Giant American insurer AIG hasn’t been slow in trying to block a move by US airlines to set up their own risk retention group. AIG Chairman Maurice Greenberg has written to Transportation Secretary Norman Mineta to announce that AIG can set up a cheaper more-risk insurance scheme than the airlines or the government can.

Like most national governments, the US has provided war and terrorism insurance for airlines following the cancellation of these clauses by the insurance industry after September 11. The US Government originally agreed to provide cover until January 11, and then extended the deadline to March 20.

Reports in the US said Mr Greenberg claims a consortium led by AIG can provide coverage for $3.80 per passenger. The airlines are currently paying $14.40 per flight departure for the government coverage.