Virgin to lose Chicago slot as transatlantic open-skies row intensifies

In a fresh sign of transatlantic differences over aviation services, Virgin Atlantic Airways has failed to gain the access it wanted to Chicago's O'Hare airport. However, talks on airline links between Britain and the United States have now restarted, which could change the competitive situation for all airlines flying across the Atlantic within weeks.

Virgin's winter take-off and landing slots for O'Hare had been due to expire on 2 April, and it had asked to renew them.

Normally, such slots are extended for a full season, typically about six months. But the US Department of Transportation agreed to only a further two weeks, meaning that the service will now cease on 16 April unless there is further agreement.

"The pleadings in this case have raised foreign policy issues that cannot be resolved at this time or in this context," said the DoT.

The short-term measure "will provide us with the opportunity to reach a judgment on the merits in this case that provides the greatest public benefits and promotes our aviation objectives most effectively", the DoT added.

The move was interpreted as evidence of the increasingly bitter relationship between London and Washington in the absence of a new air services agreement, long under discussion.

Airlines in the US want greater access to London; British negotiators want greater access to the US market in return, and also want to assure the ability of British airlines to buy American assets.

The current agreement, known as Bermuda II, restricts direct flights between Heathrow and the United States to Virgin and British Airways, and the US's United Airlines and American Airlines.

Several US airlines had opposed the Virgin application, including United and US Airways. Both are seeking concessions from Britain on services between Chicago and London and Pittsburgh and London respectively.

John Prescott made an unscheduled trip to Washington 10 days ago in an attempt to relaunch the talks, amid speculation that a much broader aviation deal might be on the table.

The Deputy Prime Minister and Rodney Slater, the US Secretary of Transportation, issued a short statement afterwards expressing optimism about the talks and saying that they would meet again soon.