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Post-Brexit UK-US air services accord near as parties meet again

UK and US officials are near an agreement covering flights between the countries once the former leaves the European Union, US officials say.

Representatives of both countries are meeting in Washington DC today, the latest in more than a year of discussions, in the hope of finalising an accord that would cover post-Brexit air services between the UK and USA.

"There is very high hope, on both sides, that there will be an agreement very soon," said David Short, deputy assistant secretary of transportation for aviation and international affairs at the US Department of Transportation, at a discussion on the future of transatlantic relations in DC on 27 November.

On the table is a deal that includes everything allowed in the EU-US open-skies agreement, as well as a number of "improvements", he says. These include seventh-freedom cargo rights – for example, a US cargo carrier could operate a flight originating in the UK that goes to Germany – as well as the inclusions of overseas UK territories, like Anguilla, Bermuda and the British Virgin Islands.

"I don't think too many would be shocked if an agreement is reached at this round," says Short citing the bilateral meetings today.

UK prime minister Theresa May and EU leaders reached a deal that would allow the country to leave the union in an orderly fashion on 25 November, after more than a year of fruitless discussions. The agreement still requires the approval of the UK parliament.

Transatlantic air links are important for the UK and USA. The market is the single largest between the EU and USA, making up 29% of all capacity between Europe and the USA this year, FlightGlobal schedules data shows. Comparatively, the second largest market, France-USA, is only 11% of capacity.

Air services between the two countries are governed by the EU-US open-skies treaty that entered into force in March 2008. Among the many liberalisations the agreement included was the lifting of restrictions on service to London Heathrow, which was limited to just two UK and two US carriers previously.

British Airways and Virgin Atlantic Airways were the two UK carriers, and American Airlines and United Airlines the US carriers allowed to serve the airport prior to open skies.

The UK's departure from the EU, and the latter's open skies treaty with the USA, has raised concerns that air service between the two countries could revert to former rules. This could potentially see Delta Air Lines, which only served London Gatwick prior to open skies, booted from Heathrow.

Short does not believe such a drastic roll back in air service will occur if no agreement is reached. He cites a similar example where France and the USA lacked an air services agreement in the 1980s and, instead of rolling back flights, capacity was held at existing levels.

"The worst case… both sides would allow the current level of service to continue," he says.

The EU is similarly working on a post-Brexit agreement with the UK, the EU delegation told the USA transport and energy counsellor James Bradbury at the transatlantic discussion. The bloc hopes to have an agreement in place for an "orderly withdrawal", as he puts it, that would allow the UK to remain part of the EU's single market through the end of 2020. During this period, the UK could negotiate air services agreements with other countries that would enter into force after its departure.

However, the EU is also preparing for the "hard Brexit" scenario – a sudden exit from the bloc in March 2019 – says Bradbury. This includes offering certain "freedoms of the air" to the UK on a reciprocal basis so existing service levels could continue.

"The priority would be to have an orderly withdrawal from the European Union," he says.

Tamur Goudarzi-Pour, vice-president for the Americas at the Lufthansa Group, echoed Bradbury and Short's comments at the discussion that an orderly exit from the EU by the UK is "desirable".

BA, and to a lesser extent its joint venture partner American, would be the most exposed to a hard Brexit with no new UK-US agreement, schedules show. The London-based carrier operates 35.5% of capacity in the market this year, and controls just over half the market when combined with its partner.

Virgin Atlantic is the second largest standalone carrier between the UK and USA in 2018, with an 18.5% share of capacity, or a nearly 24% share when combined with its partner Delta, the data shows. United has an 11.7% market share.

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