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A notable feature of air-service operation has been the regularity and safety achieved and the very few schedule runs which have been cancelled. With the completion of new aerodromes and the improvement of existing ones it is anticipated that extensions to present air-lines and some entirely new main or feeder services will be placed in operation during the summer of 1938-39. To this end concentration has been centred during the year particularly on developing flying-fields and other facilities and aids to navigation that will provide for such new services and improve conditions on the existing ones. At June, 1938, a total of 53 aerodromes and landing-grounds were licensed for regular operation. On 27 of these enlargement or improvement work was in hand during the year, while an additional 14 new fields were under construction with a view to licensing. In addition, 9 fields, of which improvement work is in hand on 7, are maintained and available as Government emergency-landing grounds, and 4 additional fields are to be developed immediately. Investigations, detailed surveys, and construction proposals for many other fields have been considered with a view to their development in the future, either as licensed aerodromes to augment the network serving air-transport needs or as emergency-landing grounds. Another major activity has been the provision of radio facilities, undertaken in conjunction with the Radio Section of the Post and Telegraph Department. Work on the first of the special radio-stations for aircraft service was commenced in June, 1937. There are now thirteen stations in operation, and the service given during the past year has been very satisfactory. Also there are eleven receiving and directionfinding stations in various stages of construction, while plans are in hand for the first of the radio approach beacons, to be located at Taieri Aerodrome. Other avenues in which the Department is associated in relation to air transport are : Compilation of the New Zealand Air Pilot; notices to airmen affecting aerodromes ; aviation strip maps ; air photography ; collection and compilation of meteorological data ; and the inspection of aerodromes for licensing purposes. A temporary aeradio and meteorological reporting station has been established on Raoul Island in the Kermadec Group, and steps are being taken to proceed with the establishment of a permanent station. The large expansion in the Royal New Zealand Air Force establishment has involved much work during the past year and is reflected in the big programme of development-work now in hand on the Air Force stations. The existing station at Wigram is being developed as a flying training school and that at Hobsonville as an aircraft base and repair depot. The establishment of a new operations station at Ohakea, near Bulls, has been commenced, and arrangements are in hand to commence immediately a similar station at Whenuapai, in the vicinity of Auckland. Most of the major work has been let to contractors, after the calling of public tenders and modern excavating machinery has been utilized, while for those works undertaken by the Department itself similar methods have been used wherever practicable. The total sum spent on aerodrome and air-route development during the year ending 31st March, 1938, was £276,300. Of this sum, £228,000 was provided from the Consolidated Fund, vote, " Aerodromes and Landing-grounds," the balance, comprising approximately £30,000, from the Employment Promotion Fund, £5,000 from the Civil Aviation vote, and miscellaneous small recoveries. In addition to the work indicated above, the Department designed and carried out or supervised the construction of buildings, structures, services, and facilities on the New Zealand Air Force Stations, the funds for which were made available from votes controlled by the Air Department. TELEGRAPH EXTENSION. The expenditure on telegraph extension by the Post and Telegraph Department for the financial year in respect of telephone, telegraph, and radio facilities throughout the Dominion amounted to £312,260, as against £232,512 for the year ended 31st March, 1937.

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