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Flights between London and New York could be a third cheaper following the Open Skies Agreement struck by regulators in the US and Europe. The deal, announced last month, throws open the door on unlimited airline competition for flights between Europe and the US from March 2008. Its effects are already being felt as speculation mounts about a takeover offer for BMI.

Deregulation of transatlantic flights will trigger a fierce marketing battle on business routes from Heathrow to New York. Meanwhile, small operators will line up to launch a new round of leisure services from London to US cities and prices will be pushed down. The established players will not take this lying down.

However, observers say that deregulated Open Skies across the Atlantic are unlikely to lead to the sort of rock-bottom prices seen in Europe from no-frills operators such as Ryanair and easyJet, triggered by the deregulation of European airspace in the early 1990s.

source: Marketing Week

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