AIR MAILS

Otago Daily Times, Issue 23221, 19 June 1937, Page 10

AIR MAILS

AGREEMENT OUTLINED OFFICIAL STATEMENT SUBSIDY PAYMENTS The last air mail from England has brought the full text (previously referred to in cabled messages) of the statement made from the- office of the British Air Ministry regarding the proposed agreement between the British Government and Imperial Airways for the operation and progressive development of the Empire air mail scheme to India, Australia and South Africa, with the later extension to New Zealand.

The scheme proposes the carriage of all first class outward mail from Great Britain at the flat rate of lid per ioz, but it does not follow that the dominions will also be able to agree to that flat rate for their outw;~d air mail. The New Zealand outVnrd air mail charge has not yet been determined. It will probably be somewhat .in excess of lid per ioz, but it will be very substantially below the present rate of Is 6d per ioz. The current agreements between the Imperial Airways Company and the British Government expire in 1939, but in 1934, five years before that date, the Government announced that a new agreement would provide for a bold and farseeing policy, in the commencement in 1937 of the carriage of all outward first class letter mail from Great Britain to Empire destinations at the flat rate of lid per ioz, the current Empire postage rate. The order in which the plan is to be applied is for a commencement on the London-Durban service and its extension to the LondonSingapore service before the end of the year. The complete scheme, which will be in operation next year, aims at providing flying boat services on the routes to South Africa, India and Australia, assisted by land plane services to Egypt and India,' both flying boat and land plane services being equipped with new machines, the Short Empire boats and the Armstrong-Whitworth Ensign planes. FREQUENCY OF SERVICES

The flying boat services will be — -Three services a week between London and Kisumu (Kenya Colony), of which two will go on to Durban (Union of South Africa); and three services a week to Singapore, of which two will go on to Sydney. The land plane services will probably be three services a week to Egypt, of which two will go to India. To sum up, the following will be the frequency of the services under the scheme: — London-Egypt (Alexandria), nine services in each direction. London-Central Africa (Kisumu), three services in each direction. London-South Africa (Durban), two services in each direction. London-India (Calcutta), five services in each direction. London-Malaya (Singapore), three services in each direction. London-Australia (Sydney), two services in .each direction.

The time of transit to these places will eventually be two days to Egypt, three days to India, three to Central Africa, four and a-half to Durban, and four and a-half to Singapore, and seven to Australia. As the agreement between the British, Australian, and New Zealand Governments for the extension of an air service across the Tasman was still under discussion when the statement was drawn up, there is no reference to New Zealand, beyond a statement that pending the availability of air connection to the trunk routes permitting the through transmission by air, first class mail will be conveyed by air to points most convenient for connection with surface transport. The official statement deals with the proposed agreement clause by clause, and only a brief summary is possible. Flying-boats and land planes, which have a load capacity of roughly 3.1 tons, are to be replaced within a period of seven years, and there are special clauses to safeguard the position which the company will face during certain rush periods, as at Christmas, when the maximum mail load which the company will be required to carry will be limited, if the demand is extreme, to 175 tons outward and 100 tons inward during the month before Christmas Day. As the scheme develops these figures will be raised to 210 and 125 tons, but the wording of the clause permits of a good deal of flexibility. FINANCE OF THE SCHEME Again, the provisions as to the payment of subsidy, which is divided into a direct and an air mail subsidy, are very flexible and may be adjusted upwards or downwards according to operating experience, costs of aircraft, fuel and oil, and other factors, but the following scale has been adopted as the basis for the payment of the general annual subsidy payable by the British Government:— £750,000 in Ist, 2nd, and 3rd years. £675,000 in 4th, sth, and 6th years. £600,000 in 7th, Bth, and 9th years. £525,000 in 10th, 11th, and 12th years. £450,000 in 13th, 14th, and 15th years. The total contributions to the general subsidy from the various overseas dominions, colonies, and protectorates is fixed at not less than £185,000 per annum for each of the 15 years, to be paid normally to the British Government and appropriated in aid of air votes, from which the annual subsidies, as above, will be paid.

In certain instances contributions may be made direct to an associated company, such as Qantas Empire Airways, operating over the Aus-tralia-Singapore section. MAIL CARRIAGE SUBSIDY In addition to the general subsidy there is also a mail carriage subsidy, which is a flat subsidy of £900.000 per annum over the full term of the 15-year agreement. This payment, the postal contributions of the United Kingdom and the other participating countries, will be made from the Post Office vote, though, as in the case of the general subsidy, companies such as Qantas may be paid their mail carriage subsidies direct. Of the total mail subsidy of £900,000 the contributing countries are to find not less than £315,000 per annum. The payment of £900,000 represents the estimated net revenue

which a flat postage rate of 2Jd per half-ounce on the estimated volume of first-class mail to be carried would produce. The fixing of the flat rate of lid per half-ounce and Id per postcard, as compared with the present Imperial letter rate of lad for the first ounce and Id for each additional ounce, will, it is estimated, entail a loss of postal revenue to begin with of about £200,000 per annum, which is regarded as a reasonable outlay on the development of the service, and as a loss which may be eliminated with the increase in mail carriage during the period of the agreement. Should the tonnage of mail matter exceed the present estimates (1250 tons during the first seven years and 1500 tons in the later years) an additional payment may be made at the rate of £350 a ton.

[The oversea countries therefore will be called upon to pay approximately one quarter of the general subsidy and roughly one-third of the postal subsidy, making a total of £500,000 a year. The statement does not refer, of course, to the allocation of this amount, a matter which presents many difficulties, as has been instanced by the long discussions over the Tasman service.] THE GUIDING PRINCIPLES

In a general note, the Air Ministry officials state that the financial provisions of the scheme are based on an attempt to apportion the risks of loss and expectation of profit equitably between the company and the Government. It was felt that in an enterprise of such novelty and magnitude it would be preferable that the risk of changes in the factors governing costs and revenue over which the company had no control should be accepted by the Government rather than by the company On the other hand, the company, while accepting the normal business risks, will have the incentive to increase its revenue and to reduce costs through the condition that the subsidy shall be on a gradually decreasing scale, unless it is able to satisfy the Secretary of State that the periodic reductions ought not to be enforced, and by a provision that savings effected in prime costs are shared between itself and the Government. Moreover, through its holding of the deferred shares, the Government possesses the right to share in any profits earned beyond a level sufficient to provide a dividend on the ordinary shares of 10 per cent, in any year. PROVISION OF GROUND ORGANISATION

Aerodromes and ground facilities which are essential as aids to navigation are to be provided free of expense to the company, but the company is required to provide and maintain all facilities necessary for the maintenance of aircraft, for the handling of mails and freight, and for the convenience of passengers.