Britain reluctantly signed up to the liberalisation of transatlantic flights yesterday, after finding itself completely isolated in its determination to wring more concessions from the United States before agreeing to open up Heathrow.

The Conservatives accused Douglas Alexander, the Transport Secretary, of “caving in” to European states, but he put a brave face on the agreement that he had opposed for months behind the scenes.

Under pressure from British Airways, Mr Alexander had argued that European airlines should be allowed greater access to US internal flights and ownership rights of American airlines in return for open competition on transatlantic routes.

He insisted yesterday that the deal he signed was good for consumers, and that it allowed Britain to withdraw if the US failed to open up to greater competition by 2010.

“This deal is just the first stage. Our goal remains a fully liberalised Open Aviation Area, free of restrictions on ownership and control,” he said. “Following my intervention... we have secured, in effect, not simply a commitment from the Americans to talk but an obligation on the Americans to act in relation to stage two.”

However, the concessions were dismissed almost immediately by John Byerly, the US lead negotiator and assistant secretary for transport affairs.

He said that the Americans were not bound to include any specific demands in the second stage of the “open skies” negotiations, such as raising the 25 per cent limit on foreign control of American airline companies.

Referring to the pull-out sanction negotiated by Mr Alexander, he said: “Suspension provisions are standard fare in all aviation agreements... Our focus is on making the second stage negotiations productive.”

Julian Brazier, the Shadow Aviation Minister, said that the Government had caved in. “Everybody is in favour of a genuine open skies agreement but that is not what this deal is. Britain will lose valuable slots at Heathrow, while America will continue to refuse access to non-American airlines on their gigantic domestic market.

“As British airlines have pointed out, the value of the American concessions is minimal while we will lose a great deal.”

The European Commission said that the deal would result in a 50 per cent increase in the number of passengers flying the Atlantic, rising to 75 million by 2013.

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