EU transport ministers are expected to agree a landmark agreement to liberalise transatlantic air services tomorrow after Britain signalled it would not oppose a deal.
Shares in European airlines, including Aer Lingus, rose dramatically yesterday on speculation the deal would finally be signed after years of tough EU-US negotiations.
The draft deal would lift the current restrictions, which prevent European airlines from flying into any US destination that they chose. It would also give US carriers more access to European destinations, significantly boosting competition in the sector.
Diplomats in Brussels said yesterday that London had dropped its opposition to an "open skies" deal but would push for some modifications to the draft EU-US agreement.
Britain is seeking to delay the implementation of the deal at Europe's biggest airport Heathrow and also wants an EU commitment to withdraw automatically from the pact if the US does not agree by mid-2010 to allow European airlines to buy US carriers.
British prime minister Tony Blair reportedly lobbied US president George Bush personally on the open skies deal yesterday, asking him to agree a second-stage deal that would further liberalise the airline sector. However, getting the US administration to lift its restrictions on foreign ownership of airlines is likely to be extremely tough.
Trade unions in the US are hostile to allowing European carriers to merge with US carriers, arguing that this could cost thousands of jobs.
Powerful forces in Congress are also hostile to the prospect of further liberalising the US airline sector.
Last week, the US House of Representatives committee on transportation wrote to the transportation secretary Mary Peters saying it could not support the agreement due to the ambiguity on the issue of foreign control of US airlines.
"We have reviewed the proposed open skies agreement . . . and are concerned that it may lead to a change in US law and policy to permit greater foreign control of US airlines," says the letter, which has been seen by The Irish Times.
