1Bermuda AgreementThe Bermuda Agreement, reached in 1946 by American and Britishnegotiators in Bermuda, was an early bilateral Air Transport Agreementregulating civil air transport. It established a precedent for the signing ofapproximately 3,000 other such agreements between countries.The Agreement was expanded in 1977.Full titles:Bermuda IAgreement between the government of the United Kingdom and thegovernment of the United States relating to Air Services between theirrespective Territories, Bermuda, 11 February 1946Bermuda IIAgreement between the government of the United Kingdom of Great Britainand Northern Ireland and the government of the United States concerningAir Services, Bermuda, 23 July 1977Bermuda IIn 1946, delegates from the United States and Great Britain met atHamilton, Bermuda, to resolve issues remaining from the 1944 Chicagomeeting. The Chicago meeting which had involved some 52 countries hadbeen unable to reach agreement on any but the most fundamental points atissue in post-war international civil air transport. It had agreed the first twoFreedoms of civil air transportFirst Freedom: The right to fly over the territory of another country. Second Freedom: The right to land for essential repairs, refuelling or toescape adverse weather conditions in another country.The failure to agree more was largely due to the disagreements between theUnited States and Britain, then the two largest carriers of civilian traffic,internationally. At Bermuda the two countries agreed again on the two
2freedoms that had been accepted at Chicago, since that agreement was notyet in force, receiving its 26th ratification in time to operate from April 4,1947. Britain also accepted the remaining three freedoms which had notbeen agreed at Chicago.Third Freedom: The right to collect passengers or cargo in an airlines homecountry for flight to another country.Fourth Freedom: The right to discharge passengers or cargo at anothercountrys airport.Fifth freedom: The right to collect passengers or cargo at a location outsideits home country and fly them to a point farther on, also outside the airlineshome country.The United States also agreed that the International Air TransportAssociation (IATA), an international body, would set fares, subject to thetwo governments approval. This bilateral agreement became the model for aseries of future bilateral agreements between the United States and othercountries. The British continued to pursue much more restrictive agreementsbased on traffic sharing with agreed fares, set by the two governmentsconcerned.During World War 11 the United States and Britain operated a regular flyingboat service across the Atlantic. The US operator was Pan American WorldAirlines and the British operator the newly formed and government ownedBritish Overseas Airways Corporation (BOAC). The US terminal was atBaltimore and the British at Poole, in Dorset south-west England.Intermediate refuelling stops were at Botwood in Newfoundland, then aBritish colony and Foynes on the river Shannon in Ireland. Flight scheduleswere for about 32 hours but could be considerably longer on the westboundroute if strong westerly winds prevailed on the North Atlantic or weatherconditions or mechanical problems interfered with departures. Both airlinesflew Boeing 314s. Passenger traffic was exclusively military orgovernmental and both Mrs Eleanor Roosevelt, wife of the president andWinston Churchill prime minister were amongst the passengers.It was clear to aviation planners in both countries that there would beconsiderable post-war development of civilian air traffic across the Atlantic.Rapid wartime development of civil aircraft especially landplanes such asthe Douglas DC4 and DC6 the Boeing Stratocruiser and Lockheed
3Constellation meant that future routes between the two countries would userunways, many developed during the war as refuelling points for USAAFBoeing Fortresses on delivery runs to operational bases in England andNorth Africa. The new airliners could carry substantially greater payloadsthan the flying boats, allowing for both more passengers and greater fuelloads providing longer range. But no civil transport aircraft at that timecould fly the Atlantic without refuelling.The British controlled several useful airports necessary for the developmentof American civil air transport in the 1940s. The most important was Ganderin Newfoundland, still a British colony, used until the dawn of the jet age byvirtually all transatlantic flights. Bermuda as well as being a destination inits own right was also useful as a staging point as was Prestwick nearGlasgow, in Scotland, which had good weather conditions. A new airport atHeathrow near London was under construction which would be useful as ahub for airline traffic through to Continental Europe and the Middle East.On the Pacific routes, Hong Kong occupied a similarly strategic position onthe routes between the USA and China, then undergoing a civil war betweenChiang Kai Shek`s Nationalist government and the Communist insurgents ofMao Tse Tung.The Bermuda meeting between the two wartime allies was arranged in orderto facilitate the development of post-war air traffic across both the Atlanticand Pacific. There were no politicians present. It was simply a workingmeeting between British civil servants from the Ministry of Aviation andrepresentatives of the State Department`s Office of Transportation Policy.Both sides had a similar overall objective: to encourage the development ofcivil aviation internationally. But they differed greatly on how this should bedone.The American delegates were in favour of a very liberal regime under whichseveral airlines could provide as much capacity as they wished on eachdesignated route, charge what fares they considered commercially justifiedand operate with as little government interference as possible. The Britishwere conscious that the US had a significant lead in the development of civilaircraft, that it already had a substantial internal air travel market and that itsairlines dominated traffic within South America and between South andNorth America.
4The British would have preferred a tightly regulated agreement as they latersigned with Australia and New Zealand. This would limit the Atlantic routesto a single airline from each country operating similar frequencies at similarfares. Ideally they would have preferred an American airline to collaboratewith the Briish carrier British Overseas Airways Corporation, sharingfacilities and revenues. Such arrangements formed the basis of subsequentagreements established by the British with other countries. This view awasalso favoured by Pan American, then the US`s chosen instrument for mostinternational routes. However it was unacceptable to the State Department,which was well aware that unlike transatlantic sea traffic, then largely in thehands of the British line Cunard, American airlines were likely to win thelargest share of the air traffic provided they were not unduly restricted by theagreement.American Export Airlines, a subsidiary of an American shipping companyand Trans World Airlines, which had been bought by Howard Hughes andhad placed the first order for Lockheed Constellations were determined tojoin Pan American on the Atlantic, which held the promise of becoming theworld`s most lucrative international air route. Extensive lobbying ofCongress by these airlines made it impossible for the American officials toconcede to the narrow UK proposals.The eventual agreement permitted each country to specify as many carriersas it wished on a series of designated routes. In the event the Britishrestricted their allocation to BOAC whilst the Americans allowed threecarriers to compete, Pan American, American Export and Trans World.Fares were to be agreed by an international body and there would be aprocedure to investigate them if either country thought that they were toolow to be commercially viable.On the Atlantic routes, the designated US airports were Baltimore, theexisting flying boat base, New York, Chicago, Detroit, Philadelphia,Washington and Boston.The UK airports were London and Prestwick in Scotland, as well asintermediate stops on British colonial territory at Bermuda or Gander andcertain other islands. Onward traffic was permitted to New Orleans andJamaica and various specified points in Latin America. In the other directionit was permitted to continue to most major Continental European airportsand also through British colonial territories in the Middle East and India as
5far as China. A New York-Bermuda route was also agreed, which theAmerican delegation used when it left the conference in a landplane - a signof things to come.The Pacific terminals were San Francisco and Los Angeles in the US and theBritish colonies of Hong Kong and Singapore. This could be linked into around the world service as Pan American subsequently did. Most Caribbeanislands in British possession including Jamaica, Trinidad and the Bahamaswere permitted as destinations from Miami and New York with some routesalso from Houston, Palm Beach and New Orleans. Onward traffic waspermitted to most of South America for airlines from both nations.A further route through a variety of Atlantic islands was agreed to theBritish colonies of the Gold Coast (later Ghana) and Nigeria and onward toSouth Africa.Members of both the Senate and the House of Lords criticised thenegotiators - surely a sign that it was a fair deal. Both sides were concernedthat the other country would exploit the agreement to take internal traffic forexample from New York to New Orleans or in the British case from Londonto India. So a clause was inserted that permitted only as much traffic to becarried between intermediate points as was justified by spare space on theaircraft. It was specifically forbidden to introduce a larger aircraft on asegment such as New York-Mexico City or London-Paris. In the event littlesuch traffic was attracted and the fears proved groundless. As was to beexpected American airlines won the lion`s share of the Atlantic route, overthe next few years. But gradually BOAC also was able to build this into itsmost profitable route, largely by using American aircraft.On May 31, 1946 Lockheed Constellations operated by Pan AmericanWorld Airways and American Overseas Airlines (the new name forAmerican Export) landed within 20 minutes of each other at a storm-tornHeathrow from New York`s La Guardia. Passengers disembarked througharmy tents,as the control tower was the only brick building on site, to begreeted by Averill Harriman the US ambassador. This inauspiociousbeginning inaugurated what would soon become the most importantinternational air route for both airlines.
6Bermuda IIIn October 1976 the British Labour Government of Harold Wilsonunilaterally terminated the Bermuda I agreement announcing that a newversion of the agreement should be put in place by June 1977 . This waswidely criticised in the United States, where it was seen as an attempt toreturn to the more restrictive ideas which the British had favoured thirtyyears earlier and in Britain, where it was felt that it would upset theAmerican Government and damage the attempts to obtain landing rights forthe Concorde which British Airways was proposing to fly into New Yorkand Washington. The timing was certainly poor as it preceded an USPresidential election and US negotiators might not be in a position to reachany agreements for several months.The British move was prompted by the relatively low share of Britishairlines on the transatlantic route, which in most years since 1947 had variedbetween one third and two fifths. However most of the passengers were alsoAmerican nationals so perhaps this should not have been a surprise. By thistime Pan American had absorbed American Overseas Airlines and beenjoined by Trans World Airlines on the routes into London Heathrow, whichwas by far the most important European hub for American flights. TWA, inparticular was able to exploit its network of US domestic routes to feedpassengers through its New York gateway on to the transatlantic route toLondon. Pan American had also developed arrangements with other UScarriers which developed further when it bought the domestic carrierNational Airlines, the following year. All three airlines operated routesbetween London Heathrow and the Bermuda I gateway airports with Boeing747 jumbo jets. Whilst many Americans enjoyed "English service" BritishAirways was unable to win a major share of the traffic on routes, where itcompeted with both US carriers.The Bermuda II agreement which came into force in 1978 was much lessliberal than Bermuda 1. Its most significant change was that it replaced theairlines right to set their own fares, subject only to a complex protestprocedure by either government with a new system in which fares wereagreed by the two governments directly. It restricted the number of airportgateways in the United States to be served directly from London Heathrow.At the same time, it permitted non-scheduled airlines to operate between thetwo countries,using other airports, particularly the relatively new airport atGatwick. There was a complicated system of controlling capacity on routes
7between the UK and the US. The British aim was certainly to provide asystem under which airlines from each country could compete on more equalterms.Unlike Bermuda I, which was a rigid agreement set for all time, Bermuda IIwas a framework agreement which would permit changes whenevercircumstances changed. In 1990 Manchester was added as a British gatewayairport for transatlantic flights which was extended to certain other regionalairports in October 1994. By 1996 access to all UK airports other thanHeathrow and Gatwick was permitted under third and fourth freedom rights,in other words without the right to carry passengers beyond the UK.In 1991 the bankruptcy of Pan American and TWA led to a majorrenegotiation which allowed American Airlines and United Airlines to taketheir places at Heathrow. Virgin Atlantic was also given rights as a secondBritish carrier to operate services.By now with British Airways proving more successful on the route,Margaret Thatcher`s government was prepared to be more liberal. Routeswere opened up to further US gateways and fifth freedom rights were againextended for flights to Asia, Australia and Central and South America.The negotiators also proposed that seventh freedom rights would again allowBritish or American airlines to carry passengers between ContinentalEuropean airports and Britain or the United States, which had beenpermitted under Bermuda I. US and British airlines were also permitted tocode share, which had previously been banned by the Sherman Act on anti-trust grounds.The provisions of Bermuda II certainly had the desired effect from theBritish viewpoint. By 1999, 13 airlines were operating the transatlantic routefrom British airports. Of these, British Airways carried 40.2% and VirginAtlantic 17.5% of the traffic. American Airlines with 13.9% and UnitedAirlines with 12.1% were the leading US carriers. Continental with 6%Delta with 4.3% cent, Northwest with 2.2% USAir with 1.7% and TWAwith 0.9% were handicapped by lack of access to Heathrow. Air India, AerLingus, Air New Zealand and Kuwait Airways, operated under FifthFreedom rights but together flew only 1.3% of passengers. By that year 18mpassengers from or to the US used London airports, up from 3m in the last
8year of Bermuda I. Just over 40% of all US traffic to European Unioncountries flew into or through London.Fifth Freedom rights which had been widely available under Bermuda I weremuch restricted under Bermuda II. British airlines were permitted to carryAmerican passengers only to Belgium, France, Germany, the Netherlands,Luxembourg and Ireland. American airlines were allowed to carrypassengers from Shannon to Prestwick and Glasgow. They could alsoembark passengers at UK airports for Berlin, Frankfurt, Hamburg, Munichand Oslo. This was far more restrictive than Bermuda I which had permitteda large number of Fifth Freedom routes. Pan American made use of theserights for its Berlin and West German services during the time that Germanairlines were not permitted to fly to the city and these were later also used byUnited Airlines which acquired Pan American`s rights. But otherwise therewas little interest in such services from the airlines. The approval of otherEuropean Governments which would have been necessary for instance topermit TWA to carry passengers between London and a European city orBritish Airways to embark passengers in a Continental city for carriage tothe US was simply not forthcoming in most cases. Only the IrishGovernment, perhaps more interested in tourism than supporting Aer Lingusplayed the game.European Union - United States air agreementThe Bermuda agreements were replaced in two stages on March 30, 2008and June 24, 2010 by an Air Transport Agreement between the EuropeanUnion, representing 25 European countries and thre United Sates. Thisprovides for an Open Skies regime, which is more liberal even thanBermuda I.