In the years between the World Wars, how aware were the world’s naval leaders about the threat posed by aircraft to capital ships? Was there a general sense that battleships would soon be highly vulnerable to air attack, or was this something they collectively realized in the first half of WW2?

This answer will describe the development of the Royal Navy's defences against air attack in the interwar period and early parts of WWII. If you want to read more about its views on use of aircraft carriers in this period, I have written earlier answers about the development of the RN's carrier doctrine through exercises, and the fleet doctrines of the three major navies.

The Royal Navy had long understood that aircraft could threaten a battlefleet. Officers of the Royal Naval Air Service had first suggested the use of aircraft to attack an enemy fleet in harbour in 1911. In 1912, a Lieutenant Hyde-Thomson wrote a paper describing the possibility of attacking targets with torpedo-carrying aircraft; he was soon sent to the Torpedo School in Portsmouth, to develop a torpedo that could be carried by an aircraft. A prototype torpedo was dropped by Squadron Commander Arthur Longmore on the 28th July 1914. Throughout WWI, the RNAS advocated for the use of torpedo-carrying aircraft to attack the German High Seas Fleet in its bases. This was hampered by the lack of carriers, torpedo bombers, and effective torpedoes, but in 1917, with the Sopwith Cuckoo and an air-droppable 18in torpedo both entering service, it became official policy. Admiral Beatty, commander of the Grand Fleet, wrote to the Admiralty advocating strongly for it on the 11th September 1917. The plan called for an attack by 121 aircraft, carried on 8 carriers. The Admiralty agreed fully, but were unable to provide the carriers required for the 1917 plan. Instead, a smaller operation was put together, to be carried out some time in late 1918 or early 1919. This was to use just twenty aircraft, flying from HMS Argus. However, the Armistice meant that it never moved beyond the planning stages. In 1919, though, Argus's squadron would get to prove their abilities, in a practice attack on the 2nd Battle Squadron in Portland Harbour. They scored a total of six hits on four ships. Admiral Madden, commanding the Atlantic Fleet, believed that, with the guns available, AA fire would not have been able to stop the attack, even with the advantage of clear weather and knowledge of the time of the attack. The fleet's defences clearly had to be improved. The main defence would be defensive fighter patrols around anchorages. More AA guns would be needed, but the report on the exercise did note that the guns would only be effective in daylight, and even then could not be expected to stop an attack.

While this exercise had shown that aircraft posed a clear threat to battleships, this threat only applied to ships in harbour. Attacks on ships at sea would be harder, as the ships could manoeuvre. The RN formed a committee on anti-aircraft defence in 1919, to integrate the lessons of the war. This focused mainly on the threat from level bombing, which was seen as more practical against ships at sea. The committee's main conclusion was the need for effective fire control. Level-bombers would have to fly straight and level to score hits on a ship; this would make them an easy target for well-controlled anti-aircraft fire. This led to the development of the interim Standard Temporary System (STS), and then the High Angle Control System (HACS). STS was used until HACS was developed, and lingered on some older ships through WWII. HACS was the RN's main anti-aircraft fire control system in the interwar period and WWII, albeit with significant upgrades. It relied on similar principles to the RN's surface fire-control systems, calculating the rate-of-change of the range to the target to work out where to aim the guns. This was simpler to implement than tachymetric systems (which measured the speed of the target directly), but much slower and less accurate. In the 1920s, though, there was a clear faith in its ability to ward off air attack.

In April 1918, the RNAS had been merged with the Army's Royal Flying Corps to form the Royal Air Force. The RAF, as the most junior of the services, felt it had to prove itself, and stake out its place. They seized on Billy Mitchell's trial against the old German battleship Ostfriesland, where American Army bombers sank the battleship with repeated bombing attacks. The RAF repeated this trail against the decomissioned battleship Monarch, dropping 57 bombs. However, they scored only 11 hits (against a stationary ship, not firing back, where the RAF aircraft had a chance to drop practice bombs). The RN viewed this trial as proof that level bombing would be inaccurate against ships at sea, but were worried about the amount of damage even rare hits could do. Several bombs were placed inside Monarch and detonated, allowing the RN to gather information about the effects of bombs; these showed that the biggest risk came from fire. There were also trials involving bombs fired from guns against targets that modelled the decks of ships. These were used to suggest improvements to the armoured decks of ships. The RN also converted two old ships to radio-controlled targets; the pre-dreadnought Agamemnon and the dreadnought Centurion. These were frequently used for bombing trials. While the RN saw these trials as confirming its belief in HACS, gunfire and maneouvre, the RAF saw them as proof that aircraft had obsoleted the battleship. In the mid-1920s, the main threat of war was seen as coming from Japan. To counter this, the RN built up its base at Singapore. The RN planned to install strong coastal defences to protect against a landing, but Hugh Trenchard, commanding the RAF, argued that the defence of the base should be left solely to aircraft. The RN's arguments ultimately won out. The formation of the RAF had another effect. It removed the vast majority of the RN's air-minded officers from the service, meaning that there were few, especially in senior ranks, who understood the capabilities of modern aircraft. The RN's future decisions should be viewed with this in mind

Throughout the late 1920s, the RN's exercises often involved carriers and their aircraft, to significant effect. An example would be 1929's Exercise MZ, where there were no less than 10 carrier strikes throughout the single day exercise. As the carriers were under the jurisdiction of the RN, but their aircraft under the RAF, their effectiveness would often be under-estimated. During Exercise MZ, aircraft from Courageous and Eagle attacked the 3rd Battle Squadron, scoring multiple hits on Benbow and Marlborough. Experience from WWII would show that so many hits would likely sink a battleship, especially WWI designs like the two in question; the exercise report merely states that the two ships were forced to reduce speed to eight knots. Even so, the carriers and their aircraft were seen as an important and capable part of the fleet.

The increasing capability of aircraft, exemplified by the success of carriers in exercises, led to the formation of a new Naval Anti-Aircraft Gunnery Committee (NAAGC) in 1931. This committee would, largely, develop the weapons, techniques and thinking that the RN took into WWII. It was led by a Rear Admiral, and included a number of technical experts drawn from within and without the Navy - including the Army's Captain Kerrison, who developed the Army's main anti-aircraft fire control system. The RAF's contribution was a solitary squadron leader, a very junior officer. The NAAGC made two main assumptions based on the RAF's thinking about the se of aircraft. The first was that 'the bomber will always get through' - in other words, that fighters would not have sufficient warning to intercept modern bombers before they were in a position to attack. The second was that the fleet was unlikely to face dive-bombing attacks. Such attacks were impossible without purpose-built aircraft, but those aircraft would be single-purpose aircraft, little use for any other task, and so would not be widely built (it should be noted, though, that the US Navy, and the RAF's own Fleet Air Arm were already testing dive-bombers). As such, the two threats the fleet would be facing were high-level bombers and low-level torpedo bombers. To counter this, the NAAGC argued for a multi-layered defence. The first layer would be a standing patrol of fighters, either from carriers or from nearby RAF bases. This standing patrol would only be 1-2 aircraft, and so would not be able to stop an attack, but would be able to intercept bombers as they approached (which fighters on the ground/carrier could not). They would force the bombers to fly in close formation, making them good targets for the fleet's guns. Torpedo bombers would have to close to within the range of close-range AA weapons, and so would be shot down by weight of fire, as well as by heavy fire from escorting destroyers. The destroyers were not expected to be targeted alone. As such, they would not need to have heavy AA guns like the major units; they could just have LA (low angle) guns that were more effective against other ships, and could target torpedo bombers if necessary. The NAAGC made several recommendations that shaped the fleet's air defences in the 1930s. Every major vessel needed an AA armament of at least eight 4in AA guns as their main armament. Close-in defence would be provided by the octuple 2pdr pom-pom that was just entering service, as well as the newly-developed quadruple mount for the Vickers .50 machine gun. As the fleet's defence was to be focused on guns, not aircraft, aircraft on the decks of the fleet's carriers were to be struck down into the hangar. This cleared the field of fire for the carrier's guns, and reduced the risk of bomb hits starting fires amongst the aircraft. Destroyers received only a light AA armament, with only a few machine guns and a quadruple 2pdr.