Brussels talks aim to liberalise transatlantic aviation services

The US and the European Union begin negotiations in Brussels today aimed at achieving a historic breakthrough in liberalising transatlantic aviation services.

The two sides have been deadlocked for years, but both Brussels and Washington believe there is a chance of agreeing a staged deal before the end of the year, which would eventually lead to the creation of a transatlantic open aviation area between the US and Europe.

Such a deal could break the logjam blocking the consolidation of the global aviation industry, which has lagged far behind other sectors, from telecommunications to cars and pharmaceuticals, in the pace of mergers and acquisitions.

Controversially for the UK, a US/EU deal would also open up London Heathrow to more competition.

At present, access to direct flights between Heathrow and the US is limited to British Airways, Virgin Atlantic, American Airlines and United Airlines.

It could allow BA to deepen its commercial ties with American Airlines and to extend its equity relationship with Spain's Iberia, where it holds a 9 per cent stake.

A comprehensive US/EU air services agreement would be used as a template for aviation negotiations with other regions of the world.

In a second stage of the deal parallel moves could be undertaken in the US and the EU to weaken or remove limitations on the foreign ownership of airlines.

This would herald the dismantling of the regulatory system that has governed international aviation for 60 years since the 1944 Chicago Convention.

John Byerly, deputy assistant secretary for transportation affairs at the US State Department, who will lead the US delegation, said in a speech in Washington on Friday that the negotiations were "the last clear chance to achieve an historic breakthrough in transatlantic aviation", before outstanding legal issues due to surface in the EU next year further complicated any chance of progress.

"Although there can be no guarantee of success, we believe that both sides are prepared to forge a deal... I'm hopeful because the time is now so clearly ripe for taking a major first step forward," said Mr Byerly.

Any deal between the two sides is not expected to be concluded this week and a second round of negotiations has already been scheduled to take place in Washington in mid-November. - (Financial Times Service)