Bilateral Air Services Agreements: From Bermuda to Today

Because the 1944 attempt at a multilateral commercial agreement largely failed, the world's airline routes are governed mainly by agreements between pairs of countries.

Why bilateral

The Chicago Convention requires permission for scheduled international air services. The multilateral Five Freedoms Agreement drew few parties. As a result, commercial traffic rights came to be exchanged through bilateral air services agreements, negotiated government to government.

Bermuda I (1946)

In early 1946 the United States and the United Kingdom, the two leading aviation powers of the day, met in Bermuda and reached the agreement that became the model for a generation of bilateral treaties. Bermuda I:

• Defined specific routes on which each country's airlines could fly, including routes with fifth freedom rights.
• Set out principles of fair and equal opportunity for each side's carriers.
• Made fares subject to approval by governments or through the International Air Transport Association.

Its balance between American preference for competition and British preference for regulation made it a template.

Bermuda II (1977)

The United Kingdom renounced Bermuda I in the 1970s, and the two countries negotiated a replacement signed in 1977 and effective in 1978. Bermuda II became famous for restricting which airlines could fly between London Heathrow and the United States. It remained in force until it was replaced, in two stages in 2008 and 2010, by the EU–US Open Skies Agreement.

What a modern agreement contains

A typical air services agreement addresses:

• Designation: which airlines each country may designate to operate.
• Routes: the points that may be served, and any beyond rights.
• Capacity and frequency: how many flights, or whether capacity is unrestricted.
• Pricing: whether fares require government approval.
• Ownership and control: requirements that designated airlines be owned and controlled by nationals of the designating country.
• Safety and security: commitments to ICAO standards.
• Doing business: currency conversion, ground handling, and sales.

Who negotiates

In the United States, the Department of State leads air transport negotiations, working with the Department of Transportation and the Department of Commerce. The State Department's Division for Transportation Affairs maintains the current list of U.S. Open Skies partners.