(1)  I refer to your memorandum of 27th March concerning the powers of the Australian National Airlines Commission to engage in certain activities, and to subsequent oral discussions on the subject.

(2)  The memorandum refers to three proposed activities of the Commission:

(i)   The provision, in the course of operating an inter-State air-line service, of transport between points in one State;

(ii)  The provision, in the course of operating a territorial air-line service, of transport directly between points in one State; and

(iii)  The provision, in the course of operating a territorial air-line service, of transport between points in one State by a route involving a landing place in a Territory.

(3)  I note that the Commission intends to test the position by providing service (i) on a suitable route, unless I advise that such action is patently ultra vires the Commission. I do not think it is. The extent of federal power to regulate or engage in intrastate activities is one of the obscure aspects of our constitutional law, and the Commission’s power to engage in the activities indicated is not free from doubt. I think however there is a reasonable likelihood that all the activities specified would be upheld by the High Court.

(4)  The matter falls into two parts:

(a)  Whether the proposed activities are authorized by the Australian National Airlines Act as it stands at present; and

(b)  Whether, if the answer to (a) is in the affirmative, the Act, as so interpreted, is authorized by the Constitution.

Question (a)

(5)  As a matter of construction of the Act, considered apart from the Constitution, I do not consider that any of the proposals are patently ultra vires. The provision of transport between points in one State is the common element in all three projects. In the circumstances under consideration, this may well be held to be, in the language of section 19 of the Act, ‘necessary or convenient to be done for, or as incidental to, in relation to, or in connexion with, the establishment, maintenance or operation’ of an air-line service of one of the classes specified in the section. This view is strengthened by the specific injunction to the Commission, in the opening words of the section, to have full regard to economy of operation, as well as to safety and efficiency.

(6)  As your memorandum suggest, it would be a question of fact in each case whether the inter-State or territorial service was the main activity and the intrastate carriage merely incidental and subsidiary, so that the latter would be authorized by the section.

Question (b)

(7)  Assuming therefore that the Act as it stands does authorize the Commission to provide the services contemplated, the question remains whether the Act, as so interpreted, is within the Commonwealth’s power under the Constitution. Although the High Court has, in a general way, upheld the validity of section 19, no question of intrastate activities was raised in the Airlines Case,¹ and I think the Court would consider itself free to consider afresh the validity of the Act to the extent that it purports to authorize any such activity. For this purpose the relevant power would be the power to make laws on matters incidental to the execution of the inter-State trade and commerce power.

(8)  The High Court has held that the provisions of the Navigation Act regarding the manning of and accommodation on ships cannot validly be applied to ships plying wholly intrastate. (Newcastle and Hunter River S. S. Co. v. A.G. (Commonwealth), (1921) 29 C.L.R. 357). It has also held that the Commonwealth cannot validly, as incidental to the execution of the inter-State trade and commerce power prohibit intrastate flights by pilots who do not hold a Commonwealth licence. (R. v. Burgess, ex parte Henry, (1936) 55 C.L.R. 608). But neither of these cases decides that the Commonwealth cannot as incidental to the trade and commerce power regulate any intrastate activities whatever. There is little doubt that in the United States services such as those contemplated by the Commission would be held to be within the commerce power. The extended construction given to the commerce power in the United States has not found much favour in Australia. But the particular point now concerned has not hitherto been directly involved in any Australian decisions. I think there is a reasonable likelihood of its being decided in the Commission’s favour.

(9)  Here again, much would depend on the facts of the particular service on which a challenge took place. The Commission would need to be able to show that the inter-State (or territorial) service was real, genuine and substantial, and likewise that the intrastate elements in it were merely ancillary, subordinate and incidental. The fact that, in a particular instance, the intrastate trade was necessary in a business sense to the economic conduct of the inter-State trade would not, I think, be disregarded by the Court.

(10)  As regards services (ii) and (iii) mentioned in paragraph 2 of this memorandum, reliance would have to be placed on section 122 of the Constitution, relating to the Government of the Territories, combined with the ‘incidental’ power contained in section 51(xxxix). In my opinion section 19 of the Act, to the extent that it authorizes (as I think it does) the provision of transport between places in one State as an incident in the conduct of a territorial air-line service (as defined in the Act), is not patently beyond the constitutional powers referred to. This view appears to me to be equally tenable, whichever of the two quite different views of the ‘territories’ power advanced by the judges in the Air-lines Case ultimately prevails. I do not consider that the separate issuing of tickets for the two portions of a journey which was made via a Territory would substantially strengthen the validity of the activity.

(11)  The opinion expressed in paragraph 10 is not intended to imply that it would not be within the power of the Parliament of the State concerned to prevent the carrying on of the intrastate transport involved in services (ii) and (iii). On that question, I express no opinion.

(12)  I agree with the assumption stated in the last paragraph of your memorandum, that if the Commission were to engage in intrastate transport, its power to do so could be challenged either by the Attorney-General of the State concerned or by a private operator who suffered loss from such activities.

(13)  The unquestionable constitutional power of the Commonwealth Parliament to provide air transport, whether intrastate or inter-State, for postal purposes deserves close consideration as a potential support for incidental passenger and freight services. The Preamble of the Australian National Airlines Act refers to the promotion of the carriage of mail by air and mail contracts between the Commission and the Minister are expressly authorized in general terms by section 22 of the Act. This section however is not expressly linked in any way with section 19, which authorizes the Commission to establish certain airline services for the transport of passengers and goods. My preliminary view therefore is that the Act as it stands should not be regarded as making provision for the possibility of passenger and freight services as incidental to the conduct of mail services. I should be glad of an opportunity to discuss further with you this aspect of the Act.

(14)  I have replied to your memorandum, on the basis exclusively of the commerce power in the Constitution, as already exercised by the 1945 Act. I point out however that, so far as concerns the States of Queensland and New South Wales, the Parliament of the Commonwealth, by virtue of the Commonwealth Powers Acts passed by those States during 1943, may make laws with respect to the entire subject of ‘air transport’. So far as concerns South Australia and Western Australia, there is power with respect to ‘the regulation of air transport’. (For present purposes, in view of the High Court’s decision in the Airlines case, this difference in wording may be unimportant). Laws passed in pursuance of all these powers would cease to have effect at the expiration of five years after the cessation of hostilities—i.e. on 2nd September, 1950. I doubt whether the Australian National Airlines Act would be held to be an exercise of these special and additional powers. But the Act could no doubt be supplements by amending provisions, specifically made applicable to the particular States mentioned.

[Vol. 37, p. 521]

1 Australian National Airways Pty Ltd v Commonwealth (No. 1) [1945] HCA 41; (1945) 71 CLR 29.