Turbulence forecast as EU and US embrace Open Skies

By Pete Harrison and Mark McSherry

LONDON, March 28 (Reuters) - Airspace between Europe and the United States will become liberalised for the first time on Sunday, setting the stage for a fresh power struggle between airlines and politicians either side of the Atlantic.

The "open skies" agreement replaces rules dating back to World War Two and allows carriers to access any U.S. city from any point in the EU, and visa versa.

The move promises to increase competition between airlines, could cut ticket prices and may eventually pave the way for transatlantic mergers to create the world's first global airlines.

But significant hurdles still stand in the way, and a second round of negotiations scheduled for May 15 could lead to a standoff between Britain and the United States.

British Airways (BAY.L: Quote, Profile, Research) has been among the first to capitalise, with plans for flights to the United States from Paris Charles de Gaulle airport on top of its traditional hub at London's chaotic Heathrow airport.

Meanwhile, rivals Air France (AIRF.PA: Quote, Profile, Research) and Delta Air Lines (DAL.N: Quote, Profile, Research) are planning to move on Heathrow in a joint venture they expect to generate $8 billion a year.

"I think Europe is getting more benefits than the United States, but the Europeans would probably disagree," said Dorothy Robyn at Washington-based consultancy The Brattle Group.

"There are benefits to both, but for the United States it is really all about getting in to Heathrow -- and that's a big deal."