The open skies deal has proved difficult to finalise

Talks have been going on for a number of years but have always foundered on concerns it would prompt trans-Atlantic mergers and hurt security and jobs.

A last round of negotiations stalled in December, though talks have continued.

EU transport commissioner Jacques Barrot said that negotiators had made "decisive progress" in talks on Friday.

'Major breakthrough'

The EU and the US have reached a provisional deal that still needs to be approved by transport ministers, but it sets up the deregulation of a trans-Atlantic airline market that is worth some $18bn (�9.3bn).

According to Brussels, an "open skies" agreement would boost trans-Atlantic passenger numbers by 26 million, create 80,000 jobs, and provide 12bn euros (�8.1bn) of economic benefits.

Our initial reaction is that there seems to be a substantially improved balance in the wording of the agreement The Association of European Airlines

Should it be approved at a meeting of ministers on 22 March then the agreement would be in place from 28 October.

"This can be considered a major breakthrough," said Michele Cercone, spokesman for Commissioner Barrot.

Under the terms of the agreement, European airlines would be allowed to make trans-Atlantic flights from any nation and not just their home country.

The deal would also open up Heathrow so that a greater number of airlines could land and take off from the London airport.

Improved balance

At the core of the agreement were ownership rights, which had proved controversial in earlier rounds of talks.

The US will still be able to prevent a foreign company from owning more than 25% of an American airline's voting rights.

However, the deal would make it easier for EU companies to buy all of an airline's non-voting shares. At the same time, the EU would be able to restrict US investment in EU airlines.