High above the crowds in Shanghai's trendy Xintiandi enormous billboards advertise impossibly cheap flights to London on British Airways.

The arrival of BA's first Boeing 777 passenger flight at Pudong International Airport on June 2 marked the British carrier's first new route in half a decade. It also launched a price war that will make passengers the ultimate winners, at least for a couple of months.

British Airways' five weekly flights will add to a similar number of flights offered by Virgin Atlantic Airways and China Eastern. The new flights will also increase competition among the only three airlines that fly directly from China's financial capital to London, which acts as a major gateway to Europe.

The Chinese Government eased restrictions on the number of flights allowed between Shanghai and London in 2004. In January of this year, it granted the UK approved destination status allowing for easier travel by Chinese passport holders.

These agreements paved the way for British Airways to start flying directly to Shanghai. The airline already flies to Beijing.

"We wanted to fly here for years but just haven't been able to," said Jenny Lourey, BA's area general manager for Asia Pacific.

BA marked the new flight with a full spread of media events, including press conferences and a very public landing for the first flight complete with a dragon dance to welcome the passengers and public dignitaries.

"It's a remarkable city, but we also know it will be a very competitive market," said Rod Eddington, BA's CEO during a press lunch the next day.

He wasn't kidding. In the last couple of months, ticket prices to London have sunk as airlines try to trump each other with better deals.

According to an agent at elong.net, a popular online booking service, China Eastern, Virgin and British Airways are all offering discount deals and people are grabbing them.

"It's because British Airways has a special price. Then the other airlines started giving out deals," said Leo Yu at elong.

China Eastern has a flight for about 3,400 yuan (US$411) return, the cheapest, but flights with the other two can be found for just a few hundred more. On its website Virgin has flights starting at 3,990 yuan (US$482) and BA has them for about 3,850 yuan (US$466).

Before the deals started cropping up there were no flights for less than 5,000 yuan (US$605) and that was with luck.

If passengers are the ones reaping the benefits of the stepped-up competition, the short-term losers are the airlines that are selling tickets as cheap as possible even at a loss to get as many of the 150,000 passengers expected to make the trip this year.

Ironically, said Lourey, the cheap deals are just the cost of doing business.

"We need to do something to tell people we are here," said Lourey and added that BA's deals are likely to last throughout the summer.

"We won't make much money here for a couple of years. It took a long time to start making money in Beijing."

"It's actually good for you guys living here because there is much more choice."

With a new airport and more people with enough money to travel, Shanghai is a prime route. Airlines are quickly filling up capacity.

(China Daily June 9, 2005)