The airline’s cheapest tickets will now include flights from London to Bordeaux for £29 one-way and to Venice and Barcelona for £39 one-way.

The cuts will mean BA remains more expensive than rivals such as Ryanair and easyJet on many routes – easyJet offers advance flights to Barcelona for £31.50, for instance. But BA tickets will include food and drink and the carriage of baggage, for which other budget airlines charge extra.

"This is not a short-term gimmick, but a long-term commitment," Martin George, British Airways' commercial director, said.

'There are no hidden extras and air travellers will receive the same excellent standards of service that are the hallmark of British Airways."

Willie Walsh, BA's recently appointed chief executive - known in the City as "The Slasher", due to his reputation to cut costs rather than prices - hopes the move will win over around 7 million passengers a year.

Share in BA fell 0.6 per cent to 338.25p in morning deals in London. To track the stock click here.

BA is facing pressure both from low-cost competitors and rising fuel charges.

The airline said its one-way fares within Britain and Europe have fallen by an average of 70 per cent in the past ten years, as European outfits modelled on America’s SouthWest Airline’s no-frills business changed the face of the industry.

Despite the latest round of price cuts, BA's business, which is targetting margins of 10 per cent, remains far-removed from that of budget competitors such as Ryanair, which achieves operating margins of 25 per cent.

Meanwhile, BA also expects high oil prices to boost its fuel bill this year by £600 million to £2.2 billion. BA recently claimed it now costs almost 400 per cent more than it did in December 2001 to fill up a plane.

Earlier this week, BA raised its fuel surcharge on long-haul flights as crude oil prices shot to record highs.

The airline increased the surcharge on tickets sold in Britain to £35 pounds from £30 pounds a flight, the first time it has increased the levy since September.

The surcharge on short-haul flights was held at £8.

Though recent results at BA have been buoyed by demand by fist-class travel, the airline had already signalled its intention to compete at the cheaper end of the market.

Earlier this year it said it would relaunch its budget airline as part of a bid to improve profits and compete more effectively.

Europe's third largest airline said that BA Connect, the new name for CitiExpress, will offer a single class of ticket on all aircraft and one-way fares from as low as £25 throughout the year.

The airline, which is working to improve the profitability of short-haul flights, also said BA Connect would offer a business and frequent flyer service called "BA Connect Plus".

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