Bermuda II - Aftermath

Aftermath

Liberalisation of the Bermuda II agreement was the declared intention of both countries since 1995. However, bilateral negotiations between the UK and the US were unsuccessful.

Subsequently, matters were complicated by the European Court of Justice's judgement to declare all bilateral agreements between individual EU member states and the US illegal. Such agreements were deemed to violate the EU's Common Aviation Market.

The main sticking point that had prevented the conclusion of a new, transatlantic "Common Aviation Area" agreement between the EU and the US was that the UK and most other European countries viewed the US version of "open skies" as too restrictive. The US "open skies" template denied foreign airlines "cabotage" rights, i.e. the right to operate wholly within the US domestic market without entering into a code-share agreement with a US carrier. It also denied foreign airlines the right to acquire stakes in their US counterparts with the intention of exercising boardroom control.

Another bone of contention preventing the conclusion of a "Common Aviation Area" agreement between the EU and the US was the US government's continuing insistence on its so-called "Fly America" policy for all employees and contractors of the federal government. This policy compelled US government employees/contractors to make all their work-related, overseas air travel arrangements with US-based airlines only. (It also included a requirement for Federal employees to use international services operated by foreign airlines only if they were code-shared with a US carrier, in which case these services needed to be booked under the US carrier's flight number.)

On March 2, 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. This new Air Transport Agreement between the EU and the US was approved unanimously by the EU Transport Council on 22 March 2007 and replaced Bermuda II with effect from 30 March 2008. It also paved the way for either country to allow airlines headquartered in other EU countries to enter the UK-US air transport market. On 3 October 2007, Britain concluded its first fully liberal Open Skies Agreement with Singapore, allowing Singapore Airlines to fly completely unrestricted from any point in the United Kingdom, including Heathrow, to any other destination, including the United States and domestic destinations, effective 30 March 2008.