In the late 1950s, the United Kingdom, France, United States and Soviet Union were considering developing supersonic transport. The British Bristol Aeroplane Company and the French Sud Aviation were both working on designs, called the Type 223 and Super-Caravelle, respectively. Both were largely funded by their respective governments. The British design was for a thin-winged delta shape (which owed much to work by Dietrich Küchemann) for a transatlantic-ranged aircraft for about 100 people, while the French were intending to build a medium-range aircraft.
The designs were both ready to start prototype construction in the early 1960s, but the cost was so great that the British government made it a requirement that BAC look for international co-operation. Approaches were made to a number of countries, but only France showed real interest. The development project was negotiated as an international treaty between the two countries rather than a commercial agreement between companies and included a clause, originally asked for by the UK, imposing heavy penalties for cancellation. A draft treaty was signed on 28 November 1962.
By this time, both companies had been merged into new ones; thus, the Concorde project was between the British Aircraft Corporation and Aérospatiale. At first the new consortium intended to produce one long range and one short range version. However, prospective customers showed no interest in the short-range version and it was dropped. The consortium secured orders (i.e., non-binding options) for over 100 of the long-range version from the major airlines of the day: Pan Am, BOAC and Air France were the launch customers, with six Concordes each. Other airlines in the order book included Panair do Brasil, Continental Airlines, Japan Airlines,Lufthansa, American Airlines, United Airlines, Air India, Air Canada, Braniff, Singapore Airlines, Iran Air, Olympic Airways, Qantas, CAAC, Middle East Airlines and TWA.
The aircraft was initially referred to in the UK as "Concorde", with the French spelling, but was officially changed to "Concord" by Harold Macmillan in response to a perceived slight by Charles de Gaulle. In 1967, at the French roll-out in Toulouse the British Government Minister for Technology, Tony Benn announced that he would change the spelling back to "Concorde". This created a nationalist uproar that died down when Benn stated that the suffixed "e" represented "Excellence, England, Europe and Entente (Cordiale)." In his memoirs, he recounts a tale of a letter from an irate Scotsman claiming: "[Y]ou talk about 'E' for England, but part of it is made in Scotland." Given Scotland’s contribution of providing the nose cone for the aircraft, Benn replied, "[I]t was also 'E' for 'Écosse' (the French name for Scotland) — and I might have added 'e' for extravagance and 'e' for escalation as well!"
Construction of two prototypes began in February 1965: 001, built by Aerospatiale at Toulouse, and 002, by BAC at Filton, Bristol. Concorde 001 made its first test flight from Toulouse on 2 March 1969, piloted by Andre Turcat, and first went supersonic on 1 October. The first UK-built Concorde flew from Filton to RAF Fairford on 9 April 1969, piloted by Brian Trubshaw. As the flight programme progressed, 001 embarked on a sales and demonstration tour on 4 September 1971, which was also the first transatlantic crossing of Concorde.
Concorde 002 followed suit on 2 June 1972 with a tour of the Middle and Far East. Concorde 002 made the first visit to the United States in 1973, landing at the new Dallas/Fort Worth Regional Airport to mark that airport’s opening. These trips led to orders for over 70 aircraft, but a combination of factors led to order cancellations: the 1973 oil crisis, financial difficulties of airlines, a spectacular Paris Le Bourget air show crash of the competing Soviet Tupolev Tu-144, and environmental concerns such as the sonic boom, takeoff-noise and pollution. By 1976 four nations remained as prospective buyers: Britain, France, China, and Iran. In the end only Air France and British Airways (the successor to BOAC) took up their orders, with the two governments taking a cut of any profits made. In the case of BA, 80% of the profit was kept by the government until 1984, while the cost of buying the aircraft was covered by a state loan.
The United States cancelled the Boeing 2707, its supersonic transport programme, in 1971. Industry observers in France and the United Kingdom suggested that part of the American opposition to Concorde on grounds of noise pollution was orchestrated, or at least encouraged, by the United States Government, out of spite at not being able to propose a viable competitor, despite President John F. Kennedy's impassioned 1963 statement of commitment. Other countries, such as India and Malaysia, ruled out Concorde supersonic overflights stating noise concerns.
Demonstration and test flights were flown from 1974 onwards. The testing of Concorde set records that have not been surpassed; the prototype, pre-production and first production aircraft undertook 5,335 flight hours; 2,000 test hours were at supersonic speeds. Unit costs were £23 million (US$46 million) in 1977, and development costs were six times the projected amount.