News: Transatlantic air-fare battle

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AUS airline has cut transatlantic fares dramatically to fill seats and generate cash before the peak season begins. Prices below £200 are commonly offered between the UK and US - but only for flights in low season: from October to early December, and between January and March. Now Northwest Airlines, one of the financially weakest US carriers, is selling return tickets from London to New York for £199 for travel later this month.

AUS airline has cut transatlantic fares dramatically to fill seats and generate cash before the peak season begins. Prices below £200 are commonly offered between the UK and US - but only for flights in low season: from October to early December, and between January and March. Now Northwest Airlines, one of the financially weakest US carriers, is selling return tickets from London to New York for £199 for travel later this month.

The deal is available through the online agency Travelocity - and will suit people with time on their hands. On test bookings made by The Independent for travel in April, the outbound flight from Gatwick was via Minneapolis, with the return via Detroit.

Northwest's flights are also being used for cheap packages to Manhattan. For example, Dreamticket is selling a three-night New York stay for £365 return, with accommodation at a good hotel included.

Once taxes and other charges are stripped from the fare, the airline will earn around £120 - or £30 for each flight. Northwest declined to discuss the move, but its rival, Virgin Atlantic, said "We haven't felt the need to go down to that price because it's not really in competition with us". Virgin flies non-stop from Heathrow to New York. It is currently offering low fares as part of package holidays that include hotel accommodation. Through Trailfinders, a five-night stay in San Francisco this month costs £465, including Virgin flights from Heathrow.

Northwest lost nearly £500m last year, blaming high fuel costs, competitors; price cuts and overcapacity.

Stelios Haji-Ioannou, founder of easyJet, told The Independent that one or more US airlines should close. "There is enough vested interest to keep them in business. But it doesn't help the rest of the industry."

Dreamticket: 0800 856 0323; www.dreamticket.com; Trailfinders: 020-7938 3444; www.trail-finders.com); Travelocity: www.travelocity.co.uk

* Icelandair (0870 787 4020; www.icelandair.co.uk) is to start cheap flights from Reykjavik to San Francisco. The flights offer a cut-price way to travel in business class to California, with return fares from Heathrow as low as £1,112 (£110 more from Glasgow) - less than a quarter of the business-class fare on BA or Virgin.

The journey is longer; from Heathrow, the trip takes two or three hours longer than non-stop flights. But the ticket allows free stopovers in Reykjavik.