The combination of lower costs more direct flights and easier boarding has proven to be a winner

The combination of lower costs, more direct flights and easier boarding has proven to be a winner.Europe has always operated a hub-and-spoke system, although it was not necessarily recognised as such. But even here, deregulation is likely to create point-to-point carriers. The latest phase will allow airlines to hop from city to city across the Continent without having to return to their home base after each leg. Mr Branson has now launched Virgin Express to do just that.Niche carriers are perhaps a more natural result of deregulation than the mega-airlinesbuilt, often, on old state monopolies.

The BA/ American alliance is a sign of their weakness, not their strength. But the nimble newcomers are more dependent on continuing liberalisation than the mega carriers, which have proven in the past they can survive quite nicely in a world carved up by political fiat.The problem for the upstarts is that deregulation is not a sure thing. While many countries, notably the US and UK, espouse open skies policies, they could easily change course if their own operators were under threat. Winston Churchill, when Secretary of State for Air in 1921, said: "Air transport must stand on its own feet. The Government can't hold it up in the air." France took a less sanguine view. Within six months, all six of Britain's fledgling airlines had gone belly up, so that when the first London airport opened at Croydon it had no domestic carriers.

The policy was changed.Even in the US today, open skies can be pushed back to make room for vested interests. Mr Erickson complained on Wednesday that his plans to fly from St Louis to Japan had been stopped by a "skilful and thus far successful lobby effort" by United and Northwest, which are already present in Japan. "I do not fault them one bit for vigorously defending their commercial interests," Mr Erickson said tellingly. "I would do the same thing."Despite the vested interests arrayed against making sense of the industry, deregulation is likely to proceed in sputters and jerks. The US example has been decried by opponents using anecdotal evidence But the statistics are convincing. The Brooking Institution, a US think-tank, calculated that the first 10 years of deregulation saved consumers $100bn.But new airlines such as Southwest and Virgin, with their relatively weaker brand names, are vulnerable to other dangers - notably public concern about safety.

Public opinion in the US was whipped into a frenzy when ValuJet Flight 592 crashed in the Florida Everglades last month. Both discount carriers and the contracting out of heavy maintenance came under fire. Southwest, which qualifies on both points, has one of the best safety records in the business. Professor Gellman worries that the biggest threat to the industry, barring a catastrophic war, would be the discovery of a serious fault that grounded much of the global fleet and destroyed public confidence.Safety in general is likely to become more of a problem as the airline industry grows. At present, the average rate of growth is around 6 per cent, which sounds small but would mean a doubling of traffic volumes by the middle of the next decade. Air freight is growing even faster than passenger traffic, and the Far East faster than America's domestic market, but Europe is expected to grow at exactly 6 per cent, though Branson is rather more bullish.National interests extend beyond aircraft operators to air traffic controllers, who are at the centre of most safety issues.

Each country in Europe, even those so small a jet can pass over them in a matter of minutes, insists on defending its aerial sovereignty. The result is a confusion of air traffic control centres, each with its own computer system. One, possibly apocryphal, tale has it that some controllers had to use a pay phone in their lobby to tell a neighbouring centre when they were passing over control. Moves are afoot to consolidate the various systems, but imagine the tabloid headlines if flights into Gatwick were to be orchestrated from Brussels or Frankfurt.The wisdom of America's chosen tactic of using alliances to force deregulation elsewhere is a tougher issue to judge.