BA's plans, revealed exclusively by the Independent on Sunday last month, will see the new operator, codenamed Operation Blue Sky, fly from London Stansted.
BA has been squeezed by smaller operators - which have been able to offer cheaper fares by flying from less expensive, less congested airports and cutting out extras such as meals.
Their success has been remarkable. Ryanair, which also operates from Stansted, earlier this month announced a rise in half year profits from pounds 9.4m to pounds 17.3m. In just 24 months, Easyjet - which runs flights from Luton - has taken 32 per cent of the market on the London to Nice route.
The upstarts are nervous that BA's plans are nothing but a front to run them out of town. Tony Anderson, Easyjet's marketing director, said: "They must be able to prove they're doing it to make money, not just to drive us out of business." Easyjet and Debonair Airways are both considering legal action.
The new company, which will be wholly-owned by BA, will have its own name, identity, management and employees. It will not use travel agents. Passengers will book by credit card on the telephone, and can expect a "frugal flier" service, with no meal and perhaps one complimentary drink.
BA are coy about the details. Barbara Cassani, formerly in charge of the airline's US operations and in charge of the new carrier, will only say that fares will be "competitive" and that the new airline will fly to cities in Italy, Spain, Scandinavia, France and Germany by the end of the first year. More than 150 new jobs are expected to be created when the aircraft launches "early next year".
Mrs Cassani will compete not only with low cost rivals - but with traditional BA flights from Heathrow and Gatwick. "This has to be a stand alone company that makes money," said Mrs Cassani. Initially, the new airline will lease eight 737 aircraft - which each carry about 130 passengers - and will fly three times a day to European destinations. "We have very clear financial targets," said Mrs Cassani. "I have to break even and move into profit by 2001."
The first lady of flight
Britain's new first lady of flight is inappropriately American. Barbara Cassani, 37, (left) was hand-picked by Bob Ayling, BA's globalist chief executive, to run the flag carrier's new low-cost carrier.
Plucked from New York, the airline executive is as feminine as she is feisty. She charms reporters in conversation as quickly as she puts them down. A mother of two - who is married to an English investment banker - she eschews the antics of her better known rivals at Virgin. "I won't be jumping out of a cake at the launch party," she dryly remarks.
Little more could be expected of someone who after Princeton, worked as a management consultant at Coopers and Lybrand and started with BA soon after it was privatised in 1987.
Big things are expected of Mrs Cassani. With BA lacking any director with any real stage presence, this high-profile job could prove her ticket to the top.Reuse content