BA to launch 'open skies' airline

The new airline is a subsidiary of BA

British Airways has launched its first direct services between the US and mainland Europe, with daily flights from New York to Brussels and Paris.

BA will set up a new subsidiary airline called Open Skies, which plans to start flying a Boeing 757 from Brussels or Paris in June.

The airline hopes its new carrier will operate six 757s by 2010.

The move comes after the European Union and US backed an "open skies" deal to liberalise transatlantic air travel.

The EU deal eases restrictions on travel between Europe and the US. It will also challenge BA's dominance at Heathrow airport.

Until now, BA has only been allowed to fly to the US directly from the UK.

Three other airlines - Virgin Atlantic, American Airlines and United Airlines - have also been permitted to operate flights from Heathrow to the US.

Supporters of the open skies deal say it will boost competition between airlines and lead to lower air fares.

It also may make it easier for BA to compete on other international routes outside of the UK.

'Major step'

BA chief executive Willie Walsh said: "This is an exciting new venture for us and we're confident that it will be a great success as we build on the strength of BA's brand in the US and Europe.

"By naming the airline Open Skies, we're celebrating the first major step in 60 years towards a liberalised US-EU aviation market which means we can fly between any US and EU destination.

"It also signals our determination to lobby for further liberalisation in this market when talks between the EU and US take place later this year," he said.

The new airline's managing director will be Dale Moss, BA's former director of worldwide sales, and the airline is registered in the UK.

The aircraft on the planned new route will carry up to 82 passengers on Boeing 757 aircraft with three onboard cabin classes: 24 business seats, 28 premium economy seats and 30 economy.

Union concerns

The planned airline is facing concerns from the British Airline Pilots' Association (Balpa), which is set to meet BA soon to discuss the issue further.

The union wants BA's existing pilots to have the chance to apply for work with the new airline before the firm embarks on hiring new staff.

Jim McAuslan, Balpa general secretary, said: "Balpa welcomes BA's decision to innovate and establish a wholly owned subsidiary company to take advantage of the new open skies agreement between the US and EU.

"But we have issues with BA on how the new service should be structured.

"Having worked so hard to secure success for BA, its pilots do not want to see its brand or its safety record put at risk.

"The new subsidiary can only fly successfully with the full support of BA's pilot force."

Mr Walsh said terms and conditions for the new venture would be different from those in BA's main operation, but said he was confident concerns could be assuaged.

BA shares were down 3% at 275 pence in late afternoon trade in London.