Virgin set for another transatlantic route

VIRGIN Atlantic is expected to gain another transatlantic route as part of a package of deregulation measures being planned by John MacGregor, Secretary of State for Transport.

As a transatlantic price war flared between British and American airlines, Mr MacGregor prepared for an early visit to the United States for talks with the new Clinton administration over aviation policy.

Mr MacGregor, who last week saw senior executives of two of the biggest US airlines, United and American, is under pressure to liberalise access to British airports, particularly Heathrow.

The US airlines are demanding concessions to compensate them for the go-ahead which was given by the new American administration for the recent tie-up between British Airways and USAir. The deal - which had been resisted fiercely by the big US airlines - gives BA vital access to USAir's network of internal flights within the US, through hub airports. At the same time, BA is stepping up its flights from regional British airports. This will extend its range of connections all over the US.

The shape of any new agreement with the Americans is difficult to determine because of the newness of the Clinton administration.

However, Mr MacGregor is determined to press for a free market approach to transatlantic aviation and will argue for greater liberalisation or an 'open skies' policy.

The US administration's approval of the BA-USAir deal has sent positive signals on opening up transatlantic travel.

BA, bruised from its humiliating battle with Virgin, may also face competition on another route from Richard Branson's airline. Mr MacGregor believes that Virgin should gain another route.

The Department of Tranport believes the BA could also be the beneficiary of any liberalisation package.

Consumers became the beneficiaries of increased competition across the Atlantic as the big carriers rushed to cut seat prices for the spring. BA, American Airlines and United Airlines all cut UK-US return fares by up to pounds 80. Mr Branson announced he was undercutting his rivals' new fares by pounds 10.

BA, American and United are introducing pounds 259 return fares to New York, Newark, Philadelphia, Washington DC, Pittsburgh, Boston and Atlanta. The new return fares to Los Angeles, San Francisco and Seattle will be pounds 329 - an pounds 80 saving. Virgin responded by offering return fares of pounds 249 to New York and Boston, pounds 299 to Miami and Orlando and pounds 319 to Los Angeles.

The new fare deals will start on Thursday and last until 15 June.