International travelers and two airline companies have become hostages in a bitter dispute business British and American government officials over reduced-fare flights across the North Atlantic.

Britain's Department of Trade on Wednesday blocked inauguration of Braniff International's long-awaited service between London and Dallas-Ft. Worth -- the first regular nonstop service from the Southwest to England's capital city.

In retaliation, the U.S. Civil Aeronautics Board has asked President Carter to suspend the operating authority of British Caledonian Airways between Houston and London for as long as Britain holds up Braniff service.

The recommendations to Carter, made public yesterday, state that British Calendonian should be allowed to offer the same low fares that Braniff has proposed, and that current London-houston fares should be suspended for a year -- hereby forcing the lower charges.

Carter said yesterday at a news conference that he does not think Britain is violating terms of a British-U.S. said he will protest to British Prime Minister James Callaghan if he finds such violations.

"My guess is, knowing the British, is that they have not violated the agreement specifically," said Carter. But the president also said he had not yet read the recommendations of the CAB, whose order could not take affect before March 10.

British Caledonian issued a bitter denunciation of the CAB last night, calling the agency's proposals an effective nationalization of the company's operation. If the recommendation were approved by Carter, the British government would not permit compliance and British Caledonian "in any event would simply ignore it," the airline stated.

In London, Braniff Chairman Harding Lawrence was quoted by United Press International as terming the incident "what we call a Mexican stand-off in Texas -- a stalemate or whatever you want to call it."

At issue between U.S. and British air officials are North Atlantic fares, with the CAB seeking budget and standby fares from all U.S. cities. Braniff has 50,000 reservations for the proposed service with fares ranging as low as $349 round trip on a standby basis. Britain has demanded that Braniff boost the standby rates to $409 and increase its economy roundtrip fares to $818 from $784. In general, British authorities want to restrict lower fares to flights in and out of New York.

Braniff had agreed to the changes but the CAB, which has been supporting a new era in cheaper air travel, refused to allow the Texas-based carrier to make such concessions.

New Caledonian, which began service to Houston in December under the so-called Bermuda II air pact of last year, warned last night that the aviation warfare could jeopardize Delta's new Atlanta-London service next month.

Negotiations are expected between the two nations next week in the wake of suggestions by some influential members of Congress that the entire U.S.-British pact be junked.