Aviation Merger Plan

Aviation policy was considered at a special informal meeting of the Legisla tive Council of New Guinea on February 28.

The suggestion that there should be a merger of aviation companies in New Guinea, and that the resulting corporation should operate under a charter was dis cussed at considerable length. Mr. I. H.

Grabowsky, general manager of Guinea Airways Limited, was invited to address the meeting and explain the proposals.

The atmosphere, however, was unfavour able to the plan. The Legislative Council was still in a condition of agitation over the Shipping Bill, in connection with which the non-official members felt that they had been flouted; and it followed that they were quite willing to sink teeth and claw into the aviation merger plan, which was regarded as a proposal eman ating from the Federal Government in Canberra.

Mr. Page (Government Secretary) said there was considerable misapprehension.

The Commonwealth Government had not committed itself to any declaration of policy. It had suggested that the general principle of a merger of existing air

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transport companies might prove desir able, and it had invited opinions concern ing this plan.

Mr. Page expressed the personal opinion that this matter must be considered with long vision—regard must be had to two main features. There was the matter of the strategical and tactical value of New Guinea to Australia, and also the protec tion and encouragement of civil and com mercial aviation. It was desirable that Australia should have in her outlying ter ritories a highly efficient service which could be converted to military needs in time of emergency, and become the ad vance eyes and ears of Australia’s defence organisation.

Mr. Page outlined various difficulties in wa y Qf a merger, especially the danger of over-valuation of assets for purposes of capitalisation. He thought that in any merger the Government should have a financial interest equal to 51 per cent, of the capital.

Mr. Grabowsky discussed the merger proposals under three heads—namely, transport policy; history of aviation in the territory; and developmental possi bilities. He said that the original cost of freight in the Morobe District per native carrier was 22d. per lb.; the first aero plane arrived in 1927 and immediately reduced the rate to 18d. per lb. The development of aerial transport caused the rates to drop steadily year by year to their present level. He emphasised that investors generally in those early days had no confidence in aerial trans- Port in New Guinea, and finance was a

very serious problem. Eventually, how ever, money was found, an efficient service was organised, and as a result of the enterprise of Guinea Airways Ltd. and other early companies there was estab lished the gold industry which had proved of incalculable value to New Guinea.

“One hears very much now of the cost of air transport,” said Mr. Grabowsky, “but it should be realised that in order to create, by means of communication other than air, the development that has taken place in the Morobe District, it would be necessary for the Adminstration to build no less than 2000 miles of roads. That is a financial undertaking that the territory could not stand.”

Mr. Grabowsky asked for adequate pro tection of the interests which had boldly taken the early risks and established and developed air transport. By their enter prise and efficiency they had created a great industry, out of which they were able to obtain the revenue by which they lived. In that enterprise a sum of about £400,000 had been expended. Competi tion was desirable in every business; but was it fair that small operators, which had taken and were taking none of the earlier risks, should be allowed to come in, without the large, safe organisation that had been created and, using the available easy cargo, to cut and slash rates and generally disturb the fair econ omic balance that had been maintained?

The senior aviation companies accepted every class of cargo that was offered to them; the newcomers sought only the cream of the business. He gave an in stance of well-known men who sent their luggage by the cheap price-cutting aero planes, but had themselves travelled by Guinea Airways’ machines which had a reputation for stability and safety. If price-cutting were to continue unchecked, under present conditions, it would mean sooner or later the breakdown of the pioneer senior companies and with their collapse there must go the present guar antee of stability, safety, regularity of service, and capacity to handle every class of cargo. It was of tremendous import ance to the whole community that aerial transport should be maintained at the present high degree of efficiency.

Had it not been for aerial transport the Morobe goldfield would still be dormant.

Or alternatively the Administration would have been forced to undertake huge ex penditure for roads, which would have placed a heavy tax on the gold industry.

The policy of the aviation companies was to reduce freight rates steadily—but within reason. Contracts had been let to other companies for transporting goods into the interior at I.Bd. per lb. Guinea Airways Limited kept a most careful record of operating costs, and they amounted to 1.75 d. per lb. Such condi tions as this made it impossible to guar antee reliable and safe aerial services.

Aerial transport was the only available practicable form of transport for the Mor obe goldfield and it must be protected.

He argued that this could only be achieved by the merger plan or some other plan which would at one and the same time protect the interests of the responsible aviation companies and of the communities which use aerial transport.

The principle of a chartered company was not new—in fact, it was favoured by every responsible Government throughout the world in regard to the carrying on of essential public services. There was a chartered aviation company in existence in practically every big nation—Britain, Germany, France, and the United States.

It was not proposed to create a monopo listic concern —what was wanted was a plan to protect an essential public utility.

It was recognised all over the world that

ungoverned competition in a public utility simply led to inefficiency and frequently to a danger of life itself.

Mr. Grabowsky then visualised the effect on the development in New Guinea of a healthy aerial transport corporation carrying on under a Government charter.

Many of the present transport difficulties would disappear—officials would move quickly and freely from one point to an other, and residents would not be bound to their plantations. Air transport ser vices, established primarily to serve the gold industry, might under such a sys tem become a potent feature in the rapid development of various other industries in New Guinea.

Questions And Answers

Mr. Grose, asked whether Guinea Air ways, or the suggested merger, would un dertake an extension of aerial services throughout the .territory.

Mr. Grabowsky said that a corporation protected in the manner suggested un doubtedly would extend its operations and carry on regular services around the islands. For two or three years these might not be profitable, but eventually they would become revenue producing.

Mr. Hogan asked whether they had con sidered the possibility of the Morobe gold field petering out and no longer provid ing a backbone for services covering the whole territory.

Mr. Grabowsky said that that aspect had been considered and it was believed to be possible to create other services which would be self supporting and pro fitable by the time the Morobe goldfield was worked out. It was impossible to give a guarantee in that direction, how ever.

In reply to Mr. Neal, who asked for de tails of the capital of Guinea Airways Ltd., Mr. Grabowsky read from a news paper cutting, that the original capital was about £30,000; that in the first years the dividends were 40 per cent.; that the capital was then increased by issuing one bonus share for every original share; that 40 per cent, was then paid back on the whole of this issued capital (being equal to 80 per cent, on the original capi tal) ; and that this rate of dividend has since been reduced to 20 per cent, per annum.

In reply to Mr. Knox Mr. Grabowsky said that there must be reasonable co operation in the future between air trans port and road transport, but they would operate in different spheres. Guinea Air ways had never failed in handling every item of freight offered to it.

Mr. Knox raised the point that the maintenance of the two ports of Sala maua and Lae for the loading of aero planes, would place an unnecessary bur den upon the goldfields population. One port should be enough.

Mr. Grabowsky argued that both ports now were necessary—neither could be ignored. It had been necessary to install the big loading plant'at Lae because it had been found impracticable to operate heavily loaded aeroplanes from Salamaua.

To concentrate all loading operations at Salamaua would be more costly than to maintain the two ports.

Opinions Of Members

Mr. Grose submitted a series of careful arguments in support of his contention that “an aviation policy for this country, if it is going to be of any benefit at all, can operate only through control, and it must have a charter,” He opposed the merger plan, however, because it would confer too great privileges upon one par ticular set of people. He believed that one chartered Company should operate,

but with the control in the hands of the Government. He moved an amendment in that direction.

Mr. Hogan opposed the creation of a Government-controlled monopoly of air

transport. He said also that there was no evidence that the proposed merger would be in the best interests of the Ter ritory. He declared that owing to the absence of sound, well-based data it was

impossible at that stage to decide what aviation policy was necessary for the Ter ritory and what would be the best course to follow.

Mr. Mullaly agreed generally with Mr.

Hogan.

Mr. Neal declared that some definite aviation policy was necessary for New Guinea and Papua, and for the Solomons, but he opposed the proposed merger; and he reported the decisions of a public meeting held in Wau to protest against the merger plan. Mr. Neal emphasised dangers of a monopoly which the merger would create.

Mr. Pratt argued in favour of legisla tion which would control fares, freights, new routes and new services. In this way they would get the advantages urged by those who were in favour of a merger, without the dangers of a monopoly.

Mr. McLennan and Mr. Perriman both said that the discussion had been inter esting and helpful; but actually there was not sufficient information before them to enable them to make up their minds re garding an aviation policy for the Ter ritory.

The Administrator (who presided) pointed out that the merger plan had not been accepted by the Commonwealth, but had been placed before them for an ex pression of opinion. He suggested that matters could be advanced a stage further if they could agree generally upon some kind of aviation policy, and then, per haps, appoint a Sub-Committee to pro duce more definite proposals than they had before them at present.

A motion and a series of amendments were submitted, and it was finally agreed that the granting of an exclusive charter should depend upon the terms of the grant; that the meeting could not express an opinion until it knew the essential terms of the grant; that an adequate aviation policy, linking New Guinea and Papua with Australia, was desirable; and that the Commonwealth Government should submit for their consideration the fullest information in its possession.

Dr. and Mrs. Clifford James sailed by the Malaita for the Solomon Islands on April 4 to take up duties at the Melane sian Mission’s Hospital on Malaita Island.

During his furlough Mr. James made a quick trip to Fiji to study at first hand the latest methods in the treatment of leprosy.