Virgin flies into Sydney route storm

VIRGIN Atlantic faces several hurdles to secure European Union approval of a landmark deal enabling it to fly to Sydney via Hong Kong, including concerns about parts of the two-way agreement from its major shareholder Singapore Airlines (SIA).

SIA, which holds 49% of Virgin, is angry at the way related rights, handed out under the same open-skies pact, gave rival Cathay Pacific transatlantic routes to New York via London.

'We have had a long-standing interest in the transatlantic route and we have simply sought to reinforce this to the relevant authorities,' a SIA spokesman said. 'This is not a matter of objecting or protesting against others on the route.'

In November the British and Hong Kong governments struck a deal clearing the way for Virgin to serve Sydney via Hong Kong. If secured, it would allow Virgin boss Sir Richard Branson to link his airline with low-cost Australian offshoot Virgin Blue and would boost competition on the London-Australia route, currently dominated by British Airways and Qantas.

In return, Cathay Pacific was provisionally allowed rights out of London to New York, a route long-coveted by SIA. Implementation was deferred at the request of Hong Kong, which wanted to ensure the pact did not violate EU transport policy. The matter is being considered by EU officials.