From the world's favourite airline to the UK's third-favourite carrier: that is the ignominy this morning facing British Airways. New figures from the Civil Aviation Authority show that BA's arch-rivals easyJet and Ryanair each fly more passengers through UK airports than does BA. Last year the two no-frills carriers were neck-and-neck at 28.1m, while British Airways is now 7 per cent lower at 26.3m.

These dramatic figures show the intense pressure that British Airways is under. Alone of the large "flag carriers", BA is forced to compete head-on with Europe's two biggest low-cost airlines. Ryanair and easyJet have their main bases in the UK. While BA remains dominant at Heathrow, easyJet is in control at Gatwick and Ryanair is the largest player at Stansted. These are the busiest three airports in Britain.

Against competition whose costs are typically half of its own, British Airways has had little option but to shrink by cutting unprofitable routes. Which begs the question: why are BA's costs so high, especially when the union, Unite, says most cabin crew at Gatwick earn less than £15,000 a year?

One answer is that other BA staff are very well rewarded: Unite says the pilots earn an average of £120,000, which works out at an impressive £13.70 an hour. But the airline is also burdened by an extraordinary web of restrictive practices and age-old agreements that have gradually come to light as the bitter dispute has unfolded.

Among the proposals that Unite made for saving BA cash, thereby ending the dispute, was to remove the "double night" agreement for inbound diversions. If a long-haul flight to London is diverted to, say, Manchester or Cardiff because of poor weather at Heathrow, the long-suffering passenger might imagine that the airline policy is – if crew hours permit – to sit tight until the final hop to Heathrow is possible. But according to a deal that BA's management willingly signed, standard practice is for the cabin crew to finish their duties on arrival at the diversion airport, spend two nights in a hotel in that city, at BA's expense, before returning to base. Attempts yesterday to find out what possible benefit this policy has for crew, airline or passenger proved fruitless. More tangible is the saving that the union offered by crew agreeing to eat the meals served to economy passengers, rather than the business-class fare they currently enjoy – and for which the airline is forking out £2.7m a year.

The union is perfectly entitled to seek to hold on to hard-won deals. But so long as BA remains tangled in a web of prehistoric restrictive practices, its low-cost rivals will prosper.