BMI
is planning to sabotage the deal between the UK and Hong Kong governments which
has given Cathay Pacific access to the lucrative Heathrow-New York route.

The
deal still has to be ratified by the European Commission and BMI has begun
lobbying EC ministers in an attempt to quash the deal. BMI’s attempts to access
New York from Heathrow have been thwarted on several occasions.

Company
secretary and legal director Tim Bye said: “We are disappointed and frustrated.
It seems odd the Government views the UK to Australia market as holding equal
status to the Heathrow-New York route.”

BMI
is likely to argue the deal is anti-competitive and could provide a stumbling
block in the bilateral talks between the US and European Union, aimed at
liberalising transatlantic skies, that are taking place this month.

Cathay
will remain tight-lipped about its plans for the route until it is ratified by
the EU, but has previously indicated it will start with a daily service, going
to double-daily once the flight is established.

Virgin
will start daily Australia flights next summer using an Airbus A340-600. It
will be able to link up with sister airline Virgin Blue, which has built a 30%
share of the Australian domestic market.

In
a dig at British Airways and Qantas, Sir Richard Branson said: “I’m under no
illusions that competing on the kangaroo route will be easy, especially given
the overwhelming advantages enjoyed by BA and Qantas through the Joint Services
Agreement.”

The
agreement – which allows BA to codeshare and consult over fares with Qantas –
is under review by the Australian competition authorities.