Open skies talks between the USA and UK, set for mid-October, were deferred with both sides agreeing that any chance of making progress was slim following the failure of the BA and KLM merger.
The next meetings in the long-running negotiations may occur early next year, but uncertainty over BA's alliance strategy needs to be resolved first, says a UK Government spokesman.
A successful BA/KLM deal was seen as the potential catalyst to liberalising air services between the two countries.
The UK does not rule out a "balanced interim deal", seeing a phased opening of London Heathrow to US carriers, as a step towards full liberalisation. A phased deal was the US price for agreeing not to block the BA/KLM merger.
Source: Airline Business