The Secretary, Department of Defence has forwarded the following memorandum for advice:

The Air Navigation Regulations in their present form cover many aspects of air navigation and lay down, inter alia, the airworthiness requirements of aircraft operating commercially and the qualifications of pilots and other personnel to be employed on such aircraft. These requirements are directed to the general operation of commercial aircraft and provide relatively few and certainly inadequate safeguards to ensure the maximum degree of safety desirable when the particular aircraft are used on a regular airline between fixed points. Before such operations, obviously the highest degree of safety should be sought and this can be achieved only by specifying many detailed requirements applicable to the particular route and perhaps the particular aircraft employed on the service. For instance, a particular type of aircraft may be quite airworthy in accordance with all general airworthiness requirements, but might still be unsuitable and, in fact, even dangerous if regularly employed on a particular service, i.e., a single engined aircraft is not considered to be reasonably safe for regular operation over mountainous terrain where ‘blind’ flying may be frequently necessary. Further, there are numerous precautions that should be rigidly followed on an airline, such as receipt and study by the pilot of meteorological reports, the detailed procedures in wireless communications, the course that should be followed under particular weather conditions and many other similar matters that cannot be detailed in any Regulation having general application.

To meet the position it has been proposed to introduce a system of licensing regular air services and it was contemplated that the detailed requirements and practices considered best for each particular route should be specified in an ‘Operations Manual’ which would become one of the conditions of the licence. This is the practice followed in the U.S.A. and appears to be the only practical method of satisfactorily meeting the position. The alternative course of leaving it to the operator himself to determine what safety measures and practices shall be taken on any particular route is open to obvious objection and would be contrary to the natural conception that the authorities should ensure that all reasonable precautions are taken for the safety of passengers.

To give effect to this proposal, it has been suggested that there should be included in the Air Navigation Regulations, a rule reading somewhat as follows:

An aircraft to which these Regulations apply shall not be used in the operation of a regular public transport service unless such operations are covered by an air line licence issued to the owner or operator of the aircraft by the Board and the conditions of that licence are complied with.

I am directed to ask your advice whether there is any Constitutional or legal objection to introducing a system of licensing regular services on the lines indicated by the draft regulation submitted. It is of course realised that, due to the present Constitutional limitations, such a regulation could be applicable only to aircraft flying in the Territories or engaged in trade and commerce with other countries and among the States.

Section 4 of the Air Navigation Act 1920–1936, which authorises the making of regulations, provides as follows:

4. The Governor-General may make regulations for the purpose of carrying out and giving effect to the Convention and the provisions of any amendment of the Convention made under article thirty-four thereof and for the purpose of providing for the control of Air Navigation–

1. in relation to trade and commerce with other countries and among the States; and
2. within any Territory of the Commonwealth.

The application of the proposed regulation is to be limited to aircraft to which the Air Navigation Regulations apply. Regulation 5 specifies the aircraft to which the Regulations apply–subregulation (1) of that regulation reading as follows:

(1) Except as otherwise prescribed in this regulation, the application of these Regulations shall be limited to–

1. aircraft engaged in international navigation;
2. aircraft engaged in air navigation in relation to trade and commerce with other countries and among the States; and
3. aircraft engaged in air navigation in one or more of the Territories.

The Commonwealth has plenary power to legislate for the control of air navigation within the Territories of the Commonwealth, and the Parliament has authorised the Governor-General to make regulations to provide for such control.

In my opinion, therefore, it is competent for the Governor-General to make a regulation to provide that an air-craft shall not be used in the operation of a regular public transport service within the Territories unless the owner or operator of the aircraft is the holder of an air line licence issued by the Board in respect of that service.

I am of opinion, also, that there is power to make a regulation providing for a licensing system applicable to Australian public transport aircraft engaged in air navigation in relation to trade and commerce with other countries.

The position is not so clear, however, with respect to aircraft engaged in trade and commerce among the States. In attempting to exercise control over this class of aircraft regard must be had to sections 92 and 99 of the Constitution.

Section 92, so far as material, is as follows:

92. On the imposition of uniform duties of customs, trade, commerce, and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free.

In James v. the Commonwealth ((1936) 55 C.L.R. 1), the Privy Council in dealing with the question of the validity of the Dried Fruits Act 1928–1935 and the regulations thereunder, considered the nature of the freedom guaranteed by section 92. At pages 58 and 59, the following passages appear in the judgment:

The true criterion seems to be that what is meant is freedom as at the frontier or, to use the words of sec.112, in respect of ‘goods passing into or out of the State.’ What is meant by that needs explanation. The idea starts with the admitted fact that federation in Australia was intended (inter alia) to abolish the frontiers between the different States and create one Australia. That conception involved freedom from customs duties, imports, border prohibitions and restrictions of every kind: the people of Australia were to be free to trade with each other and to pass to and fro among the States without any burden, hindrance or restriction based merely on the fact that they were not members of the same State.

As a matter of actual language, freedom in sec. 92 must be somehow limited, and the only limitation which emerges from the context and which can logically and realistically be applied is freedom at what is the crucial point in interstate trade, that is at the State barrier.

The Privy Council declared that the Act in question and the regulations were invalid as contravening section 92 in that they either prohibit entirely, if there is no licence, or if a licence is granted, partially prohibit interstate trade.(The underlining is mine).

It is therefore necessary to consider, in the light of this decision, whether the proposed regulation, in its application to aircraft engaged in trade and commerce among the States, would contravene section 92.

In the first place, the regulation would necessarily be a regulation of trade or commerce (cf. per McTiernan, J. in Vizzard’s case, 50 C.L.R. 30 at p. 102). Its purpose appears to be to empower the Civil Aviation Board to grant or refuse air line licences in respect of aircraft engaged in public transport.

The proposed regulation is silent as to the principles that would govern the grant or refusal of licences and also as to the nature of the conditions it is proposed should be inserted in the licences. The Board would, therefore, be in a position to prohibit an aircraft from operating in interstate trade or commerce either entirely, if there is no licence, or, if a licence is granted, subject to conditions fixed by the Board which may, in practice, result in the partial prohibition of interstate flying.

In my view, the proposed regulation is legislation of the same class as that declared to be invalid by the Privy Council in James’ case. Accordingly, I am of the opinion that it would contravene section 92 of the Constitution.

Even if the proposed regulation did not offend against section 92, the result of its administration might be such as to create a preference forbidden by section 99.

Whilst there are Constitutional objections to the regulation in the form proposed, I do not think that it would be impossible for a valid regulation to be drafted which would give to the Board power to exercise control over the operations of interstate air lines, in order to ensure the safety of aircraft and passengers.

It is, I think, clear from the judgment of the Privy Council that not every interference with interstate trade or commerce is forbidden by section 92. Thus, at page 54 of the judgment, the Privy Council considered the effect of section 92 of the Constitution on section 98 of the Post and Telegraph Act. Section 98 forbids, subject to specified exceptions, the sending or carriage of a letter for reward otherwise than by post. The Privy Council expressed the following view with regard to this section:

As this provision applies to interstate as well as intrastate correspondence, it is in one sense a limitation on freedom of intercourse, assuming that term to include correspondence and it may thus be regarded as an interference with trade. Whether that is so or not, it is however a limitation notoriously existing in ordinary usage in all modern civilised communities; it does not impede freedom of correspondence, but merely as it were, canalizes its course just as ‘free speech’ is limited by well known rules of law.

The same idea seems to be present in the Judgment of Rich, J. in Vizzard’s case (50 C.L.R. 30). At page 52, he stated that:

A regulation of an incident of commerce which is calculated to guide the stream but not to obstruct it does not impose a direct restraint merely because it conditions the individual’s exercise of rights which previously existed.

A regulation which required air lines to have certificates to conduct interstate operations would, in my opinion, be valid if it provided for the automatic issue of such certificates upon compliance with prescribed conditions and precautions in relation to the safety of the aircraft to be employed or of the passengers to be carried. Such a regulation would neither entirely prohibit nor even partially prohibit an interstate air service; it would simply place condition on the operation of the service which would, in practice, have the effect of ensuring the observance of such precautions as are necessary to secure the safety of the aircraft engaged in the service and the persons carried by such aircraft.

[Vol. 30, p. 256]