UPDATE 4-Dutch government scraps plan to cap flights at Schiphol next year

(Adds US government reaction, paragraph 7)

By Toby Sterling and Bart H. Meijer

AMSTERDAM, Nov 14 (Reuters) - Facing pressure from the U.S. government and the European Union, the Dutch government on Tuesday gave up on a plan to cap the maximum number of flights at Amsterdam's Schiphol airport next summer, calling the decision "a bitter pill".

The decision is a victory for the airline industry including Air France-KLM's Dutch subsidiary, and U.S. airlines including Delta and JetBlue, which had opposed the cap - and a loss for environmentalist and resident groups living near Schiphol who had supported the cap.

"I emphasize that the cabinet is still committed to restoring the balance between Schiphol and its environment," infrastructure minister Mark Harbers said in a letter to parliament. Harbers said the cabinet would continue to pursue the plan. It is not certain, however, that a new cabinet will have the same priorities after a national election on Nov. 22.

The plan to cap the number of flights at Schiphol, one of Europe's busiest hubs, at around 450,000 flights, or 10% below 2019 levels, had been primarily driven by the desire to cut noise pollution. It had also been cheered by environmentalists as needed to reduce carbon dioxide and nitrogen emissions.

Opposition swelled this month after the Dutch slot coordinator announced costly cuts for airlines including KLM and exclusion for JetBlue, which began flying from Schiphol to New York and Boston this year.

That led the U.S. government on Nov. 3 to threaten retaliation if the Dutch went ahead with the plan, with the Department of Transportation calling it "unreasonable" and saying it violated the U.S.-EU Air Transport Agreement.

Deputy U.S. Transportation Secretary Polly Trottenberg said it was the "right decision" by the Dutch to drop the plan and said the department would not move forward with any countermeasures, which JetBlue had asked for.

Harbers' letter to parliament said that after a U.S.-E.U. meeting on Nov. 13, European Commissioner for Transport Adina Valean had sent the Dutch government a letter expressing "serious concerns" about whether the cap had been properly vetted.

"The Netherlands has come to stand alone" on the cap policy, Harbers said, adding that it will now await a Supreme Court ruling and further European Commission feedback expected next year.

"This is a heavy setback, but the number of flights must be lowered in order to make the Netherlands livable and to tackle the climate crisis," Greenpeace said in reaction. "Voters can express their opinion about that next week."

Several airlines welcomed the decision, with "SkyTeam" partners KLM and Delta saying they remain committed to flying more quietly and sustainably "without reducing capacity." JetBlue said its entry at Schiphol had lowered fares and urged governments to continue to ensure it has access.

Industry group Airlines for America thanked the U.S. government, saying its discussions with the EU had been "instrumental to persuading the Dutch government to this successful outcome." (Reporting by Toby Sterling and Bart H. Meijer in the Netherlands and David Shepardson in Washington; Editing by Emelia Sithole-Matarise, Jonathan Oatis and Grant McCool)