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But by the early 1970s its wording—possibly intentionally imprecise in a number of places—had become increasingly out of date and the subject of contentious argument.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.

I shall aim at explaining, from an operator's point of I view, what was so wrong with the Bermuda Agreement that the UK Government denounced it, to what extent Bermuda 2 has corrected that position and, in addition, put forward a few thoughts on possible charter arrangements within Bermuda 2.

For over 30 years, the Bermuda Agreement of 1946 set the framework for UK/US civil aviation affairs—and served for perhaps 15 to 20 years in form and in reality as the prototype for most civil aviation agreements in the free world.

By the late 1960s, however, there were few bilateral air agreements involving countries other than the USA which did not in some way control capacity. Despite the almost invariable Bermuda façade, the effect of attaching confidential understandings between governments to the published Bermuda text was to control capacity in one way or another.

British Caledonian is one of several British privately owned airlines that will be affected in some way or other by Bermuda 2. They will all be affected in different ways and will therefore have different views about the Agreement. This paper represents the views only of British Caledonian.

British Caledonian is the first airline to have taken up any wholly new opportunity offered by Bermuda 2 and has therefore been more affected more quickly by the Agreement than any other airline.

At the same time we have been strongly critical of Bermuda 2. We were opposed to the complete re-negotiation of the old Agreement although we did wish to see major changes, particularly to the route schedules. In general we think the results are disappointing. They fall far short of the British expectations on which the whole British decision to re-negotiate was based. In our view the new Agreement offers no solutions to the sort of problems that have afflicted most North Atlantic operations over a long period of time. Both the UK and the US now believe that many of the changes made to the route schedules could have been secured without renouncing the old Agreement.

Responses to Bermuda 2 in the United States range from cheers to castigation and from praise to predictions of doom. I have included in these remarks quotations from various public figures in my country which illustrate the diversity of views held with respect to that agreement.

In order to grasp fully the spectrum of reactions to Bermuda 2, one must first understand current changes and developments in American aviation policy.

In order to understand our new policies, however, one must have an appreciation of political influences as they impact on our international aviation programmes.

Frankly, as I do not understand either the policies or the politics, this should make for a very short speech. I have a story to tell you, however, that should contribute to your perception and comprehensive of the American scene.

I have been asked to describe the American attitude toward Bermuda 2 from a Pan American perspective. I will not burden you at length with an introspective analysis of how happy or unhappy we are with the results. We did not anticipate that the negotiations would be a tea party, and the event was certainly not as universally acclaimed on the US side as was the Boston Tea Party (an affair whose 204th anniversary will be celebrated in about two weeks).

As you know, a good deal of dissatisfaction with Bermuda 2 has been expressed in various quarters in the United States, some of it informed and quite sincere, some of it unrealistic and exaggerated. Pan American, which thought it had the most to lose in the negotiations, was confirmed in that expectation. However, we have not engaged in sterile recrimination. The United States side was ably and effectively represented.Had the responsi-bility been ours, we cannot say that we could have made a better overall bargain given the ability and tenacity of the opposition and the need felt on both sides to reach an accommadation.

There are two methodological approaches by which airline efficiency might be measured. One way is by using the concept of comparative airline efficiency. Using this concept, efficiency is measured with respect to typical, mean, or expected industrial average performances. The approach adopted in this paper is to measure airline efficiency by using the concept of monitored airline performances. In this kind of exercise efficiency is measured with respect to the airline's stated objectives. In using the. monitoring approach a consideration of general airline objectives is required. Typical airline objectives are discussed below, as are the expected repercussions on efficiency parameters. After discussing objectives in general, British Airways’ corporate objectives will be discussed in particular. Finally, whether British Airways has been successful or not in reaching its objectives will be investigated. But as a prerequisite to this investigation some discussion will be necessary of the most appropriate indicators to use for monitoring the objectives.

Future air transportation growth will be limited not only by the availability of personal disposable income for travel and by the maximum reasonable needs of business travellers, but also by competition from other modes such as the automobile, train, exotic guided ground transportation systems, such as magnetically levitated vehicles, buses and ships. Because of the aircraft's overwhelmingly superior speed and cost characteristics with respect to passenger ships, the passenger ship has been largely reduced to a recreational facility rather than a transportation mode. There are, of course, a few exceptions for short voyages between origins and destinations separated by water. But it is sufficiently clear that water transportation will not compete economically with air, except at very short ranges in a few unique situations, so that this mode will not be discussed.

For most aircraft, longitudinal dynamic stability is assured if the static margin is positive. However, a statically stable aircraft is not necessarily dynamically stable. The problem of establishing under what conditions static stability is sufficient has recently been considered in Ref. I, by means of two-parameter stability diagrams. It seems to the present writer that a simpler approximate solution can be found by considering the factors of the characteristic equation.