CLOSE-UP: LIVE ISSUE/BRITISH MIDLAND - Can BBH help bmi to challenge the major airlines? British Midland prepares to take on the major airline players, John Tylee reports

Introducing the latest UK contender to join the dogfight for the 14 million passengers flying the transatlantic skies each year. After British Airways and Virgin, will you please welcome ... Derby Aviation.

Introducing the latest UK contender to join the dogfight for the 14 million passengers flying the transatlantic skies each year. After British Airways and Virgin, will you please welcome ... Derby Aviation.

Seriously? Well, yes, in a manner of speaking. BA and Richard Branson have been bellicose beligerents on the Atlantic routes since 1984. As for Derby Aviation, it hasn't been known by that name since the day almost 40 years ago when it rechristened itself British Midland Airways.

Now it has relaunched itself again under the snappier moniker of bmi british midland - even though confusion remains about what the 'i' actually stands for.

What's certain is the upcoming challenge by the UK's second-largest scheduled airline to the established players on the North American run which it is flagging with new TV advertising (Campaign, 2 March).

But, as the old names imply, it must do so with some cumbersome historical baggage still stowed in its hold. The airline's roots remain in the Midlands - it is still based in Castle Donington - providing some unwelcome parochial connotations that have to be overcome if it is to convince consumers that it is a credible international player.

A dollars 1.1 billion investment in a fleet of Airbus A330s underlines the seriousness of bmi's ambitions. So does its intention to mount a challenge in Brussels to the legality of the Bermuda 2 agreement which allows only four carriers - BA, Virgin, United Airlines and American Airlines - to run US services from Heathrow.

The restrictions mean that bmi must stage the April launch of its services to Washington and Chicago from Manchester instead of Heathrow. Although bmi expects to do well from Northern-based businesspeople who will no longer have to take the Heathrow shuttle, Sir Michael Bishop, the airline's chairman, has attacked the accord between the UK and US governments as uncompetitive.

This, though, will be just one of the handicaps bmi must overcome. Its new 'civil aviation' campaign through Bartle Bogle Hegarty, which emphasises the attentiveness and user-friendliness of the airline's cabin crews, is surely only the start of the battle. The agency hopes it will become a continuing 'soap in the sky' and promote bmi's declared intention to 'make air travel civilised again'.

The key to its success will be how well bmi can graft on an international reputation to its proven success as a regional airline carrying 6.5 million passengers a year to 32 European cities with 55 aircraft.

'There's a huge difference between operating short-haul and long-haul services,' an industry source explains. 'For short-haul the demands are far more functional. Passengers want to get to the airport quickly, be well treated on the plane and get out fast.

'Long-haul passengers, who may be on board for between eight and 12 hours, will notice everything. That doesn't just include staff attitudes but the quality of the in-flight entertainment and the comfort of the seats.'

Twenty video, 16 audio and 11 film channels, some showing movies before general release, and in-flight chefs serving up restaurant-style food are among the features being offered to bmi transatlantic customers.

Moreover, Gwyn Jones, BBH's managing director, contends that bmi's already established reputation for bringing added value to its European offering gives it a strong platform on which to build its transatlantic business.

'The unpretentiousness of the staff who treat you as a person rather than a passenger has enormous relevance in the transatlantic market,' he claims.

Provided it can cope with a changing culture, bmi's arrival as a transatlantic player may be timely. US rivals are suffering a consumer backlash over shoddy service, flight delays and strike threats.

Meanwhile, bmi's access to the Star Alliance via Lufthansa, which owns 20 per cent of its stock, should boost passenger 'feed'.

Nevertheless, the airline is entering the world's most competitive market, where relentless innovation is essential. 'The odds are stacked against bmi because of the constant investment needed in the product,' a senior agency executive with long experience of handling airline business explains.

'This is a market which relies on frequent flyers who really know what's going on and are always making comparisons between you and your rivals. Enhancing your product can produce a significant shift in your market share.'

The airline will also have to confront an additional element of the competition on transatlantic flights which it rarely faces on its short-haul services.

'If you're a UK business traveller flying to mainland Europe for a meeting you turn up at the airport to catch a flight simply because it's leaving at a convenient time,' an airline insider comments. 'But if you're crossing the Atlantic you'll probably be flying overnight and won't be concerned about when the plane leaves. You want the most comfortable.'

Most importantly, bmi now has to fight on different fronts, making a consistent brand positioning difficult. With the disposal of Go, its budget subsidiary, BA has signalled its intention to concentrate on being a premium brand. But bmi must challenge as forcibly in the no frills sector populated by Go, EasyJet and Buzz as it does for transatlantic passengers. Jones insists it will not be a problem, arguing that the extension of its services allows bmi to take a completely new brand positioning.

However, some industry observers are unsure what that positioning will be. Can it capitalise on its Britishness? BA already does that. Can it portray itself as the little guy taking on the airline leviathans? Virgin has already claimed the territory.

Price may be what's left and there's speculation that bmi may offer fares below those of the four existing transatlantic carriers.

A price war would go down like a lead balloon among other airlines, which profit well from North American routes. 'It's very easy to fill planes and still lose money,' a source close to BA warns. As for the advertising, it's clear that a charm offensive alone will not suffice. As one industry source puts it: 'Saying how nice your staff are isn't going to be enough.'