The UK’s Chancellor Philip Hammond has admitted that leaving the EU without a deal could “theoretically” lead to the grounding of all flights between the UK and Europe.

Hammond gave the warning when appearing before the House of Commons’ Treasury Select Committee on Wednesday, although he insisted that “I don’t think anybody seriously believes that is where we will get to”, adding that “mutual self-interest” would result in an air travel deal being agreed.

The EU’s Internal Market for Aviation allows for EU airlines to fly between airports in member countries, and according to the European Commission website has contributed to an eight-fold increase in the number of routes within the EU since the agreement was launched in 1992.

But Brexit will see the UK leave this market, and if no new deal is done before the UK is set to leave on March 29, 2019, flights to Europe could theoretically be halted.

Similarly routes between the UK and US are governed by an EU-US Open Skies agreement, and a no deal scenario could affect European carriers operating transatlantic flights from the UK, such as Norwegian.

However Hammond insisted that “mutual self-interest means that even if talks break down, even if there is no deal, there will be a very strong compulsion on both sides to reach agreement on an air traffic services arrangement.”

Earlier this year Easyjet announced plans to apply for an Austrian Air Operator Certificate, with a new carrier headquartered in Vienna enabling it to “continue to operate flights both across Europe and domestically within European countries after the UK has left the EU (regardless of the outcome of talks on a future UK-EU aviation agreement)”.,