UK Markets closed

US offers UK poorer 'Open Skies' transatlantic flights deal after Brexit

British Airways could see less access to the US after Brexit, officials are warning (REUTERS/Hannah McKay)

British transatlantic airlines will be offered a poorer “Open Skies” deal with the US after Brexit, it has been claimed.

The more limited deal would hit big carriers such as British Airways and Virgin Atlantic that currently comply with the EU open skies policy.

Britain’s membership of the EU version will lapse once the UK leaves the bloc – and has become a hot topic in the airline industry with the likes of Ryanair boss Michael O’Leary predicting planes could be grounded if no new deal is negotiated.

MORE: Ryanair boss says UK could become a ‘no-fly zone’ after Brexit

The problem with the US relationship rests on ownership of UK airlines. A standard requirement imposed by the US is that foreign airlines be majority owned by citizens of the country in which they are based.

Such standards could be problematic for UK airlines as they have large foreign shareholdings.

If imposed, that may restrict the kind of flights to the US – how many a day, where they can fly to, what they can carry – by several UK carriers.

According to the Financial Times, British and American negotiators met in January for the first formal talks on a new air services deal.

MORE: Airbus may need to stockpile parts to beat Brexit customs delays

The newspaper quoted one official who attended the talks as saying: “You can’t just scratch out ‘EU’ and put in ‘UK’.”

The FT was also told by a British official that the negotiations showed “the squeeze” London will face as it tries to reconstruct its international agreements after Brexit.

Ryanair CEO Michael O’Leary has warned that UK flights could be grounded after Brexit without a new open skies deal in place (REUTERS/Yves Herman)

That said, publicly, all parties are confident a solid deal can be reached.

“We have every confidence that the US and UK will sign a deal that is in everyone’s interests and that IAG will comply with the EU and UK ownership and control regulations post Brexit,” said International Airlines Group, which owns British Airways.

Meanwhile, a spokesman for the Department for Transport said: “All parties have a shared interest in ensuring that existing rights will continue under the new bilateral arrangements, allowing airlines on both sides of the Atlantic to continue to operate existing services as well as to seek to develop new ones.”

MORE: Ford calls for Brexit clarity to help it make UK investment decision

Sir Richard Branson owns 51% of Virgin, making it majority UK-owned. But he is in the process of selling 31% to Air France-KLM, which could affect the carrier’s access to the US, post-Brexit.

A spokesperson for Virgin Atlantic, said: “As a British airline operating under a UK licence we are confident with how the talks are progressing to agree a new Open Skies agreement.

“We remain assured that a new liberal agreement will be reached, allowing us to keep flying to all of our destinations in North America.”

IAG, which owns British Airways, must be 50% owned within the EU to maintain operating rights in the bloc after Brexit – but that may not be enough to satisfy US officials.

The EU-US open skies agreement allows any airline based either in Europe or the States to fly into anywhere within the two territories without restrictions.