Victory for T.W.A.?

The State Department reluctantly laid down a policy last week for U.S. airlines operating in ex-enemy nations. The policy, over which State has hemmed & hawed for weeks, was forced out by the squabble between Transcontinental & Western Air, Inc. and the British Government. Nub of the dispute: control of Italy's internal airlines.

Last winter T.W.A. signed a contract with the Italian Government under which a new company, Linee Aeree-Italiane Societ`a Perazioni was to get an exclusive franchise to fly internal air routes: T.W.A. was to get a 40% interest in L.A.I. The British demanded that T.W.A. share its interest with the Government-owned British Overseas Airways Corp. T.W.A. President Jack Frye refused, saying that British and American equipment could not be profitably operated together.

Confident that T.W.A. could out-compete B.O.A.C., Frye proposed that the British set up a competing line. But the British, not as anxious to compete as to share, used diplomatic pressure to prevent the Italian Government from carrying out its contract with T.W.A.

Last week the State Department answered both sides. State, conscious of Russia's air monopoly in the Balkans, told T.W.A.: the U.S. is opposed to exclusive trade privileges for any one power in ex-enemy states. But if the exclusive features were taken out of the T.W.A. contract, the Department would try to see that the contract was carried out. Said State to the British: the U.S. could not force T.W.A. to share its Italian interests with B.O.A.C. However, the British could arrange with the Italian Government to form a rival company.

T.W.A.'s Frye quickly dropped the exclusive air privileges, thought it was a clear victory for T.W.A. It would be--if the Italian Cabinet passes a decree giving the contract final approval this week.

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