New British secretary of state for trade and industry Peter Mandelson is being drawn into the controversy as BA is trying to evade the EU's directive to surrender 270 landing slots, mostly at Heathrow, as a prelude to go ahead for the mega-merger between BA and American Airlines.

Europe's competition commissioner Karel Van Miert has described the proposal by the Office of Fair Trading to allow BA to sell landing slots were "unacceptable".

Director general of British Office of Fair Trading John Bridgeman feels that landing slots had monetary value and BA should be allowed to recoup that value like any other company facing competition.

The market price of BA at present is valued at 5.8 billion pound sterling, with net assetsaccounting for 3.8 billion pounds.

In July, the British officials argue, British landing slots market was deemed to be worth more than four billion pound sterling.

But the European and Trans-Atlantic competitors of the BA argue that the airlines wants to "make money either way" - the merger giving it monopoly of access to American and Canadian airports and making a huge cash pile by selling coveted landing slots at Heathrow.

The BA are worried over squeezing profits as a result of strong sterling and is in the process like other major European airlines to shift planes away from what is being described as "deserted Asian routes to thriving Atlantic markets."

However, Van Miert has insisted that such a sale of slots at British airports, particularly Heathrow, would flout European competition rules and amount to raising barriers to entry.

He said the sale of slots would unduly favour "bigger airlines and carriers which have been long established at the EU as most important airport."

Media reportssaid the dispute would force Mandelson to choose between the advice of his own airlines and that of Brussels.

A spokesman for British trade department said the secretary of state had the final say in the matter. "The commission would have to appeal to European court."

The dispute is being watched with keen interest by airlines from the developing countries including Air India, which has been struggling for over two years to get right landing slots at Heathrow.