BMI British Midland, Britain's second largest airline, is to challenge the legality of the long-standing Anglo-American agreement governing air travel between London's Heathrow airport and the United States.
It plans to submit a formal complaint to the European Commission's competition authorities arguing that the deal - which originally dates back to 1977 - contravenes the Treaty of Rome.
Only four airlines - British Airways, Virgin, American Airlines and United Airlines - are allowed to run flights between Heathrow and the US.
Yesterday BMI chairman Sir Michael Bishop described the deal as "archaic. It is bad for transatlantic travellers, it is bad for business and it is bad for governments to continue to uphold the agreement. We believe that the agreement flouts EU competition law as it clearly prevents free competition."
Britain and the US have been negotiating a more liberal "open skies" regime for more than a decade - though the issue is complicated by a turf war with the EC which claims the right to negotiate an EU-wide deal with the US and which is challenging national governments rights' to strike their own deals through the courts.
A further complication is the decision by BA and American Airlines to revive a planned alliance on transatlantic routes - an idea first mooted and blocked in 1999. The two airlines want antitrust immunity for their alliance and are understood to accept that would have to be within the context of a new "open skies" agreement. However critics argue that such immunity should not be considered until a new, more liberal, regime has been introduced.
A commission spokesman said the EC had already started an informal review of the UK-US accord. "We'll have to see whether it really is an infringement of EU competition law in so far as it favours certain airlines."
