits from the governments concerned'. The air transport commands of the United Kingdom, and the United States, are operating frequent non-commercial services. Trans-Canada Air Lines, after extending its transcontinental commercial service to Newfoundland in 1942 by agreement with the Newfoundland government, later proceeded to initiate a regular noncommercial service across the north Atlantic, in accordance with notes exchanged between the Canadian and British governments on July 15 and 16, 1943, and the Canadian and Newfoundland governments on July 19 and 30, 1943. This service has been established solely for war purposes, and the arrangements for it apply for the duration of t'he war and six months thereafter. It carries only official passengers and freight,-particularly mail for the troops-and is, of course, providing valuable experience for Canada in the operation of trans-oceanic air services. The R.C.A.F. has also established a direct mail service from Canada to [DOT] the United Kingdom and to the Mediterranean theatre of operation.

In view of the fact that the joint-operating company envisaged in the 1935-36 agreement was never set up and in view of the material changes in circumstances which have already taken place since the agreement was drawn up, the Canadian government is of the opinion that the agreement can no longer be considered applicable to present conditions. The other parties to the agreement have been notified of our views.

Subsequently in 1938 and 1939, as the air links between Canada and the United States began to assume increasing importance, certain technical agreements were concluded between the two countries dealing with air navigation, certificates of competency, certificates of airworthiness and the use of radio. These agreements established certain standardized practices to facilitate the movement of crossborder air traffic.

More important, however, was the agreement between Canada and the United States on air transport services effected by exchange of notes on August 18, 1939. Under this agreement, eadh party agreed that air carriers of the other would be permitted1 to operate non-stop over the territory of the other between two domestic points. (Non-stop services between United States and Alaska were to be dealt with in a separate understanding.) It is under this clause, for example, that Canada posseses rights to fly from- Quebec to New Brunswick over the territory of Maine, and that United States air lines fly from Buffalo to Detroit over Canadian territory.

In addition, each party agreed to grant operating rights to the air carrier enterprises

of the other for sendees between Canada and the United States as decided between the aeronautical authorities of the two countries, the purpose being to maintain a fair balance between operations of each country. Transportation of mail was to be subject to direct agreement between the postal officials of both countries. This exchange of notes was to remain in force for two years, and thereafter until terminated_on six months' notice given by either government.

The implementation of arrangements provided for in this exchange of notes was covered in a further exchange of notes on November 22 and December 2, 1940, between the two countries. Under this second exchange, crossborder routes between Canada and the United States were divided between the two countries.

This agreement, which did not cover services between Canada and Alaska, was to remain in effect until December 31, 1942. Subsequently, since neither government felt that war time was the proper time for reconsideration or alteration of the agreement, it was renewed by an exchange of notes on March 4, 1943, for the duration of the war subject to cancellation by either party on six months' notice after a period of sixty days consultation.

The arrangements of 1940 which are still in force provide the over-all framework for the operation of air services between Canada and the United States. Under this arrangement, the through service from Toronto to New York is operated by Trans-Canada Air Lines; while the following United States companies operate into Canada: Northeast Airlines from Moncton to Bangor; Colonial Airlines from New York to Montreal; American Airlines from Buffalo to Toronto, and from Buffalo to Windsor en route to Detroit; Northwest Airlines from Fargo to Winnipeg; Western Airlines from Great Falls to Lethbridge; United Airlines from Seattle to Vancouver; and PanAmerican Airways from Fairbanks and Juneau, Alaska, to Whitehorse.

Some persons have suggested that Canada came out of this bargain badly. To this, I would answer that having in mind the availability of planes and air facilities, it was a fair arrangement to meet the circumstances at the time. We can look forward to the further development and expansion of trans-frontier services between the two countries and may expect to see both Canadian and United States lines participating in this expansion in accordance with whatever arrangements may be agreed upon by the two governments.

A number of war-time agreements have been concluded between Canada and other countries for the operation of special war-time transportation services. For example, Pan-

War Appropriation-Supplies

American Airways has been given a temporary permit to operate over Canadian territory, between Seattle, and Juneau, Alaska. In granting this permission, on January 26, 1944, the Canadian government informed the United States government that it proposed at a future date to take up the question of permission for a Canadian service to operate into Alaska. These agreements are numerous and reasons of military security make it impossible for me to go into detail regarding them. They have been concluded in order to provide rapid transportation and communication by air for the more effective prosecution of the war. They are, generally speaking, valid for the duration of the war and six months thereafter and operations carried out under them will create no vested rights for the post-war period. As these agreements affect the United States, licences have been granted only to the United States army and navy for non-revenue operations.

The civil aeronautics board in the United States has recently announced that it is considering the opening of hearings on applications for new air services from the United States to Canada. So that there will be no misunderstanding, I wish to make it clear that the existing framework of air services between Canada and the United States is fixed in accordance with the exchanges of notes to which I have referred. While the civil aeronautics board may receive applications for new air services to Canada from various American airlines and may find it expedient to decide which of these it would be desirable and necessary in the United States' interest to grant, any new services on a commercial basis between the two countries cannot be initiated without the consent of the two governments and any development of such new services will involve a reconsideration of the existing arrangements between the two. Canada does not consider applications from airlines of another country unless forwarded by the government of that country through diplomatic channels.

Canada has carried out certain construction and development work in connection with aviation in Newfoundland and Labrador. Here the agreements involved have been of a military nature dealing with military problems related to the defence of this continent and assistance in the battle of the north Atlantic.

The briefest fashion in which I can describe the situation which will exist at the end of the war is that the position and sovereignty of the Canadian government have been protected completely in all arrangements that have been made; that special wartime arrangements will come to an end at or shortly after the conclusion of hostilities and developments during

the war will create no vested interest in air transport or air facilities in Canada for any other government.

We believe that in the field of international air transport our interest lies in a liberal course of cooperation with other nations. This decision has been reached in view of the great importance of air transport in the future. Air transport is more than just the latest and fastest method of transporting passengers and goods. It is a revolutionary development which has already profoundly affected the civilization of the world. No one can predict with any degree of certainty or precision the nature and extent of the contribution which it may make to the future security and prosperity of the peoples of the world. It is our intention to make every effort to ensure that the framework within which the international air transport of the future functions, will be designed to promote international cooperation and not to foster international bitterness.

The demands of war have telescoped into four or five years the growth that might normally have taken air transport a generation to achieve. Canada's size is shrinking, while our long 3,000-mile frame is filling out, as air transport opens up the Canadian north. All Canadians are becoming neighbours and Canada is being given a new basis for unity. What is true of relations between the various parts of Canada is true also of relations between the nations of the world. These too are being brought closer together. Moreover, new regional connections are being developed and the boundaries of old regions washed away. Because of the geographical location of the land masses of the earth, that section of the globe stretching out from the north pole to a degree of latitude roughly equivalent to the Mediterranean and the southern border of the United States will probably be the most important for the air transport of the future. In this northern region, Canada occupies a strategic position, for it stands athwart most of the air routes linking North America with Europe and Asia. This position carries with it great responsibilities and great opportunities.

As I have already mentioned, on April 2nd last year the Prime Minister gave a statement of the government's position with regard to international air transport, making it clear that our policy would be one of international cooperation and collaboration and that we would support whatever policy seemed best calculated to serve not only the immediate national interests of Canada, but our overriding interest in the establishment of an international order which will prevent the outbreak of another world war.

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Behind this statement lies a recognition of the duty of the Canadian government to do what it can to avoid the two chief weaknesses in the pre-war organization of international air transport. In the first place, it was a cause of serious rivalries and disputes between nations. In the second place, and closely connected1 to the first weakness, lines were run at an uneconomic cost, necessitating large national subsidies. Some countries refused to permit airlines to cross the air space above their territory, necessitating costly detours. Others refused landing rights, as well as transit rights. The necessity for hard and persistent bilateral bargaining resulted, especially in Europe, in the establishment of so many competing national services that air transport became highly uneconomic, and lines were heavily subsidized at the expense of national taxpayers.

Behind much of this friction lay considerations of national prestige, but more especially of national security. Civil air transport fleets, and civil aircraft industries, represent a war potential, a reserve both of personnel and of industrial capacity which is all-important in time of war. The truth of this has been obvious in the present conflict. The emphasis in the pre-war period upon security aspects of civil air transport was, therefore, natural, and goes far to explain the failure of nations at that time to agree upon a method of effective international control of international air services. Because of the rapid development of aviation since the outbreak of war the international rivalries which would develop in the future after the concldsion of hostilities would be even sharper than those of the past, unless some improvement is effected.

The decision which the united nations must make . in the near future in the post-war organization of air transport thus is vital. An enlightened settlement will go a long way toward establishing a lasting peace, and a new world order of security. It can constitute a model for the settlement of . other difficult international problems, and create an atmosphere in which the settlement of these other problems will become easier. Failure to devise a working system of cooperation and collaboration will not only lead to endless friction in the field of air transport, but will prejudice the establishment of an effective world security organization.

From the point of view of practical politics, the problem is to find some method of international control which will serve the desired objectives, and yet be generally acceptable to all. The task is not an easy one. For many months it has been the subject of exhaustive study by Canadian officials and of

active consideration by the government. I think that a policy which is designed to. meet these ends has been worked out, and that the Canadian representatives in future international discussions on air transport will enter those discussions well prepared, and with a clear view of the type of arrangement best designed to meet the needs of Canada for the development of international air services and provide for a fair share of international air transport, and at the same time establish an atmosphere of working-cooperation among all other interested nations.

It is obvious that air regulations dealing with such matters as traffic rules, safety and navigational aids should be, as nearly' as possible, uniform throughout the world, and that an international authority must be set up and given the power to prepare regulations which would be accepted as standards by the members of that authority. This alone, however, is not enough. I have already stated that the difficulties, in the pre-war period, arose because certain nations exercised their sovereignty over the air, above their countries, in a fashion designed to hinder the development of air transport, and foster ill will. Accordingly, I think that we must be prepared to subscribe to the granting of general freedom of transit for international air services, on a universal basis, so that national air services will automatically possess the right to cross the territory of other nations, en route to their destinations, and to land in other countries for refuelling and reservicing, without having to request the specific permission of each government concerned. However, in order to prevent misuse of this freedom, it would appear necessary to grant, to some international authority, power to supervise the manner in which it is carried out. Moreover, in thus establishing freedom of transit, countries such as Canada, which are strategically placed, will be making a very great contribution to an effective international system, particularly when, like Canada, their population is not great, and the amount of traffic which they have to offer for international carriage would consequently not be large. On the other hand, this right of transit would be of particular benefit to those nations, which have a great deal of potential traffic for international air services, but are less strategically located.

It would seem reasonable, therefore, to suggest that freedom of air transit should be extended to cover, as well, a certain amount of freedom of carriage of goods and passengers, in order to enable all nations to share in a proportion of the international traffic

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available, without having to go in for all the bilateral bargaining which so confused the pre-war situation. It would seem necessary, accordingly, that each nation should at least possess the right to carry passengers and cargo from its own territory to other countries, and to bring back from those other countries passengers and cargo which are intended for its own territory. This would mean that the nations of the world, operating international air services, would not only be unhampered in the movement of their aircraft across the territories of other countries, but would also have a certain amount of traffic available to their own air services, without the necessity of bilateral bargaining, thus increasing the chances of reasonable economic operation. In order to prevent a helter-skelter of airways developing, each country would, of course, designate the routes across its territory which the airlines of other countries must follow, just as it does for its own domestic services.

While international air transport will be a great and important factor in the future, nevertheless one airplane can do a great deal of work, and, in tl\e post-war period, all the air traffic available may be carried by a comparatively small number of aircraft. It would not seem desirable that each nation should be allowed to establish as many international services, in as many areas, as it wished, thus bringing about a useless, uneconomic and competitive situation which could only lead to trouble. Not only should some international air transport authority supervise the administration of the freedoms, and rights, suggested above, but the authority should also have power to regulate international air services, in order to prevent the dangers of unnecessary and uneconomic duplication. Some such method might be used as control of rates and schedules, and licensing. Because an authority, established on a universal basis, might have difficulty in giving due consideration to the special needs of particular regions, it would be desirable that it work through regional groupings or councils.

If any such framework for international cooperation in the field of air transport should be developed, and I think it desirable that it should, it would seem that cross-border services, such as those between Canada and the United States, should be considered in a special category, and dealt with specially by the two countries concerned, since services originating in the one country and terminating in the other are primarily trans-frontier extensions of domestic air services.

The Canadian government is of the opinion that some form of organization along the

lines suggested above would go far toward meeting the needs of the world for the establishment of effective international cooperation, in the provision of efficient and economical air services, and, at the same time, provide for the fair and equitable participation of Canada in these air services.

One year ago the Prime Minister said, "The government sees no good reason for changing its policy that Trans-Canada air lines is the sole Canadian agency which may operate international air services." This is a matter of purely domestic concern, and this decision is, in the opinion of the government, the one best calculated to serve the interests and needs of the Canadian people. It has, however, no bearing upon any decision of this type that may be made bj' other governments. The choice of instruments for the operation of international air services by the countries concerned is, and must remain, a matter of purely domestic decision. Each country must decide for itself whether its airline companies operating international air services are to be privately owned, or state owned, whether there is to be one single national company or several.

I should like to say a word at this point regarding international discussions on air transport policy. As members of this house are aware, there was a preliminary exchange of views in London last October among the members of the commonwealth, in which a Canadian delegation under my chairmanship participated. A complete airing of ideas and opinions, with regard to international air transport after the war took place, and provided a useful introduction to the broader discussion which will take place in due course. Canada, of course, expects to participate in these further discussions also, and is at the moment taking part in discussions with the United Kingdom and the United States regarding the holding of further exploratory conversations. No final decisions were taken in London, but I may say that it was evident from the outset that all participants had the same general objectives in view-the objectives which I have described earlier in this statement-and that there was a broad basis of general agreement as to the way these objectives might best be attained. All the participants were desirous of improving the air services between their territories, and agreed that such development must take place within an international framework, and that closed discriminatory systems could only promote disharmony, and endanger the chances of reaching that broad agreement which is necessary.

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Following the conversations in London, a statement was issued to the press, reading as follows:

"The conference with the dominions and India on civil air transport, which has been meeting in London since Monday last, concluded its 'sessions this morning. The conversations were informal and exploratory, and the conclusions reached are subject to confirmation by the governments represented at the conference. Unanimous agreement was reached as to the recommendations which should be made regarding the lines on which civil aviation should be developed after the war, and as to the contribution which the governments of the commonwealth and empire could make towards international cooperation in this field."

The chairman of the London meeting was Lord Beaverbrook, who is a member of the United Kingdom government charged by Mr. Churchill with responsibility for the coordination of post-war ci-vil air transport policy. Speaking in the House of Lords a week after the conclusion of the London meetings, Lord Beaverbrook emphasized the unanimous agreement which the conference had reached on every issue presented to it. He said that those isues were " adequate for testing immediate opinion in relation to civil aviation." He added that it had been agreed that " the international air transport authority should be intimately associated with and responsible to any united nations security organization which might be established."

In summary, I may say that the Canadian government is determined that Canada, by its participation in the framing of the general settlement of air transport, will make as great a contribution as possible to the successful solution of this problem. Our representatives in the international discussions, therefore, will be authorized to support or initiate such proposals as. in the government's opinion, will be likely to result in the establishment of an international air transport authority, with effective powers, supported by all governments concerned, which will further international cooperation and goodwill, ensure that international air routes and services are divided fairly and equitably among all member nations, meet the needs of the peoples of the world for efficient and economical air transport, and contribute to the establishment and maintenance of a permanent system of general security.

Before taking my seat I wish to table a copy of a tentative and preliminary draft of an international air transport convention. I have referred to the work of the officials of the government and the government itself in the preparation of this as a basis for further study at international discussions. Since portions of this have been made public in another country

and have been printed in the press, it has been thought wise to table the document here. As there will be a great deal of interest in this document I ask the unanimous consent of the committee to have it published in Hansard.

Topic:   DEPARTMENT OF MUNITIONS AND SUPPLY
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LIB

Joseph-Arthur Bradette (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

The CHAIRMAN:

By unanimous consent of the committee.

DRAFT INTERNATIONAL Am TRANSPORT CONVENTION

Contents Page

Summary 1626

Preamble 1627

A rfipIpq[DOT]

I The authority 1628

II Obligations of member states

1628III The assembly

1628IV The board

1629V Regional councils

1629VI Licences

1630VII Airports and other ground facilities_ 1630VIII Finance

1631IX Relationship to the internationalsecurity organization

1631X Joint operating organizations andpooling

1631XI Other agreements and arrangements.. 1631XII Amendments, ratification, etc

1632XIII Definitions

1632XIV Provisional article

1632Annex

1633

It is assumed that an overriding treaty of peace will determine the obligations and rights of the defeated powers under this convention.

Summary

1. The convention establishes an international air transport authority, gives it a constitution and endows it with powers. The authority has the normal structure of an international organization: an assembly representing all the member states and a small executive committee which is called a Board of Directors. In each regibn a regional council is set up to deal with matters of regional concern.

2. The authority is charged with the duty of planning and fostering the organization of international air services so as

(a) to make the most effective contribution to the establishment and maintenance of a permanent system of general security,

(b) to meet the needs of the peoples of the world for efficient and economical air transport. and

(e) to ensure that, so far as possible, international air routes and services are divided fairly and equitably between the various member states.

3. The convention is an agreement between states and is not concerned with such domestic questions as whether the international air services of the various member states should be government-owmed or privately-owned or whether a state should have more than one government-owmed or privately-owned airline company engaged in international air transport. These are matters of domestic policy which each individual member state decides for itself. They are, therefore, outside the scope of the international convention.

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4. The number of votes which each member state can cast in the international air transport assembly varies from one to six depending on its importance in international air transport. The board of twelve members, which is elected by the assembly, must include at least one national of each of the eight member states of chief importance in international air transport.

5. A company wishing to operate an international air service makes application first to its own government. The goverrnment, if it approves of the application, forwards it to the appropriate regional council. The regional council holds formal hearings on the application before deciding whether the applicant should receive a licence and, if so, under what conditions.

G. The regional council has power to issue a licence entitling a company not only to

(a) freedom of air transit over the airways of all the member states of the region but also to

(b) the right to land at airports in the region for refuelling, repairs and in emergency,

(c) the right to carry passengers, mail and cargo from the home state to any other member state and

(d) the right to bring back passengers, mails and cargo to the home state from any other member state.

7. A state which considers that a decision by a regional council is unfair has the right to appeal to the board of directors and the board can set aside or modify the decision.

8. The application for a licence from an airline which wishes to operate a service passing over territory under the jurisdiction of two or more regional councils does not go to all the regional councils concerned but goes to the board.

9. The authority, acting through either the board or a regional council is given power to determine frequencies of service on each route, to allocate quotas between the Various member states and to determine rates of carriage for passengers and cargo.

10. On questions affecting world security the international air transport authority is made subject to the international security organization which is to be set up by the united nations. That organization may, in the interests of world security, order the international air transport board to withdraw, suspend or modify a licence, take certain measures concerning technical services, operating facilities and bases or set up one or more operating organizations to operate the air services on certain routes or in certain regions.

11. Two or more member states may decide that the best way of operating all or some of the air services between them is not by rival companies each carrying a national flag but by a joint organization. The member states are not prevented from establishing such joint operating organizations. Indeed the board or a regional council may recommend to the member states concerned that they pool the air services on certain routes or in certain regions or constitute joint operating organizations to perform certain air services. A state has the right to participate in a joint operating organization either through its government or through an airline company or companies designated by its government. The companies

may, at the sole discretion of the state concerned, be state-owned or partly state-owned or privately-owned.

12. Services between two contiguous states, such as Canada and the United States, are excepted from the provisions of the convention and are left to be dealt with by agreements between the two states concerned. Contiguous states may, however, by mutual consent, give the international air transport authority jurisdiction over the services between them.

13. In order that the air regulations throughout the world should be as uniform as possible, an agreed set of regulations will be drawn up by the international air transport assembly and brought into force by each member state. These regulations will cover such matters as air safety, rules of the air, competency of air crew, ground signals, meteorological procedure,

' navigational aids, communications, airworthiness, national registration and identification of aircraft, carriage of dangerous goods and salvage.

14. The aircraft licensed by the board or the regional councils 'will be assured wherever they go in the world of being able to use adequate airports and other ground facilities on payment of reasonable fees and charges. Member states may elect to bear all or a portion of the costs of constructing and maintaining the necessary facilities. If a member state does not so elect, the costs are advanced by the board and borne by the board or apportioned among states using the facilities. The board may require, in return for advancement of costs a reasonable share in the supervision of the construction work and in the control of the airports and other facilities. If a member state so requests the board may itself provide, man and maintain any or all the airports and other facilities which it requires on the territory of that state and may impose reasonable fees and charges for their use.

15. The expenses of the international air transport authority wall be borne by the member states in proportion to the number of votes at their disposal in the assembly, provided that those expenses of a regional air transport council which are properly chargeable to the states participating in that council, will be borne by those states.

16. Some time will be required after the coming into force of the convention before the international air transport authority is in full working order. The assembly must meet, the board must be elected, the regional councils constituted, their rules of procedure agreed upon. Certain temporary arrangements are therefore contemplated to cover the inital period of existence of the authority. The convention does not terminate the rights of companies now engaged ininternational air transport. These companies are given two years to secure licenses from the authority. Furthermore, airline companies designated in a schedule to the convention are deemed to possess licences issued by the authority to operate routes designated in the schedule and these licences remain valid until modified or withdrawn by the board or the competent regional council.

Preamble

The governments signatory hereto agree to the establishment of an international air transport authority. *

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Article I The Authority

Section 1

An authority is hereby established to be known as the international air transport authority and to consist of an assembly, a board of directors, regional air transport councils and such other units as may be created pursuant to the provisions of this convention.

Section 2

The authority shall plan and foster the organization of international air services so as

(a) to make the most effective contribution to the establishment and maintenance of a permanent system of general security,

(b) to meet the needs of the pepples of the world for efficient and economical air transport, and

(c) to ensure that, so far as possible, international air routes and services are divided fairly and equitably between the various member states.

Section 3

The authority shall have exclusive jurisdiction, pursuant to the provisions of this convention, over international air services between two contiguous member states, provided that any two contiguous member states may agree that services between them shall come under the exclusive jurisdiction of the authority. When such an agreement has been notified by both states to the board, and until such agreement has been terminated, the authority shall have exclusive jurisdiction, pursuant to the rovisions of this convention, over the services etween the two states.

Article II

Obligations of member states

Section 1

Each member state recognizes that every state has complete exclusive sovereignty over the air space above its territory.

Section 2

Each member state undertakes to give the following freedoms of the air to the international air services operating under the provisions of this convention to the extent allowed by the licence issued to the services:

(1) The right of innocent passage,

(2) The right to land for non-traffic purposes (e.g~ refuelling, repair, emergency),

(3) The right to discharge passengers, mails

and freight embarked in the territory of the state or states whose nationality the aircraft possesses, and .

(4) The right to take on passengers, mails and freight destined for the territory of the state or states whose nationality the aircraft possesses.

Section 3

Each member state may

(a) designate the route to be followed within its territory by any international air service and the air ports which any international air service may use, and

(b) impose or permit to be imposed on any international air service just and reasonable charges for the use of the air ports and

IMr Howe.]

other facilities on its territory, which shall not be higher than would be paid by national aircraft engaged in comparable international services,

provided that, upon complaint by an interested air carrier through the government or governments of which it is a national, the designation of routes and use of air ports, and the charges imposed for the use of air ports and other facilities shall be subject to review by the licensing authority.

Section 4

Each member state undertakes to make available such radio frequencies and to provide such meteorological services as may from time to time be required by the licensing authority for the safety, efficiency and regularity of the air services licensed by it.

Section 5

Each member state undertakes to perform the obligations imposed on it by this convention and to enact legislation necessary to carry out its terms including

(a) legislation to ensure that no air carrier may operate international air services unless that carrier is in possession of a valid licence authorizing such services, issued under the provisions of article VI of this convention, and

(b) legislation to bring its national laws into conformity with the regulations approved by the assembly under the provisions of subsection 5 of section 2 of article III of this convention. This action shall be taken within the period of one year from the date of approval by the assembly or, if it is impossible owing to exceptional circumstances to do so within the period of one year, then at the earliest practicable moment and in no case later than eighteen months from the date of approval by the assembly.

Section 6

Each member state undertakes to permit the operation within its territory of operating organizations constituted under the provisions of section 3 of article IX of this convention, provided that permission to an operating organization to engage in domestic qir transport within its territory shall be in the discretion of the state.

Article III The assembly

Section 1

The international air transport assembly shall be composed of representatives of the member states. Each state shall be entitled to the number of votes [one to six] in the assembly provided in the annex to this convention and may appoint as many representatives to the assembly as it has votes and may replace them from time to time. Each state may cast all of the votes allotted to it regardless of the number of its representatives present at any meeting. Decisions of the assembly shall be. taken by a majority of the votes cast except where otherwise provided in this convention. There shall be deemed to be a quorum if the representatives present can cast one-half of the possible votes.

t

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Section 2

The duties of the assembly shall be:

(1) To elect the international air transport board.

(2) To elect the president of the board. The president shall hold office for a period of six years.

(3) To meet from time to time as occasion may require and at least once a year.

(4) To examine and approve the annual report of the board, and to decide any matter referred to it by the board.

(5) To draw up and maintain regulations governing such matters as air safety, rules of the air, competency of aircrew, ground signals, meteorological procedure, navigational aids, communications, airworthiness, national registration and identification of aircraft, carriage of dangerous goods, salvage.

(6) To make regulations governing the preparation of budgets and financial statements by the board and to approve the annual budget and the financial arrangements made 'by the board.

Section 3

The assembly shall have power:

(1) To determine its rules of procedure.

(2) To fix the salaries of the president and the other members of the board.

(3) To refer to subsidiary commissions, the board or any other appropriate agency any matter within the sphere of its jurisdiction.

(4) To deal with any matter within the sphere of action of the international air transport authority not specifically assigned to the board or the regional councils.

Article IV The Board

Section 1

The international air transport board shall be elected by the international air transport assembly. The board shall be a permanent body responsible to the assembly and composed of twelve members in addition to the president. They shall not be members of the assembly. They shall hold office for a period of six years. Two members of the board shall retire annually and in rotation but shall be eligible for reelection. The assembly shall have the right to dismiss any member of the board at any time. In the event of the dismissal or death of a member of the board, the assembly shall elect a successor who shall hold office for the unexpired portion of his predecessor's term of office. The board shall include at least one national of each of the eight member states of chief importance in international air transport.

Section 2

The duties of the board shall be:

(1) To constitute, subject to the approval of the assembly, the following regional air transport councils: (for example, European,

North Atlantic, North Pacific, Inter-American). In constituting a regional council the board shall designate as participating states those member states which are principally concerned in the international airlines of the region. The board shall also define the boundaries of the region or designate the routes over which the regional council shall have jurisdiction. The

board may from time to time revise the lists of participating states and alter the boundaries of the regions or change the designations of the routes.

(2) To decide, subject to the approval of the assembly, the method of appointment, the salaries and conditions of service of its employees, including those members of the regional councils who are appointed by the board.

(3) To establish the rules of procedure of subsidiary commissions and of regional councils.

(4) To administer, subject to the approval of the assembly, the finances of the international air transport authority.

(5) To grant licences over routes coming within the jurisdiction of two or more regional councils or of no regional council; and in these cases to exercise the duties of a regional council.

(6) To conduct research into all aspects of air transport which are of international concern, to make the results of its research known to all the member states and to facilitate tbe exchange of information on air transport matters between the member states.

Section 3

The board shall have power:

(1) To revoke or alter, after public notice or hearing, any decision of a regional air transport council including any decision to grant, withhold, alter, amend, modify, revoke or suspend a licence and any decision determining frequencies of service, allocation of quotas, or rates of carriage.

(2) To carry out the provisions of article YII of this convention (airports and other ground facilities).

(3) To establish, subject to the approval of the assembly, subsidiary commissions responsible to it.

(4) To institute such training facilities for its employees as it may consider necessary.

Section 4

Decisions of the board shall be taken by a majority of the votes east. One-half the members of the board shall form a quorum. The president shall have a casting vote. The board shall determine its rules of procedure but the place of its permanent seat shall be decided by the assembly.

Article Y Regional Councils Section I

A regional air transport council shall be composed of not less than six nor more than nine members. One-third of the members shall be appointed by the international air transport board and hold office at the pleasure of the board; they shall possess special knowledge of problems of air transport and shall be nationals of states other than those which are designated by the board as being principally concerned in the international airlines of the region. The other members shall be appointed by the designated states. The number of members to be appointed by each of the designated states shall be, from time to time, determined by the board, having regard to the relative importance to each state of the international air transport services under the regional council's jurisdiction and to

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the relative importance of each state in air transport. The members appointed by designated states shall hold office at the pleasure of the government appointing them.

Section 2

Decisions of a regional council shall be taken by a majority of the votes cast. One-lialf the members of a council shall form a quorum.

Section 3

Each regional council shall appoint a managing director who shall hold office for a period of four years.

Section 4

The duties of a regional council shall be:

(1) To grant licences to operate international air services within the region; to withhold licences; to attach to the exercise of the privileges granted by a licence such reasonable terms, conditions and limitations as the public interest may require and as are consistent with the terms of this convention; to _ alter, amend, modify or suspend any licence, in whole or in part, or revoke any licence, in whole or in part, for deliberate failure to comply with any provision of this convention or ot any order, rule or regulation issued under this convention or any term, condition or limitation of the licence.

(2) To determine rates of carriage for passengers and cargo, having regard, among other things, to standards of speed and of accommodation. and to consult with the postal administrations regarding rates of carriage for mail.

(3) To collect and publish information and cost statistics relating to the operation of international air services within the region.

Section 5 *>

If the airline companies of more than one state are operating on a route a regional council shall have power to determine frequencies of service on the route and to allocate quotas*.

Article VI Licences Section 1

(1) Applications for licences can be submitted only by governments of member states. An application by a person or corporation shall be submitted through the intermediary of the government of the member state of which the person or corporation is a national.

(2) An application shall normally be made to the competent regional air transport council. If the application, however, is for a service which falls within the jurisdiction of two or more regional councils or of no regional council, the application shall be made to the international air transport board which may refer it to one or more regional councils for their opinion.

Section 2

(1) The board or a regional council shall not grant, renew, alter, amend, modify, suspend or revoke a licence except after reasonable notice

*The' term "frequencies of service" means the number of trips on the route per day or per week. The term "quotas" means the number of trips which the airline companies of any one member state may operate on the route.

to all member states in the region or regions concerned and after a formal hearing at which all these member states shall have the right to be heard except in ease of emergency or under the provisions of article IX of this convention (relationship to the international security organization).

(2) The board or a regional council shall not grant a licence unless it is satisfied:

(a) that the person or corporation applying for the licence is able properly to provide the proposed air services, and to conform to the provisions of this convention and the rules, regulations and requirements of the international air transport authority and the competent regional councils, and

(b) that the proposed services and their performance by the applicant would serve public convenience and necessity.

Section 3

(1) The holder of a licence granted by the board or a regional council shall have the right to operate to, within, over and away from the territory of any member state to the extent allowed by the licence. The licence may allow the holder to make stops in the territory _ of any member state for refuelling, repairs, taking on or discharging of passengers, cargo and mail and for any other purpose and member states shall allow such stops, provided that no licence shall grant permission to a person or corporation possessing the nationality of one state to take on passengers, cargo or mail within the territory of any other state for discharge within contiguous territory of the latter or within the territory of a third state except with the consent of the member state or member states concerned.

(2) No licence shall be granted for a period of more than ... years but licences may be renewed on application. Any licence may be revoked, altered, amended, modified or suspended by the board or by the regional council which granted the licence.

Article VII

Airports and Other Ground Facilities Section 1

If an air carrier licensed by the board or a regional council is of the opinion that the airports or other ground facilities on the territory of a member state are not reasonably adequate for the safe, regular, efficient and economical operation of the air services which it is permitted by its licence to perform, it may so inform the government or governments of which it is a national. Such government or governments may, if the complaint is considered to be valid, transmit it to the appropriate regional council, or if more than one regional council or no regional council is concerned, to the board. After reasonable notice to all member states concerned and after one or more hearings at which these member states shall have the right to be heard, the board or regional council may request the member state to expand its existing facilities or to construct new ones or to man and maintain its existing or new facilities in accordance with standards set by the board or regional council. The board shall, at the instance of an interested member state, review any request made by a regional

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council and after public notice or hearing may suspend, withdraw, alter, amend or modify its terms. Each member state undertakes, at the earliest practicable moment, to give effect to the requests of the board or regional council.

Section 2

The expenses involved in carrying out any such request shall be apportioned as follows:

(a) The member state may elect to bear all or a portion of the costs,

(b) If the member state bears none of the costs or bear only a portion thereof, the costs (or the remaining portion of them, as the case may be) shall be advanced by the board to the member state and shall be borne by the board or be apportioned by the board, over a reasonable period of time, between the states (including the member state constructing the facilities) whose air carriers or services use the facilities.

In cases where the board advances costs it may require a reasonable share in the supervision of the construction work, in the control of the airports and other facilities, and in the revenues derived from charges levied.

Section 3

If a member state so requests the board may provide, man, maintain and control any or all of the airports and other ground facilities which it requires in the territory of that member state for the safe, regular, efficient and economical operation of the air services which it or a regional council has licensed and may impose just and reasonable charges for the use of the facilities. The member state shall either provide the land itself or facilitate the acquisition of the necessary land by the board on just and reasonable terms.

Section 4

A member state may at any time acquire and obtain complete control over facilities on its territory for which the board has advanced costs under section 2 of this article, or wrhich the board has provided under section 3 of this article, by paying to the board an amount which in the opinion of the board is reasonable in the circumstances.

Article VIII Finance

The expenses of the international air transport authority shall be borne by the member states in proportion to the number of votes at their disposal in the assembly, provided that those expenses of a regional air transport council which are, in the opinion of the board, properly chargeable to the states participating in that council shall be borne by those states in such proportions as the board may determine.

Article IX

Relationship to the International Security Organization

Section 1

The international air transport authority shall be subject, so far as questions involving world security are concerned, to the general organization which may be established among the nations of the world for the maintenance of peace and international security.

Section 2

The board, when informed by the international security organization that such action is required in the interest of world security, shall immediately and without formal hearing grant, withhold, alter, amend, modify, suspend or revoke any licence in whole or in part and take the measures concerning technical services, operating facilities and bases which the international security Organization has directed should be taken.

Section 3

The board shall, when informed by the international security organization that such action is required in the interest of world security, constitute, supervise and control one or more operating organizations to operate air services on routes or in regions designated from time to time by the international security organization, provided that such operating organizations shall not .engage in domestic air transport within any state without the permission of that state. The board may place operating organizations under the supervision and control of the appropriate regional air transport council.

Article X

Joint Operating Organizations and Pooling

Section 1

Nothing in this convention shall prevent two or more states from constituting joint air transport operating organizations but such organizations shall be subject to all the provisions of this convention including those relating to licences and to the registration of agreements with the board.

Section 2

Nothing in this convention shall prevent two or -more states from pooling their air services on certain routes or in certain regions but such pooled services shall be subject to all the provisions of this convention including those relating to licences and to the registration of agreements with the board.

Section 3

The board, or a regional air transport council, may recommend to the member states concerned that they pool the air services on certain routes or in certain regions or that they constitute joint operating organizations to perform some or all the air services on certain routes or in certain regions.

Section 4

A state shall have the right to participate in joint operating organizations either through its government or through an air line company or companies designated by it. The companies may, at the sole discretion of the state concerned, be state-owned or partly state-owned or privately owned.

Article XI

Other agreements and arrangements Section 1

This convention shall replace the international aerial navigation convention signed at Paris in 1919, the Ibero-American convention on aerial navigation signed at Madrid in 1926, the PanAmerican convention on commercial aviation

15S6

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Topic:   DEPARTMENT OF MUNITIONS AND SUPPLY
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NAT

Grote Stirling

National Government

Mr. STIRLING:

The understanding was that this matter would be set aside to a future date so that it could be digested before the discussion continued.

Topic:   DEPARTMENT OF MUNITIONS AND SUPPLY
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LIB

William Lyon Mackenzie King (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Liberal

Mr. MACKENZIE KING:

That is correct.

War Appropriation-Naval Services

Topic:   DEPARTMENT OF MUNITIONS AND SUPPLY
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DEPARTMENT OF NATIONAL DEFENCE FOR NAVAL SERVICES


6. Signal and wireless equipment, line construction, etc., $19,759,334.


March 17, 1944