A price war is breaking out in the airline industry with several major airlines slashing their fares to their lowest levels since the Eighties. Several leading carriers afeel compelled to implement a cut of about 25% in their ticket charges amidst mounting fears that the economic downturn might give way to a post-Christmas slump in the demand for air travel.

British Airways has already announced its New Year sale featuring a significant reduction in ticket price to over 75 destinations. Now, a return flight to New York is priced only at £259. Following BA"s announcement, Virgin Atlantic has attempted to hit back by undercutting BA by £1 on fares to a number of destinations including New York, Los Angeles and Chicago.

Following last month"s terror attacks in Mumbai, return tickets to India have also come down with BA reducing its prices to Delhi by £121 to £359, Mumbai by £91 to £329 and Calcutta by £71 to £359.

In addition, big foreign carriers operating flight services out of Britain, including Lufthansa and Emirates have also reduced prices.

Richard Tams of BA observed, "There are real bargains to be had thanks to the combination of our New Year sale and the reduction in the fuel surcharge.   We know from research that customers still rate their annual holiday as extremely important even in these difficult economic times, but obviously they want to make the absolute most of their money and this is a great time for them to do just that.”