The project will attempt to convert trash into a drop-in fuel for air-planes by 2017.
While the world's first factory to turn garbage into jet fuel will come up in about three years, waste-fuelled transatlantic flights could come soon after.
Turning garbage into bio-fuel generates twice as much energy as incinerating it for trash, British Airways' head of environment Jonathan Counsell said.
"What we get from that is a very pure, high-quality fuel," said Counsell.
According to Counsell, recent life-cycle analyses indicate that the fuel could reduce greenhouse gas emissions by up to 95 per cent compared to fossil fuels.
The airline has partnered with Solena Fuels to build a trash-to-jet fuel conversion facility at a former oil refinery just east of London, 'ClimateWire' reported.
The facility will take the waste that cities already collect and turn it into fuel.
Once the waste has been cleaned of any hazardous or recyclable materials, it will be combusted in a low-oxygen environment that produces a synthesis gas of hydrogen and carbon monoxide, a process known as gasification.
The gas will then be converted to liquid fuel, in a process called Fischer-Tropsch, the report said.
Fuelling the London to New York trips with bio-fuel would displace about 2 per cent of the airlines' consumption at its main hub - Heathrow Airport outside of London.
However, British Airways expects to increase its use gradually, in compliance with a UK aviation industry road map that sets the goal of obtaining 30 per cent of fuels from renewable sources by 2050.