British Airways (BA) and American Airlines (AA) have been given the green light to proceed with plans to form a new transatlantic alliance, which could lead to decreased ticket prices.

The US Department of Transport (DOT) has proposed that an application for antitrust immunity is approved for the two carriers, as well as oneworld partners Iberia Airlines, Finnair and Royal Jordanian Airlines to work more closely together. According to the DOT, the planned alliance will create competition for the existing Star Alliance and SkyTeam alliance but accepted there could be a negative impact on competition for some routes from London Heathrow.

AA senior vice president - government affairs, Will Ris, said: "American Airlines and its oneworld partners are looking forward to competing for business over the Atlantic on a level playing field." Virgin Atlantic president Sir Richard Branson has accused both airlines of hypocrisy after BA and AA opposed Delta and Japan Airlines' (JAL) move to create an alliance.

Branson said: "Oneworld's approach to the potential JAL/Delta transpacific alliance is hypocritical in the extreme. BA and AA's arguments against the JAL/Delta transpacific alliance read like a carbon copy of our longstanding objections to a BA/AA transatlantic alliance."