* Deal should see full flight liberalization by 2014
* Should result in direct flights between more cities
* Brazilian demand surging, Europe seen rebounding
By Stuart Grudgings
RIO DE JANEIRO, Sept 30 Brazil's President Dilma Rousseff will sign an agreement with the European Union next week that aims to completely liberalize air travel between both sides by 2014 when Brazil hosts the soccer World Cup, a senior Brazilian aviation agency official said.
The "open skies" agreement between Latin America's largest economy and the 27-member EU comes as Brazilians' demand for international travel surges, fueled by a strong currency and the country's robust economy.
The nationwide 2014 tournament and the Olympic Games in Rio de Janeiro two years later are expected to draw an influx of European visitors.
Bruno Dalcolmo, the head of international relations for Brazil's national aviation agency ANAC, told Reuters in an interview the deal allows for an increase in flights every 12 months leading to full liberalization by 2014. The first year after the agreement should see a 20 percent increase in flight frequency, he said.
Brazil already has separate flight liberalization agreements with 15 EU member countries.
"It's the conclusion of a liberalization process that's been going on for the past 3-5 years," Dalcolmo said.
Rousseff will sign the agreement, which was concluded in March, in Brussels during her week-long visit to Europe next week.
Over three years the agreement should greatly expand the options for passengers traveling between Brazil and EU countries, reducing ticket prices and opening up more direct routes between smaller Brazilian and European cities.
Dalcolmo pointed to new routes linking the southern city of Porto Alegre to Lisbon (operated by Portuguese state carrier TAP) and Rio de Janeiro to Amsterdam (Air France KLM (AIRF.PA)) as examples of the type of direct links that are expected to grow in the coming years.
The number of passengers traveling between Brazil and Europe by air rose 11 percent last year to 4.9 million passengers. Most of the rise was accounted for by strong demand from Brazilians flush with a strong currency.
Dalcolmo said Brazil expected Europe to bounce back from its economic woes in the coming years, resulting in greater demand for flights to a wider range of Brazilian cities than the traditional hubs of Sao Paulo and Rio.
Brazil is scrambling to expand its airport capacity to meet surging domestic demand and prepare for an influx of international visitors for the World Cup, but Dalcolmo said that airports were prepared for a rise in international arrivals.
"International flights do not put that much pressure on the airports. Domestic demand is the main driver behind what we are seeing these days in Brazilian airports," he said.
The agreement also stipulates that no new international routes will be added for Sao Paulo's overloaded Guarulhos airport until after the open-skies liberalization process is completed in 2014.
Brazil is also negotiating an open-skies agreement with the United States, which it expects to complete by 2015. Dalcolmo said Brazil also aimed to secure a formal liberalization agreement with Argentina, Brazil's second-largest air travel market after the United States, in the next few years. (Reporting by Stuart Grudgings; Editing by Tim Dobbyn)