Travel-industry sources said that British Airways had announced discounted fares on India-bound flights. A London-Delhi ticket, which cost upward of 500 (Rs 35,500) currently, will be priced at 399 (Rs 28,300) from July 1. BA has already cut fares on London-bound flights from India by 20 per cent.

A Delhi-London journey currently costs Rs 33,000 on BA. A slash in fares by BA implies that other airlines, including Air India, Lufthansa, KLM Royal Dutch Airlines and Air France will follow suit. Lower-end carriers like Gulf Air and Emirates may also be forced to cut fares. "We have no choice but to follow in BA's footsteps. Otherwise, we start losing customers who get attracted by the cheaper fares to rival airlines," said a European air carrier official.

Industry experts predicted that a full-scalefare war is likely to result from BA's move. "The discounts in fares which have been announced in peak season will mean a drop in yields and revenues of all airlines," industry sources said. This is the second time that BA's strategy to get a larger pie of the skies has ruffled feathers of other international airlines operating in India. In January, BA's decision to drop fares had resulted in a frenzied round of discounting by major foreign carriers.

An agreement amongst all airlines to offer only stipulated discounts brought the fare war to an end. Air India, which could ill-afford to offer discounts, had strongly criticised BA, and refused to be a part of the agreement.