BA faces Open Skies challenge

After years of negotiations, a new transatlantic air agreement - known as Open Skies - has taken effect, allowing any US or EU airline to fly from anywhere in the EU to America.

Until now, just four carriers - the UK's BA and Virgin Atlantic and the USA's United and American Airlines - have been allowed to fly to America from Heathrow.

But thanks to the first phase of the new agreement, a number of carriers have already moved transatlantic operations into Heathrow.

US airline Continental began Heathrow services to Newark in New Jersey and to Houston, while American carrier Delta is also starting Heathrow flights to New York and Atlanta and US Airways is flying between Heathrow and Philadelphia.

Other carriers taking advantage of the relaxation of rules include Air France which is running flights from Heathrow to Los Angeles.

Jacques Barrot, vice-president of the European Commission, has hailed Open Skies as a deal that will "change passengers lives" with better services and prices.

But Virgin Atlantic chiefs have been more sceptical, saying that the new agreement is unlikely to bring lower fares as the current off-peak deals are extremely low anyway.

Virgin has also pointed out that airlines wishing to use Heathrow for transatlantic services still have to obtain ultra-expensive take-off and landing slots at the already-crowded west London airport.

Graham Pickett, aviation industry expert at professional services company Deloitte UK said: "The Open Skies agreement could lead to greater competition between airlines for flights from Heathrow. However, airlines keen to rival the incumbent players may find it difficult to secure slots ... and alliances between carriers are seen as the best way to open up routes from Heathrow to the USA."