Airlines face uncertainty after European transport ministers failed to back plans for a mutual insurance scheme.
Leading brokers had hoped the ministers would support the proposed Eurotime scheme, which would replace current temporary government arrangements for war and terrorism third party cover.
The ministers decided on Monday to refer the proposals back to the European Commission for more detailed study.
Ministers' discussions centred on just how much government involvement would be required to support the Eurotime mutual scheme and to what extent they would be liable for any risks.
The commission is responsible for matters involving competition between EU member states and will now come up with detailed proposals for councillors to vote on at a future meeting.
The decision followed intensive lobbying by airlines for the Eurotime scheme.
The Association of European Airlines (AEA) had described the meeting as "momentous", saying that Eurotime is the right solution at a reasonable cost.
The UK government is now expected to announce early next week that it will extend its temporary guarantees for the risks.
An AEA spokesman said:
"It would appear that the process is still on track so we are quite happy about that.
"We would have preferred to get [Eurotime] up and running because it's ready to go, but we don't see this as a negative result."
