Nigeria has barred US-based airlines from flying direct to the African nation in retaliation for an American ban on Nigeria's new national carrier, Virgin Nigeria, officials said on Friday.

US-based Continental Airlines last week cancelled plans to fly to Nigeria after aviation authorities denied it technical permits required to operate the lucrative Lagos-New York route.

US authorities had barred Virgin Nigeria, 49 percent owned by Richard Branson's Virgin Group, from direct flights into the United States, reportedly citing Britain's anti-competitive aviation policy.

"That decision was based on misinformation, Virgin Nigeria is not a British airline," an aviation ministry official said.

"The Virgin Nigeria issue has to be sorted out first before Continental can be cleared, because there has to be a level playing ground," the spokesman said.

Aviation Minister Isa Yuguda has said Nigeria informed the US government of its decision not to permit US airlines into the oil-exporting nation.

"We have communicated that to the US ambassador in Nigeria, and I believe they understand," Yuguda was quoted as saying in the local press earlier this week.

Before it shelved its plans, Continental was due to begin operations in the second quarter of 2005, which would have made it the only American airline operating direct flights to Africa's most populous nation.

The US ban meant that Virgin Nigeria would have lost business on the Lagos-New York route to Continental. The two countries had signed an open-skies agreement in 2000.

Virgin Nigeria was formed last year after the collapse of the former Nigerian state-owned national carrier, Nigeria Airways. The new company raised initial capital of USD$50 million earlier this year and is due to begin domestic operations this month.

It also plans to operate regional routes to Africa and international destinations, including the Middle East and Europe.

In December a US diplomat told the Nigerian news agency that, given the big interest of the UK-registered carrier in the new airline, it would be unfair to permit Virgin Nigeria to benefit from the US-Nigeria open-skies agreement.

He said the UK had repeatedly failed to open the London market to additional US airlines and that Virgin Atlantic had been vocal in urging its home government to lock out American airlines.