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UPDATE 2-Ryanair chief says Brexit threat to UK-EU flights increasing

(Adds reaction from industry body)

LONDON, Aug 2 (Reuters) - Major disruption to flights between Britain and the European Union from March 2019 is looking increasingly likely as Brexit talks proceed, Ryanair Chief Executive Michael O'Leary warned on Wednesday.

Airlines say they would need a new bilateral deal between the UK and Europe by September or October next year to replace the EU's "open skies" regime, which allows EU airlines to fly wherever they wish within the bloc, to be able to provide scheduled flights in the months after Britain leaves the EU.

But O'Leary said initial signs from Brexit talks were not promising due to likely sticking points such as the EU wanting the European Court of Justice to have sole jurisdiction over any deal.

"It's odds against a deal being done in advance of Christmas 2018 because it is in the Europeans' interest to not have a deal done ... and all hell will be kicking off over here in the UK," O'Leary told reporters at a briefing in London.

O'Leary was speaking after talks with British Transport Secretary Chris Grayling, which he described as "a very good meeting". O'Leary said Grayling was increasingly conscious of the need to conclude an aviation deal before the end of 2018.

However, he said he did not share Grayling's optimism that a deal would be straightforward.

"We believe the French and the German airlines in particular are actively negotiating against any favourable deal," O'Leary said.

But some in the industry say O'Leary is overstating the threat from Brexit.

"We fully expect flights between the UK and Europe to be protected because the benefits to both consumers and companies across the UK and the rest of Europe are so significant," Tim Alderslade, Chief Executive of Airlines UK, the industry body representing UK-registered carriers.

Totis Kotsonis, partner at international law firm Eversheds Sutherland, said O'Leary was right in saying there was a risk of flights between Britain and the EU being disrupted but it was possible an interim arrangement could be reached with a view to an open skies deal being negotiated later.

"The (UK) government is aware of this risk, and this is yet another reason why there is a growing expectation that an interim arrangement will be necessary to allow for a post-Brexit UK-EU deal to be properly negotiated and agreed, including as regards aviation," he told Reuters.

O'Leary has been warning since January that a failure by London and Brussels to agree a new bilateral deal by late 2018 could lead to a total freeze on flights between Britain and the European Union.

He said that without a deal on aviation, Ryanair would move dozens of planes currently in Britain to bases in other EU countries.

Britain formally began negotiations to leave the European Union in June, but little progress has been made towards an agreement on issues such as reciprocal rights for UK and EU citizens living abroad, which are first on the agenda before sectoral issues like aviation are discussed.

O'Leary, an outspoken critic of the British decision to leave the European Union, has warned of the uncertainties caused by the vote ever since the referendum in June 2016, and said that a deal looked no more likely now than it did then.

"We're 12 months down the road, and we're no closer to an agreement," O'Leary said. (Additional reporting by Conor Humphries in Dublin and Victoria Bryan in Berlin,; editing by Louise Heavens and Adrian Croft)