This time the peace talks, brokered by Christopher Chataway, chairman of the Civil Aviation Authority, broke down over the level of compensation to be paid by BA.
In earlier talks BA had agreed to pay pounds 9m but the two airlines then failed to reach agreement on a so- called gagging clause preventing Richard Branson, Virgin's chairman, from referring to the case in future .
BA said last night, however, that the proposed settlement was now 'not worth pounds 9m or anything like it' and that it had made that clear at the outset of the talks three weeks ago.
Virgin, which had assumed the pounds 9m was already settled, leaving the gagging clause the only area of contention, said: 'Once again at the last moment BA have decided to move the goalposts.'
Mr Branson added: 'Very sadly it seems that the only way this issue will be settled is for two British airlines to go to court.'
Virgin has already issued High Court writs against BA and intends to launch anti-trust proceedings in the United States.
The CAA said the dispute was potentially harmful to British aviation and it was disappointed a deal had proved impossible. 'We believed that agreement on all other terms of a settlement was close,' a spokesman said.
BA said it had suggested to the CAA that Virgin's claims be submitted to an impartial arbitrator.
Robert Ayling, BA group managing director, said: 'British Airways has always declared its willingness to pay any legitimate claims Virgin may have.
But the CAA said BA's announcement that it could not agree to pay the pounds 9m meant there was no further role for the authority in trying to settle the dispute.Reuse content