The US and UK are reportedly nearing the completion of a new Open Skies agreement, as the two countries look to ensure a smooth transition for transatlantic aviation post-Brexit.

News of the imminent deal was first reported May 28 in UK newspaper The Telegraph, citing four sources close to the talks in Washington DC and London.

The two countries are negotiating the deal because the current US-European Union (EU) agreement will no longer apply to the UK after Brexit, when it exits the EU in March 2019.

Government officials from the two countries met mid-May in Washington DC for informal talks, and have resolved in principle many of the outstanding issues between them, a source familiar with the talks told ATW’s sister publication Aviation Week.

The biggest sticking point remaining is determining the set of rules that would govern ownership and control for airliners. This is not an issue for US-based carriers, which are required by law to be controlled by US citizens, but it presents a challenge for UK-based carriers, including Norwegian Air Shuttle, Virgin Atlantic and British Airways’ parent International Airlines Group, all of which are majority-owned and controlled by foreign nationals.

Under the rules governing most existing bilateral US Open Skies agreements, carriers must be majority-owned and controlled by nationals of the member states to the agreement.

After much disagreement, the two sides have tentatively settled on a plan to grandfather in the ownership structures of the major UK carriers after a certain date, meaning any new UK carrier would have to be majority-owned and controlled by British nationals, according to a person briefed on the talks.

The two sides would still need to hammer out rules governing changes of ownership, in the event a UK carrier were to be acquired by a foreign company.

The deal would also cover UK overseas territories Bermuda and the Cayman Islands, both of which are not covered under the current US-EU agreement. Extending the agreement to those territories was an important objective for the American delegation, according to the same source.

If the two sides can realize sufficient progress, a formal meeting between the countries could take place in Washington DC as early as mid-June.

There is also talk of a potential transition agreement, which would go into effect after Brexit and provide the two countries more time to work through the legal ramifications of the deal, during which the current terms of the US-EU Open Skies agreement would continue to apply.

Airlines for America SVP-government affairs Sean Kennedy expressed cautious optimism regarding the state of the negotiations, saying: “The stakes are high in that the UK market is absolutely vital to US airlines and our customers. Brexit has the potential to disrupt that traffic, but both governments recognize the risks and are actively working toward an Open Skies agreement. We’re still in the tunnel, but there is definitely light visible at the end.”
A spokesman from the US State Department, in response to an inquiry, said: “Discussions continue between the United States and the UK on a post-Brexit air transport agreement.  Nothing has yet been finalized. That includes issues involving ownership and control.”

Ben Goldstein, Ben.Goldstein@Aviationweek.com