10 Facts About Bermuda II

Bermuda II was a bilateral air transport agreement between the governments of the United Kingdom and the United States signed on 23 July 1977 as a renegotiation of the original 1946 Bermuda air services agreement.

Original 1946 Bermuda agreement took its name from the island where UK and US transport officials met to negotiate a new, inter-governmental air services agreement.

Bermuda II was revised several times since its signing, most recently in 1995.

Bermuda II continued and expanded the principle of "dual designation", i e the right to designate two UK airlines as well as two US carriers as "flag carriers" on the same routes, which already existed on the London–New York and London–Los Angeles routes under the original Bermuda treaty.

At British insistence Bermuda II furthermore contained clauses that made it illegal for any airline operating scheduled flights between the UK and the US to resort to predatory pricing or capacity dumping.

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The reason for insisting on the inclusion of these provisions in the Bermuda II agreement was to prevent the much bigger, better financed and commercially far more aggressive US carriers from undercutting BCal with "loss-leading" fares cross-subsidised with profits those carriers' vast domestic networks generated as well as to stop them from "marginalising" the UK carrier by adding capacity far in excess of what the market could sustain.

Bermuda II provided routing restrictions for flights between the United States and various British overseas colonies including Bermuda, various Caribbean islands and Hong Kong.

Virgin Atlantic's access rights to Heathrow under Bermuda II derived from the fact that the UK was not using its entitlement to nominate a second carrier to match the two US carriers' presence at London's premier airport.

Liberalisation of the Bermuda II agreement was the declared intention of both countries since 1995.

On 2 March 2007 a draft agreement was reached by negotiators from the European Commission and the US that proposed to drop Bermuda II's restrictions preventing US flag carriers, other than American and United, from flying to Heathrow.