THE cosy domination of the skies by national flag carrier airlines is not quite over, despite the completion of the European Commission's ten year deregulation programme, British Midland said last night.

In a report to be released today, the airline says that only 6 per cent of Europe's routes are operated by three or more airlines.

"Europe's politicians and regulators have provided the structure for change - now in turn they face a choice," said Sir Michael Bishop, the chairman of British Midland.

He said it was time "to pack their briefcases in self satisfaction, or recognise there is considerable unfinished business."

Deregulation is only being fully felt in the pockets of consumers on routes where competition has been fully realised and where more than two airlines operate, according to the report.

Six per cent of routes now have three or more airlines, compared with 2 per cent in 1993, the report states. Some 64 per cent are served by two carriers.

According to British Midland, on the 40 busiest cross border routes, between 1986 and 1996, the lowest business class fares rose 36 per cent where there was genuine competition, but by 48 per cent where there was not.

The lowest economy fares rose 28 per cent with competition, but by 46 per cent in a duopoly or monopoly, the airline says.

"But of those 40 routes, 17 were still operated by only two carriers at the end of 1995, denying around 6.9 million business passengers access to competition.