The move was sanctioned by the European Commission, after negotiations with the US about the data that would be provided, and how it would be used.

But the European Parliament took a different view, and mounted a court challenge. The European Court of Justice has now ruled the transfer of data illegal.

Why does the US want the data about passengers?

The US began to demand it following the 11 September 2001 attacks by suicide hijackers, claiming that it could help prevent terrorist attacks.

It threatened airlines with fines of up to $6,000 (4,707 euros; £3,226) per passenger and the loss of landing rights if they failed to comply.

What data has been handed over ?

Thirty-four pieces of data on each passenger, including credit card numbers and phone numbers.

The US originally wanted to store the data for 50 years, but agreed to delete it after three-and-a-half years.

Why did the European Parliament oppose the deal?

It disagreed with the European Commission that the US data protection regime was "adequate".

MEPs feared the information could be used for purposes other than thwarting terrorism.

Why did the European Court of Justice annul the deal?

The Court ruled that there was no legal basis for the Commission's decision to declare the US data protection regime "adequate".

The Commission took the decision under the EU Data Protection Directive, but the directive does not apply to data collected for security purposes.

For similar reasons, it also annulled the decision of the Council of the European Union (taken by transport ministers of the member states) approving the deal struck by the Commission.

What does this mean for passengers?