For several years before 1976 the United Kingdom had been increasingly dissatisfied with the working of the old Bermuda Agreement. That Treaty had been a landmark in its day and its authors can be—and must be —proud that it stood the test of time so long. It had a profound influence on the development of post-war civil aviation and was the guiding light for numerous bilateral Air Services Agreements the world over.

But by the early 1970s its wording—possibly intentionally imprecise in a number of places—had become increasingly out of date and the subject of contentious argument. The Tariffs Article in particular gave continuing cause for trouble and the UK had become disenchanted with the working of the capacity provisions and dissatisfied in particular with the general balance of the Agreement. US airlines earned in the year ending 31st March 1976 nearly £300m from the Agreement whereas the earnings of British airlines was only some £130m. Of this latter figure, £127m was earned on the North Atlantic where US airlines earned upwards of £180m. It was self-evident that the American airlines would always outfly and out-earn us across the Pacific on routes to and through Hong Kong, and on routes between the mainland of the USA and Bermuda as well as to British points in the Caribbean. But it was not so self-evident that American airlines should continue to have a wide range of valuable fifth freedom rights at London and Hong Kong when British airlines could make no practical use of the relatively few fifth freedom opportunities which they had from points in the United States onwards across the Pacific and into the Caribbean.