Virgin's US link-up flies into problems

VIRGIN Atlantic's marketing deal with Delta Air Lines is in danger of becoming the latest pawn in the transatlantic dispute over US access to Heathrow Airport.

Rival US airlines, which are urging Washington to seize on the deal as an opportunity to press Britain for a new bilateral treaty, are claiming at least a partial victory, noting that the US Transportation Department did not join the Justice Department last week in approving the alliance.

The two carriers announced in April a plan that would see Delta buy dollars 150m worth of seats on Virgin flights in and out of Heathrow from November, giving Delta access to the London airport and Virgin a chance to tap into Delta's domestic network.

A Transportation Department spokesman said yesterday that the arrangement was still under review and was being judged as an isolated case. Negotiations towards a new air transport treaty broke off earlier this year, around the time British Airways said it was abandoning plans to increase its 24.6 per cent stake in USAir.

Delta insists the deal does not afford Washington any new leverage in its dealings with the British transport ministry. But its US rivals - notably American, which has called for a ban such code- sharing agreements - say Virgin can put pressure on the British Government for concessions.

A trade magazine last week reported that the US Transportation Secretary, Federico Pena, had told his UK counterpart, John MacGregor, that he could not approve the deal in its current form.