LETTERS

No. 245

Embassy of the
United States of America,
New Delhi,
October 26, 1964

Dear Mr. SECRETARY

I have the honor to refer to the announcement by Air India relating to the operation by Air India of daily flights throughout the year between London and New York. It is my understanding that, with the scheduling of daily service, Air India believes that it will be able to develop and further increase the primary justification traffic between our two countries, traffic which both countries agree is the firm base on which the Air Transport Services Agreement between the United States and India signed on February 3, 1956 stands.

The Government of the United States of America, being opposed in principle to predetermination, does not object to the proposed Air India operations for the winter of 1964/65. As the Government of India is aware, the Air Transport Services Agreement does not require schedule filings by either Government on behalf of its designated airlines and does not give either country the right to disapprove the proposed schedules of these airlines. The designated airlines of each country are free to provide the level of services they believe is commercially justified within the framework of the Bermuda capacity principles. However, while neither country will impose predetermined frequencies upon the airlines of the other country, both the United States and India have the right under the capacity articles and Article 12 of the Air Transport Services Agreement to request the bilateral examination at an appropriate time and on an ex post facto basis of the capacity offered by the airline or airlines of the other country, if it appears that the capacity offered is not consistent with the capacity principles set forth in Articles 6, 7 and 8 of the said Agreement.

In order to describe more fully the principles embodied in these articles, and pursuant to Article 9, the United States wishes to set forth certain procedures and clarifications of the Agreement's capacity principles in which, it understands, the Government of India concurs: 

1. With respect to the application of Article 8 of the Air Transport Services Agreement, the capacity provided by each airline shall be that which is designed primarily to accommodate traffic having its true origin or destination (as defined in Paragraph 3 below) in the country of which the airline is a national, that is, primary justification traffic, or that which each airline concerned can reasonably establish as its anticipated needs for the carriage of such traffic. The classification of traffic as primary justification traffic or secondary traffic on the basis of true origin and destination will not be affected by stopovers enroute or in the territory of either party to the Air Transport Services Agreement. Thus, primary justification traffic for a United States airline would be the volume of traffic originating in or destined for the United States which transits, stops over, or terminates in India, and for an Indian Airline the volume of traffic originating in or destined for India which transits, stops over, or terminates in the United States. 

2. In the application of Article 8 of the Air Transport Services Agreement, consideration should be given to the following factors, among others: 

a. The size of the United States-India air traffic market, its rate of growth, and the needs of the public for direct, as well as connecting services; 

b. The total traffic between India and the United States carried by airlines foreign to both countries and by other means; 

c. Factors affecting the requirements of through airlines operations, including the effect which the growth of traffic
to other points along the routes specified in the Air Transport Services Agreement may have on the capacity offered in the United States-India market, it being understood that capacity provided for such traffic will not be used for the carriage of an unreasonable amount of secondary traffic; and

d. The geographical position of the United States and India.

3. For the purpose of Article 8 of the Air Transport Services Agreement, it will be necessary, commencing on September 1, 1964, to have available accurate statistical data on the movement of traffic as follows:

a. The Government of the United States will transmit to the Government of India statistical reports for passengers and freight traffic embarked or disembarked in India by  United States airlines during the first seven days of the  months of January, March, May, July, September and  November, or on some other mutually agreed sampling  basis. These reports will provide the true (that is, initial) origin and ultimate destination as shown on the pertinent  ticket or way bill, or on combinations of tickets or way bills, and the Indian point of embarkation and disembarkation  of this traffic by these airlines. The traffic reported will be broken down so as to show (i) primary justification traffic and (ii) secondary traffic. Secondary traffic will be further broken down to show that which moves between India and third country and that which moves between two third countries. There will also be reported all transit traffic on United States airlines carried on flights making traffic stops in India.

b. The Government of India will transmit to the Government of the United States for the Indian airline statistical   reports giving the same information with respect to its traffic moving to, from, or across United States territory, although these data may be based on the entire months of   January, March, May, July, September and November instead of the first seven days of these months.

In addition, it is the understanding of the Government of the United States that, in modification of Paragraph 5 (c) of the Schedule to the Air Transport Services Agreement, the Government of India agrees that United States airlines may operate to or through any of the three points in India specified in Paragraph 2 of that Schedule,
that is, Bombay, Delhi, and Calcutta, as long as no more than one such point is served on any one flight.

I propose that, if the preceding understandings are acceptable to the Government of India, this note and your reply concurring therein shall constitute an Agreement between our two Governments amending and implementing the Air Transport Services Agreement signed on February 3, I956, and replacing the notes relating thereto exchanged on that same date.

This Agreement shall enter into force on the date of your reply and shall remain in force as, long as the Air Transport Services Agreement remains in force.

Accept, Sir, the renewed assurances of my high consideration.

Sd /- 
 
CHESTER BOWLES.

Shri V. SHANKAR 
Secretary, Ministry of Civil Aviation
Government of India
New Delhi.

Ministry of Civil Aviation, 
New Delhi.

October 26, 1964

Excellency,

I have the honour to acknowledge the receipt of your letter dated 26th October, 1964, with regard to the procedures agreed between the Contracting Parties in pursuance of the Air Transport Services Agreement signed on 3rd February, 1956, which reads as follows :

“I have the honor to refer to the announcement by Air India relating to the operation by Air India of daily flights throughout the year between London and New York. It is my understanding that, with the scheduling of daily service, Air India believes that it will be able to develop and further increase the primary justification traffic between our two countries, traffic which both countries agree is the firm base on which the Air Transport Services Agreement between the United States and India signed on February 3, 1956 stands.

The Government of the United States of America, being opposed in principle to predetermination, does not object to the proposed Air India operations for the winter of 1964/65. As the Government of India is aware, the Air Transport Services Agreement does not require schedule filings by either Government on behalf of its designated airlines and does not give either country the right to disapprove the proposed schedules of these airlines. The designated airlines of each country are free to provide the level of services they believe is commercially justified within the framework of the Bermuda capacity principles. However, while neither country will impose predetermined frequencies upon the airlines of the other country, both the United States and India have the right under the capacity articles and Article 12 of the Air Transport Services Agreement to request the bilateral examination at an appropriate time and on an ex post facto basis of the capacity offered by the airline or airlines of the other country, if it appears that the capacity offered is not consistent with the capacity principles set forth in Articles 6, 7 and 8 of the said Agreement.

In order to describe more fully the principles embodied in these articles, and pursuant to Article 9, the United States wishes to set forth certain procedures and clarifications of the Agreement's capacity principles in which, it understands, the Government of India concurs : 

1. With respect to the application of Article 8 of the air Transport Services Agreement, the capacity provided by each airline shall be that which is designed primarily to  accommodate traffic having its true origin or destination (as  defined in Paragraph 3 below) in the country of which the  airline is a national, that is, primary justification traffic, or that which each airline concerned can reasonably establish as its anticipated needs for the carriage of such traffic. The classification of traffic as primary justification traffic or  secondary traffic on the basis of true origin and destination  will not be affected by stopovers en route or in the territory  of either party to the Air Transport Services Agreement.  Thus, Primary justification traffic for a United States airlines  would be the volume of traffic originating in or destined for the United States which transits, stops over, or terminates  in India, and for an Indian airline the volume of traffic originating in or destified for India which transits, stops over  or terminates in the United States.

2. In the application of Article 9 of the Air Transport Services Agreement, consideration should be given to the following factors, among others :

a. The size of the United States--India air traffic market, its rate of growth, and the needs of the public for direct, as well as connecting services;

b. The total traffic between India and the United States carried by airlines foreign to both countries and by other   means; 

c. Factors affecting the requirements of through airlines operations, including the effect which the growth of traffic to other points along the routes specified in the Air Transport Services Agreement may have on the capacity   offered in the United States-India market, it being understood that capacity provided for such traffic will not be used for the carriage of an unreasonable amount of secondary traffic; and 

d. The geographical position of the United States and India.

3. For the purpose of Article 8 of the Air Transport Services Agreement, it will be necessary, commencing on September 1, 1964, to have available accurate statistical data on the movement of traffic as follows :

a. The Government of the United States will transmit to the  Government of India statistical reports for passengers and  freight traffic embarked or disembarked in India by  United States airlines during the first seven days of the  months of January, March, May, July, September, and  November, or on some other mutually agreed sampling  basis. These reports will provide the true (that is, initial)  origin and ultimate destination as shown on the pertinent  ticket or way bill, or on combinations of tickets or of way  bills, and the Indian point of embarkation and  disembarkation of this traffic by these airlines. The traffic  reported will be broken down so as to show (i) primary  justification traffic and (ii) secondary traffic. Secondary  traffic will be further broken down to show that which  moves between India and a third country and that which  moves between two third countries. There will also be  reported all transit traffic on United States airlines carried on flights making traffic stops in India.

b. The Government of India will transmit to the Government  of the United States for the Indian airline statistical  reports giving the same information with respect to its  traffic moving to, from, or across United States territory,  although these data may be based on the entire months of  January, March, May, July, September, and November  instead of the first seven days of these months:

In addition, it is the understanding of the Government of the United States that, in modification of Paragraph 3(c) of the Schedule to the Air Transport Services Agreement, the Government of India agrees that United States airlines may operate to or through any of the three points in India specified in paragraph 2 of that Schedule, that is Bombay, Delhi, and Calcutta, as long as no more than one such point is served on any one flight.

I propose that, if the preceding understandings are acceptable to the Government of India, this note and your reply concurring therein shall constitute an Agreement between our two Governments amending and implementing the Air Transport Services Agreement signed on February 3, 1956, and replacing the notes relating thereto exchanged on that same date. This agreement shall enter into force on the date of your reply and shall remain in force as long as the Air Transport Services Agreement remains in force.

Accept, sir, the renewed assurances of my highest consideration.”

I have the honour to confirm that the Government of India accepts the above understandings.

Accept, Excellency, the renewed assurances of my highest consideration.

Sd /-
V. SHANKAR
Secretary to the Government of India.