An airline price war is looming following the announcement of an aggressive new Government plan which will go after low-cost air carriers and charter flights.

The bid is part of an pro-active effort spearheaded by the Department of Tourism to address the challenges the Island's air-service faces.

"If we can get competition, we can bring prices down,'' stressed Tourism Minister David Dodwell yesterday as he unveiled the results of the Air Transport Policy Review Committee's Report.

"This is the key,'' he said.

Amongst the committee's findings were: airlines were enjoying record profits; aircraft were allocated to routes which delivered the highest return; business travellers paid full fare for tickets which pushed airfares up; the number of aircraft in service could not meet the demand for them; Bermuda was well served by its current airlines; destinations were offering subsidies and guarantees to attract airlines; and new technology was available in the market place.

And to participate in this new airline market place, the Tourism Department intends to meet regularly with airlines, share Island marketing plans with them, create a conducive environment for them and foster competition.

For lower prices and an increase in business which would hopefully see yearly air visitor figures hit 400,000, Bermuda needed three more flights per day, said Committee chairman Terrett West.

"We will not expand business without more airlines,'' pointed out Mr.

Dodwell.

And one source for more airlines to service the Island is the charter industry.

"Government will aggressively pursue charters and create a more flexible charter policy which will even allow operations out of gateway cities,'' said Mr. Dodwell.

"Charter airlines have evolved and have a valuable role to play in leisure travel. Today's charter operator fly modern planes supported by aggressive marketing effort.'' The department will also pursue additional flights from cities and hopefully incorporate one-stop flights from destinations that are further away.

Local officials have met with American Airlines and Delta Airlines and intend to meet with Continental and US Airways by June 12.

Mr. Dodwell revealed that he would also be meeting with low-cost carriers Southwest Airlines, Legend and Air Tran next week.

Mega-carriers such as Delta and American offered broad distribution networks, generally newer equipment, marketing muscle and were preferred by business travellers, he noted.

"Regional airlines, on the other hand, have lower operating costs, are more flexible and price competitive and are preferred by vacationers.'' Mr. West added: "They come into a market and shake it up from a price standpoint. This is an opportunity for us.'' "We want both categories to serve Bermuda and are in discussions with smaller airlines to convince them of the attractiveness of Bermuda,'' stressed Mr.

Dodwell.

Further opportunities could be offered in the form of new technology -- regional jets.

Twelve hundred of the new planes with smaller capacities of around 50 passengers are on order across the US.

They have a range of 1,000 to 1,500 miles and could offer service from smaller, non-gateway cities to the Island.

Bermuda could feasibly become a hub for the aircraft, disclosed Mr. Dodwell.

Government is meanwhile looking at the possibility of risk sharing and offering market subsidies to airlines.

It will also focus on rapid decision making which will make the Island attractive to overseas partners.

As an aspect of this, Government will endeavour to get involved with the Bermuda Two negotiating processes between the US and the UK in a bid to have more of a say in affairs governing its airline policies.

"The benefit for Bermuda can be greater access for travellers, more competition and, again, lower costs.'' said Mr. Dodwell.