In Laker Airways v Department of Trade [1977] QB 643, the facts involved regulation of the transatlantic air route. In order for an air carrier to operate on the transatlantic route, it had to be a 'designated' air carrier under the Bermuda Agreement of 1946. The Bermuda Agreement was a treaty, made between the UK and the USA, which entitled each government to 'designate' one or more air carriers for a specified route from one country to the other. The other government was then bound to accept that carrier, as long as it came up to operational standard. In order for a UK airline to operate, it also had to obtain a licence from the Civil Aviation Authority (CAA). The CAA was a body created under the Civil Aviation Act 1971 and was entrusted with the task of granting licences, as well as revoking or varying them. The Act also provided that the Secretary of State could give 'guidance' to the CAA as to the policy to be followed in the consideration of licence applications. Freddie Laker had applied for designation under the Bermuda Agreement, having been granted a licence under the Civil Aviation Act 1971 for his 'Skytrain' service to operate on the transatlantic route. Unfortunately for 'Skytrain', there was a delay in obtaining approval from the President of the United States for its designation. During the course of this delay, the Secretary of State made an announcement in the House of Commons on future civil aviation policy. This represented a complete reversal of the previous policy and effectively allowed British Airways to have a monopoly on the transatlantic route. Subsequent to the new policy announcement, the Secretary of State issued 'guidance' to the CAA stating that he had decided to cancel 'Skytrain's' designation and that the CAA should withdraw 'Skytrain's' licence in accordance with this new policy. In an application for judicial review by Mr Laker, it was argued that the Secretary of State’s 'guidance' was ultra vires. The court agreed, stating that the Secretary of State's 'guidance' was such a complete reversal of policy that it could not properly be said to be guidance at all. The government argued that the power of the Secretary of State to withdraw the designation was a prerogative power arising under treaty (the Bermuda Agreement) and so could not be examined in the courts. The court dismissed this argument by stating that there was a power under the Civil Aviation Act 1971 for designation of airlines to be changed, but that this power was only to be used in carefully defined circumstances, such as in the interests of national security or good international relations. Lord Denning summed up the position thus: 'Seeing that these statutory means were available for stopping Skytrain if there was a proper case for it, the question is whether the Secretary of State can stop it by other means. Can he do it by withdrawing the designation? Can he do indirectly that which he cannot do directly? Can he displace the statute by invoking a prerogative? If he could do this, it would mean by a side wind, Laker Airways Ltd would be deprived of the protection that statute affords them. There would be no hearing, no safeguard against injustice … To my mind such a procedure was never contemplated by the statute.' The court therefore agreed that the 'guidance' was ultra vires.