The Bermuda Agreement (formally Agreement between the government of the United Kingdom and the government of the United States relating to Air Services between their respective Territories), reached in 1946 by American and British negotiators in Bermuda, was an early bilateral air transport agreement regulating civil air transport. It established a precedent for the signing of approximately 3,000 other such agreements between countries. The Agreement was replaced by the Bermuda II Agreement, which was signed in 1977 and effective in 1978.
Background
thumb|Boeing 314 flying boat
During World War II, transatlantic air service between Britain and America was limited to Boeing 314 flying boat service between Baltimore and Foynes, which Pan American World Airways had begun in July 1939. British Overseas Airways Corporation (BOAC) also flew the route using three Boeing 314s purchased from Pan Am.
The Bermuda Agreement arose in the wake of the Chicago Conference of 1944, where the United States and United Kingdom disagreed about economic control of international air transport. The US and UK had generally agreed on the first two freedoms of the air (overflight and landings for repair/refueling) but the UK and several other countries refused to accept the US position on the third, fourth and fifth freedoms regarding the handling of passenger and cargo traffic. Specifically, the US sought the freedom for its carriers to determine capacity and frequencies on international routes, while the UK sought predetermined routes and an equal division of capacity between the two nations' carriers on those routes. Britain had lost much of its air fleet in the course of World War II and was reluctant to place itself in full competition with the stronger American air fleet.
Prior to the Bermuda Agreement, the United States signed bilateral aviation agreements with several other European countries (Ireland, Norway, Sweden and Denmark), and had signed a multilateral Transport Agreement with several European and Latin American countries, but service to and from the United Kingdom had to be negotiated with the British government on an ad hoc basis. As of late 1945, the UK had limited transatlantic traffic by the US to 14 services per week, 500 seats per week and a minimum fare of $375.
The US and UK governments agreed in late 1945 to meet and discuss the terms of a bilateral aviation agreement. Bermuda was chosen to host the meeting due to its location between the two countries and isolation from their respective governments. In a sign of the rapidly advancing technology of the time, the British delegation arrived in January by Boeing 314 flying boats, and departed in February by Lockheed 049 Constellation pressurized landplanes.
Newfoundland, an essential refueling stop on any transatlantic air route in the 1940s, was part of Britain at the time the Bermuda Agreement was signed. In 1949, following its accession as a Canadian province, the United States signed an agreement with Canada to provide for fifth freedom rights to and from Gander.
BOAC introduced de Havilland Comet jet service on the London-New York route in 1958. TWA began jet service on the New York-London-Frankfurt route in 1959.
1960s
The United States began to exercise an even more dominant position in the transatlantic market during the 1960s. One key issue was that Pan Am and TWA began to use the hub and spoke system to feed passengers from many US destinations through a transatlantic "gateway" and on to Europe, giving the US carriers an advantage in serving secondary markets. Partly as a result of this competitive pressure, the market share of BOAC on transatlantic routes fell from 37.8% in 1961–62 to 30.9% by 1966–67.
1970s
The British government added a privately owned carrier, British Caledonian, to the transatlantic market in 1973, with flights from London's Gatwick Airport to New York and Los Angeles. BCal was forced to exit the market in 1976 after the British government determined that competition was not improving Britain's overall market share.
Termination
In 1976, the British government announced its intention to renounce the agreement, beginning the negotiation of the Bermuda II Agreement which became effective in 1978.