Jim Bede designed the BD-1 as a straightforward low wing, tricycle undercarriage, single-engined light aircraft seating two people in a side-by-side cockpit. This low cost trainer was intended to compete with the Cessna 150 and Piper Cherokee 140. Bede flew the prototype (N6248D) on 11th July, 1963.
During 1964, the American Aviation Corporation was formed to bring new life to the promising BD-1 design. The prototype AA-1 Yankee N888M first flew on March 2nd, 1967. The AA-1 was a little larger than the original BD-1 with a more powerful 115hp Lycoming 0-235-C2C engine.