British Airways and Virgin Atlantic are likely to lose their lucrative stranglehold over transatlantic flights at Heathrow airport after a European court said yesterday that the arrangement is discriminatory and cannot be justified.
In an interim ruling, the European court of justice took the European commission's side against eight countries including Britain and declared that bilateral air transport agreements negotiated with the United States should not discriminate on the basis of nationality.
Under the Bermuda 2 agreement only four airlines - BA, Virgin, American Airlines and United Airlines - are allowed to run flights between London's main airport and the US.
The government has stipulated that, aside from the two American carriers, only those companies majority-owned or controlled by UK nationals should be allowed to offer transatlantic flights. Recent attempts to negotiate a new, more open deal with the US have come to nothing.
The European Commission believes that other European airlines should be able to compete on the same route as BA and Virgin and yesterday's interim ruling opens the way for them to do so.
If that happens BMI British Midland, Britain's second largest airline, believes that the government will have no choice but to throw open Heathrow to other domestic airlines.
BMI announced on Wednesday that it would lodge an official complaint with the competition authorities in Brussels on the grounds that the "carve-up" at Heathrow contravenes the Treaty of Rome.
Sir Michael Bishop, the chairman of BMI, vowed to use the follow-up to yesterday's judgment, expected within the next six months, to seek damages from the gov ernment for being prevented from offering transatlantic flights for so long.
The commission appeared to take BMI's side yesterday and said that the Bermuda deal, agreed between the UK and the US in 1977, is illegal and will have to be scrapped if the court ruling is confirmed. In 80% of cases the final judgment does confirm the initial ruling.
"The British government will have to open up Heathrow and put an end to this discrimination," said one official. "This will be good news for consumers and may mean lower prices and more competition although ultimately the market will decide."
A government spokesman conceded yesterday that there would be implications for Heathrow if the ruling is confirmed but declined to speculate on what they might be.
A spokesman for BA said the airline was in favour of more competition provided there was a level playing field.
