cut-price fares to the Caribbean island.

It complained when Northwest and American offered flights from Miami to the Caymans for about $118 return, compared to a regular price of around $216.

International airline regulators then told the US companies to drop the special deals.

Cayman Airways is closely watched by Bermuda's politicians, who regularly clash over whether the Island should have a similar national carrier.

Government ministers the Hon. C.V. (Jim) Woolridge and the Hon. Quinton Edness have pointed to it as a good example of a loss-making airline.

But the PLP's Mr. David Allen has argued the tiny carrier has boosted the Caymans' economy by bringing in visitors.

The latest move could add strength to the arguments of airline opponents.

Airlines rushed to offer travellers special one-off deals this week after Northwest slashed its fares to record levels.

If customers bought tickets by 5 p.m. on Friday, they could save up to 35 percent on round trips to most US gateway cities.

Mr. Charles Glidden, spokesman for Cayman Airways, said his airline successfully objected to the $118 fare through British airline authorities.

The fare represented unfair competition, he said.

"It was ridiculously low,'' he said. "It would put people in your seats but you would not make any money.

"It was done strictly to get market share. Lots of times an airline will need some cashflow and just has a fire sale.

"We have a regulated air industry -- we're not like the US where it's deregulated.

"A fare of $118 between Cayman and Miami is a 100 percent guaranteed road to bankruptcy.'' Such low fares were responsible for heavy losses now being suffered by US airlines, he said.