US carriers launch price war with BA

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A TWO-WEEK transatlantic price war broke out yesterday as US carriers United and American said they will match British Airways' cuts of up to 30 per cent on flights to 60 US cities. BA's move, which is aimed at leisure travellers, comes as Washington threatens to scrap the agreement governing flights between the UK and US.

BA's initiative is the third round in its World Offer programme, which started at the end of March. Tickets to 150 destinations will be available at a discount of up to 45 per cent, and include European, African, Gulf and Latin American destinations. Restrictions will make the offers most attractive to non- business travellers.

Andrew Barker, an analyst with SG Warburg, said the programme was part of a trend to clear unsold seats directly. 'BA is being quite aggressive on price, and it is doing it itself rather than through bucket shops.'

The main battleground will be in the US, where prices are being cut on flights to 12 of BA's gateways, as well as all 49 airports served by the BA/USAir code-sharing flights. The year-old code-sharing agreement is designed to give BA, which owns 25 per cent of USAir, a bigger share of business to non-gateway destinations.

American is the most vociferous opponent of BA's expansion into the US through the USAir link-up. Its chairman said in March that unless US carriers are given better access to Heathrow, the code-sharing agreement should be scrapped. On Thursday Federico Pena, the US Transportation Secretary, said he might do this unless the renegotiation of the US-UK aviation agreement was speeded up. 'We see renunciation as an option of the last resort, but it is an option,' he said.