The U.S. and Japan have a once-in-a-lifetime opportunity to liberalize their tightly-regulated airline market, according to proponents of a proposed "open-skies" deal.

Negotiators started three days of talks in Washington D.C. Wednesday aimed at paving the way for a new pact by the end of the year to replace a decades-old agreement that limits trans-Pacific passenger and cargo services. The talks conclude Sept. 11.

U.S. Transportation Secretary Ray LaHood outlined the U.S. commitment in a speech Thursday, but any agreement is being challenged by a potential split between U.S. carriers serving Japan.

Some fear that an accord could be heavily weighted in favor of Japanese carriers after its negotiators recently reversed long-held opposition to a more liberalized deal, according to people familiar with the discussions.

Japan had previously resisted loosening the existing pact governing a highly-prized international market driven by business traffic.

However, Japanese negotiators surprised the U.S. earlier this year by prompting further talks that would break the oligopoly on services held by Delta Air Lines Inc. (DAL), the United Airlines unit of UAL Corp. (UAUA), FedEx Corp. (FDX) and Japan's two largest carriers, All Nippon Airways Co. (9202.TO) and Japan Airlines Co ((9205.TO).

"Things are very different now," says one U.S. airline executive familiar with the discussions. "There is a very real prospect of an open-skies deal this year."

Japan's turnaround reflects plans to open Tokyo's Haneda airport to limited international traffic next year. A new runway would open up an airport just 15 minutes from downtown Tokyo, compared with the 90 minutes to Narita, the existing international hub.

Securing access to Haneda, the world's fourth largest airport by passenger numbers, has assumed a similar pivotal role in the talks with Japan as London's congested Heathrow airport held in the protracted talks that led to an open-skies deal with the European Union.

Japan also hopes a deal will pave the way for All Nippon to secure antitrust immunity, or ATI, from U.S. regulators, in line with that enjoyed by fellow members of the Star Alliance grouping headed by United and Deutsche Lufthansa AG (LHA.XE).

JAL, a member of the rival Oneworld group headed by AMR Corp. (AMR) and British Airways PLC (BAY.LN), may also be hopeful of winning antitrust immunity from the U.S. at some point.

But Delta, the world's largest airline, lacks a Japanese partner in its SkyTeam alliance, and has been lobbying hard against any new deal that "gifts" antitrust immunity to ANA without guaranteeing fair access to international carriers at Haneda, said a person familiar with the situation.

United and Delta declined comment ahead of the talks.

Japan is currently proposing to split 40 daily flights to overseas markets from Haneda evenly between Japanese and foreign carriers, with U.S. airlines receiving just four.

Delta, which acquired a large hub operation at Narita airport when it acquired Northwest Airlines, is seen by observers as having the most to lose from Haneda's expansion unless it can secure additional access.

"If they are going to have an open-skies deal, it must be true open skies which includes the elimination of restrictions on pricing and the freedom to transfer slots among airlines at Haneda and Narita," said a person familiar with Delta's position.

-By Doug Cameron, Dow Jones Newswires; 312-750-4135; doug.cameron@dowjones.com