Glossary of Airline Terminology

Post-1977 Agreement

Beginning in 1978, the United States negotiated a series of agreements that departed from previous Bermuda-style agreements. These new agreements are characterized by increased operational flexibility for airlines and less governmental regulation of services. Like the Bermuda-type agreements, a Post-1977 agreement includes multiple designations, but it explicitly provides that each party may designate as many airlines as it wishes. A standard Post-1977 agreement includes: Capacity Principles – In general, Post-1977 capacity principles say that each party’s airlines shall have a fair and equal opportunity to operate the specified air services. Neither party may unilaterally limit the service – volume of traffic, frequency, or aircraft type – of an airline of the other party except for technical reasons. Pricing Articles – Two general types of pricing articles have been included in Post- 1977 agreements. Under each, intervention by the parties is limited to: (1) Prevention of predatory or discriminatory prices or practices; (2) Protection of consumers from prices that are unduly high or restrictive due to abuse of monopoly power; and (3) Protection of airlines from prices that are artificially low because of direct or indirect governmental subsidy or support.

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