BRUSSELS, March 22: EU transport ministers gave clearance on Thursday for plans to free up the transatlantic aviation market under an “open skies” accord expected to drive down ticket prices and create jobs.

Unanimous agreement on the deal was possible only after ministers overcame British reservations about competition out of London's Heathrow airport by delaying the date of application to the end of March 2008.

Welcoming the agreement, EU Transport Commissioner Jacques Barrot predicted that the number of passengers on transatlantic flights would surge 50pc over the first five years from 50 million to 75 million.

“To have such an increase, it means that there will probably be far cheaper, more attractive fares being offered to Europeans and Americans,” he told journalists.

In Washington, US Transportation Secretary Mary Peters hailed the “historic decision” taken by the ministers also with predictions for big benefits for consumers.

“Tearing down regulatory barriers allows us to foster more affordable and convenient air travel and gives our airline industry more opportunities to compete, innovate and thrive,” she said in a statement.

The European Commission, which negotiated the deal on the EU's behalf, says consumers will see up to 12 billion euros ($16 billion) in benefits, as increased competition brings down ticket prices and creates 80,000 new jobs in the aviation sector in the EU and US combined.

It is set to be signed in Washington on April 30, but will now only come into effect in March 30, 2008, instead of October 28 this year, as originally planned, to take into account British objections.

Britain had deep reservations about the deal because it would lift restrictions on the number of airlines which can operate profitable transatlantic flights from Heathrow airport outside London.

Currently, only British Airways, Virgin Atlantic of Britain and US carriers United Airlines and American Airlines are allowed to fly from Heathrow to the United States.

Barrot said the fact that all member states had backed the agreement would strengthen the EU's hand for a second round of negotiations with the United States, that are supposed to remove remaining barriers.

“This confidence and unity means that the European side enters the next phase of negotiations with the United States in a strong position,” he said.

Under the new agreement, the EU has obtained fewer concessions from the United States than originally hoped and the European side aims to secure a better deal in the next round.

It stipulates that any EU carrier would be able to fly from anywhere in the bloc to any point in the US and vice versa.

That is expected to dramatically increase competition because EU carriers are currently allowed to fly to the United States only from their home country.

However, while US carriers would be able to fly intra-EU routes, their European rivals would not be able to fly between two cities within the US.

The agreement would also lift restrictions on EU carriers buying big stakes in US airlines, although their voting rights in a US carrier would remain capped at 25 per cent, much to the chagrin of Britain.

The ministers also agreed to a clause that could see some of the benefits of the deal suspended if there were no progress on further liberalisation after the first two-and-a-half years.

An open-skies deal is supposed to replace the patchwork of existing bilateral air transport agreements between EU members and the United States, eight of which the European Court of Justice has ruled are illegal.—AFP