An "open skies" agreement, due to be agreed by EU transport ministers today, is being hailed as a revolution by officials who say it will deliver more competition and lower fares.
But environmental groups say the increased air traffic generated by the measure will write off all the benefits expected from separate plans to "green" aviation by bringing airlines into the EU's carbon emissions trading scheme.
Coming just days after EU leaders announced ambitious plans to combat global warming, the row over "open skies" has prompted questions about the EU's commitment to the environment. Under the deal, any EU airline will be able to fly to the US from any part of Europe ushering in a dramatic change in the structure of transatlantic aviation.
Britain is unhappy with the blueprint because it will open Heathrow up to more competition without gaining a key concession sought by European operators: the lifting of restrictions on foreign ownership of American carriers.
The UK currently accounts for 40 per cent of the transatlantic aviation, mainly because of Heathrow. Only two UK and two US airlines can operate this lucrative route. Italy, which wants to privatise Alitalia, also has reservations over "open skies" but most diplomats expect the deal to go through at today's meeting.
According to the European Commission, the plan will create 72,000 jobs on both sides of the Atlantic. Over a period of five years 26 million additional passengers would fly across the Atlantic. By the fifth year the market would have grown by a third creating 9.6 million more travellers.
The deal would end a situation under which current aviation arrangements are in legal limbo following a ruling in the European Court of Justice.
British Airways, one of Heathrow's transatlantic operators, would lose out. But bmi (formerly British Midland) and foreign airlines such as Aer Lingus could be able to use their existing slots at London's main airport for flights to the US.
Freight carriers from the US would be able to fly to the UK and then on to China, something currently prohibited.
The European Federation for Transport and the Environment pressure group said that, based on the Commission calculations, "This will lead to some 3.5 million tonnes of extra CO2 emissions annually. This is about as much as the expected reduction of aviation emissions resulting from the inclusion of aviation into the European emissions trading system". It also argued that the deal makes it difficult to change the current system under which kerosene is exempt from taxation.
Caroline Lucas, a Green MEP, argued: "This 'Open Skies' agreement risks undermining all the EU's effort on tackling climate change, and must be rejected - at least until both the EU and US have adopted a tough package of measures to reduce the sector's emissions year-on-year, such as establishing an aviation-only emissions trading scheme with fixed, annually reducing emissions caps.
"It is simply incompatible to be encouraging a large increase in the number of flights between the EU and US and cutting greenhouse gas emissions sufficiently to either prevent the worst impacts of climate change, or even meet the emissions reductions targets agreed at the Brussels summit this month."
But Barbara Helfferich, the environment spokeswoman for the European Commission, said: "All airlines will be included in the emissions trading system, whether European or non-EU. The more flights there are, the higher the cost of carbon will be for the carriers. We are confident that this will oblige the airlines to contribute their fair share to fighting climate change."
In 2004, 47.4 million passengers flew between the EU and the US. The Commission report, written by the consultants Booz Allen Hamilton, argues that, with open skies, "airline fares would fall, new jobs would be created to serve the new passengers, there is greater consumer choice for airports and airlines and economic growth is stimulated. Over the course of the five years these effects generate a consumer surplus of between €6.4bn (£4.4bn) and €12bn."
Air travel now...
* EU-US traffic at 47.4 million passengers per year, though this is lower than its peak year in 2000.
* US air transport industry carried more than 712 million passengers in 2004, of whom just 9 per cent flew internationally.
* EU industry carried 650 million people, of whom more than one third were travelling outside Europe.
* Together the EU and US account for more than half of all global scheduled traffic.
... and in the future
* An extra 26 million transatlantic passengers over five years.
* Benefits worth €6.4bn-€12bn (£4.3bn-£8.2bn).
* Additional 72,000 jobs created in the EU and US over five years.
* An extra 100,000-170,000 extra tonnes of freight generated.
* Gains in savings and productivity leading to lower fares.
* More opportunities for airlines to pool resources.
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