(BRDO PRI KRANJU) - EU and US officials launched a second stage of talks Thursday aimed at improving transatlantic air travel, with the US team warning they could drag on into the next decade.

The negotiations will build on a first EU-US "open skies" agreement launched to much fanfare and some success at the end of March.

But they will also confront key stumbling points that cropped up in initial talks and have not been overcome.

The United States wants to broaden out the second round, which the European Union hopes will remove limits on the ownership of airlines and allow companies to fly passengers on both EU and US domestic routes.

Speaking at the launch in Brdo Pri Kranju, Slovenia, US special envoy for EU affairs Boyden Gray warned that a barrier-free transatlantic aviation market was still some way off.

"I don't think anyone thinks it's going to be done overnight," he said.

"I think by some time next decade we will have virtually everything, by 2020 perhaps, but by 2010 I don't know," he told reporters.

After more than four years of often tense negotiations, the first-stage "open skies" agreement has already brought more choice and the possibility of cheaper tickets to passengers flying between Europe and the United States.

Since the end of March, any EU carrier can fly from anywhere in the bloc to any point in the United States and then on to a third country, and vice versa.

The EU's focus now is on European carriers that want to invest in their US counterparts, a move deeply opposed by the US Congress.

So far the new pact has lifted restrictions on EU carriers buying majority stakes in US airlines but their voting rights in a US company remain capped at 25 percent.

On the other hand US airlines will be able to hold voting rights of up to 49 percent in a European carrier. But that figure could be scaled back to 25 percent if there were no progress in the negotiations on further liberalisation.

Indeed, if this second stage -- involving some 90 experts and negotiators -- fails to produce results, elements of the first phase could be re-opened, under a review scheduled for November 2010.

According to EU and US experts, "open skies" is already bearing fruit.

"We are seeing already concrete benefits, very positive developments," said Daniel Calleja Crespo, director of aviation at the European Commission's transport wing.

He said that an eight-percent increase in EU-US flights this summer is expected, compared to 2007, and that around 20 percent more transatlantic flights would be operating out of London's Heathrow airport.

Airlines too were seeing a rise in investment, notably Virgin and Lufthansa.

But one factor that will definitely increase drag this time is a US demand to free up investment requirements for airlines in at least 60 countries, allowing improved access for US investors.

"We would like to concentrate on the deepening of the existing agreement first of all," said EU transport deputy Zoltan Kazatsay, when asked whether this would be helpful.

EU-US Open Skies Agreement (2nd stage of negotiations)

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