BMI moves to halt US deal for Cathay

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.