The owners of Plymouth City Airport are starting the airline

The development comes just as anxiety was growing that no successor had yet been identified.

It follows months of negotiations between BA and the company that runs Plymouth Airport, Sutton Harbour Holdings.

Air Southwest will operate the present schedule of four flights daily from 26 October, and it is expected that its fares will be lower than BA's.

The news follows a deal between Sutton and BA to take over the Gatwick landing slots.

Continental hopes

The �1.25m cost of getting the airline started, including the lease of two Dash 8 turboprop planes, started has been funded from Sutton Harbour's reserves.

Air Southwest will be run by Malcolm Naylor, former managing director of Brymon Airways, which used to operate the service and eventually became part of BA.

Head office and main operations base will be at Plymouth and, as a consequence, costs will be significantly lower than those of British Airways CitiExpress, Sutton said.

Routes to continental cities such as Paris and Amsterdam are being considered.

A spokesman said: "We have also conducted extensive research into potential additional routes and it is hoped that these will be added in future."

Some redundancies are expected among BA staff which employs about 70 at Plymouth and Newquay. Air Southwest is planning to launch with a team of 50.