Airlines have mounted a ferocious price war in a desperate attempt to fill empty seats during autumn and winter.

Despite claiming for months that fares would have to rise to recoup lost profits on soaring fuel costs, British Airways and other big airlines have dramatically reduced fares. In some cases, the price of economy tickets on long-haul flights has been cut by more than 40 per cent.

In an unusual move, both BA and Lufthansa are selling cut-price tickets for journeys well into next year. The BA tickets, which are up to 36 per cent cheaper than usual, are based on various departures from August 22 until June 30, 2009.

Lufthansa, the third-largest airline at Heathrow, has reduced the price of economy tickets by 20 per cent for departures until the end of March.

Virgin Atlantic has extended its sale until Tuesday for flights leaving over the next few months. Its price cuts range from 15 per cent to 41 per cent to destinations including Dubai, Hong Kong and Johannesburg, and will bring the cost of an economy ticket to New York to less than £300.

Air France and KLM will disclose their new lower prices on Tuesday, including reductions of up to 21 per cent. American Airlines is also running a cut-price promotion.

Douglas McNeill, a transport analyst at Blue Oar, a City stock-broking firm, said: “It has certainly been the case that the general aim for most airlines is to put fares up in order to recoup high fuel costs. Any deviation from that general approach raises concerns that demand is softening in the face of slower economic growth.

“This [reduction in ticket prices] will be all the more welcome for consumers for being so unexpected.”

At the beginning of July, Willie Walsh, chief executive of BA, said that the airline’s fares would have to rise to cover the airline’s soaring fuel bill, which will top £3 billion next year. “BA cannot absorb the increase in oil prices. Fares are going to have to go up,” he said.

Now the BA sale has “for the first time ever” included thousands of discounted fares “to over 90 long and short-haul destinations in economy and business classes with upgrades to premium economy”. Nearly £400 has been trimmed from some long-haul flight prices.

Martin Ferguson, business travel correspondent at Travel Trade Gazette, a specialist publication, said: “The airline bosses have been pleading impending poverty for months. The consensus was that fares, in general terms, would go up. BA admitted that its £900 million profit in the last financial year would be wiped out by the soaring price of oil. So it is strange and surprising to learn that economy fares are being cut so drastically.

“Perhaps demand is softening quicker than they expected. Or maybe they want the security of cash in the bank so that by next April they have a better idea of how much they have to spend on hedging fuel.”

The credit crunch has forced many families to tighten their belts and reduce spending on luxury items, such as foreign holidays. According to Visit Britain, the national tourism agency, Travelodge, Pontin’s, Hoseasons and lastminute.com have all reported increasing interest or bookings from British travellers for British destinations.

Grant Hearn, chief executive of Travelodge, said: “If ever there was a time to win back the Brits who have been tempted abroad by the budget airlines, it is now.

“Soaring air fares, an overpowering euro and the credit crunch are changing holiday habits this summer and maybe for good. If we can provide quality accommodation, low prices and fantastic attractions we can turn this opportunity into a lasting tourism legacy.”

Airlines are hoping that the dismal August weather combined with their reduced fares will persuade people to book trips abroad. The Met Office said that there were 11.5 rainy days in June and 13.2 in July. So far, August has been wetter than July.

Paul Charles, a spokesman for Virgin Atlantic, said: “Clearly airlines are pump priming the market to boost demand. There is ferocious competition out there at the moment, which is very good news for consumers.”

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