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During the year the following aerodromes have been opened : The N.Z. Aero Transport Company has acquired 80 acres at Washdyke, Timaru, and 77 acres at West Plains, Invercargill. Hangars have been erected at both these places, and workshops arc to be installed. This company has also acquired the temporary use of an area of 70 acres on the foreshore of Anderson's Bay, Dunedin. The N.Z. Aerial Transport Company has rented as a temporary measure an aerodrome of 200 acres, and converted a wool-shed for use as a hangar at Longlands, Hastings. No land has as yet been procured for use as key aerodromes, but under the terms of the policy it is hoped that during the current year, as a result of inspections now being made, suitable sites will be obtained and brought into use. Owing to the present lack of lighting and signalling systems along routes and at aerodromes night flying has been forbidden by instructions issued by the Air Board. Later, if the speed of aerial mail-services is to be taken full advantage of by operating during that period between the cessation of business hours on the one day and the opening-hour of the next day, night flying will become essential. With the object of being able to install the necessary apparatus with the minimum delay, the extensive experiments now being made in the United Kingdom are being closely followed by the Air Board. Aviation Regulations. Provisional regulations have been drawn up and gazetted in order to bring civil aviation under control. These regulations provide for a system of inspection and licensing of aircraft and personnel which will ensure the greatest possible measure of safety to all concerned. An Air Navigation Bill, necessary to bring into effect the International Air Convention, is being prepared for presentation to Parliament. The present regulations, which came into force on the 18th March, 1921, conform as nearly as was possible under the Aviation Act, 1918, to the provisions of the Convention, but it will be necessary to amend them when the new Bill becomes law. Activities of Civil Companies. No aerial mail-services of a permanent nature have been established, but several experimental services have been carried out from time to time. (a.) General. —All companies have been active in what may be termed propaganda work— i.e., "joy riding " ; numerous townships have been visited and the public treated to exhibitions and given opportunities of taking flights. In addition many extended trips have been undertaken. Appended is a tabular list showing passengers carried, hours flown, and approximate machine-mileage for the period under review, during which time only one accident entailing loss of life has to be recorded. (b.) N.Z. Flying-school. —ln April, 1920, a trial trip with mail was undertaken from Auckland to Awanui. Calls were made at Russell, Whangaroa, and Mangonui. Mails were also conveyed from Auckland to Raglan and Kawhia in a seaplane belonging to the N.Z. Flying-school. In June, 1920, a D.H.6 flew by stages from Auckland to Wellington, and on various occasions carried mails. In July, 1920, a trial trip was made from Auckland to Hokianga, return ; calls were made at Kohukohu, Rawene, and Dargaville. (c.) Canterbury Aviation Company. —On the 31st January, 1921, an experimental service was inaugurated between Christchurch and Timaru under contract with the Postmaster-General. The service was to be run return daily, Sundays excepted. With the exception of minor delays due to occasional slight engine trouble or unfavourable weather the service was maintained up to schedule. It was not, however, financially successful, but the experience gained by the Postal authorities and the aviation company was most valuable. Endeavour is being made to push on the ground organization and the preparation of machines for the running of a service from Christchurch to Blenheim. It is considered that this route will prove to be more profitable, as the present facilities for conveyance of mails are comparatively slow and inconvenient. Expenditure. The expenditure for the financial year ended 31st March, 1921, amounted to £14,355. Provision for the current year's expenditure is set forth in detail as a separate vote in the estimates of the Defence Department. Whilst aviation is still in its infancy estimates are more or less hypothetical, as it is impossible to gauge the measure of progress during the coming year. The estimates for the year 1921-22 have therefore been calculated on a basis sufficiently elastic, compatible with economy, to permit of a maximum expansion of ground organization, &c, for the development of civil aviation and the provision of the nucleus of a fleet of aircraft for defence purposes It is proposed to establish a key aerodrome in or near Auckland for the combined use of land and sea aircraft. Should it be found impossible to obtain a site in the vicinity of the city it may be necessary to have a forward station for marine aircraft on the Waitemata Harbour. This station could be rented to a civil company during peace, and during war one of the local racecourses could be taken over as a forward aerodrome for land aircraft. For the aerial defence of Auckland it is hoped to obtain shortly a nucleus of a fleet of torpedocarrying aircraft. The machines at present in the Dominion can be used for coastal patrol; and as the fleet of torpedo aircraft and escorting fighters is gradually built up other bases will be established throughout the two Islands, and a skeleton organization capable of rapid expansion in war will be set up. It is vitally necessary that in a National emergency the Dominion should possess adequate resources of highly-trained personnel, up-to-date machines, and properly equipped Aerodromes and workshops.