An “open skies” agreement between the EU and the US was set back after American authorities withdrew a plan to give foreign investors more control over US airlines.
The open skies plan would see US carriers given wider access to EU airspace. At the moment, only American Airlines and United Airlines are permitted to fly to London Heathrow. In exchange for this, the US would allow European airlines to fly from airports outside their home country to the US, and to charge whatever they want.
A greater number of airlines would also be given access to transatlantic routes, as well as permission to fly onward from US airports. Advocates argue that this would result in cheaper transatlantic flights, increase air travel and create new jobs.
However, pressure from unions and the US Congress has forced the Bush administration to scrap the foreign investment plan, which EU transport commissioner Jacques Barrot has said is crucial for taking the talks forward.
Current rules prevent foreign companies owning more than 25 per cent of US carriers and, at a time of heightened air security, many in the US are loath to relinquish more control. The changes would have meant foreign owners would have more of a say in flight routes and the types of aircraft operated.
The open skies deal could also be affected by any decision made regarding Virgin America, the start-up for which Sir Richard Branson is awaiting approval from US authorities. If it is rejected it may make it harder for US airlines to gain better access to the UK aviation market.
