The airline has told recently that the launch is scheduled for the spring of 2009. The new route connecting London Gatwick and Reykjavik was due to commence on 16th September 2008.

Once the route is served by the airline commencing from the spring of 2009, the airline will operate up to five services per week.

Sheikh Ahmed, who is also chairman of Emirates airline, said that FlyDubai will be based at Al Maktoum International Airport in Jebel Ali, and will operate separately from Dubai’s flagship carrier.  Branding for FlyDubai is expected to be unveiled in the next few months.

FlyDubai will compete with a number of other low-cost operators in the Gulf - including Air Arabia, Jazeera Airways, Sama and Nas Air.  Its launch was announced at a time of record fuel prices.

Other full-service airlines, including Qatar Airways and Abu Dhabi’s Etihad have both said they are considering low cost carriers.

Even ringing a call center to book a plane ticket could incur a charge.

The stark warning comes from John McCulloch, managing partner of Oneworld Alliance, the group that represents world’s leading airlines.

It comes just days after British Airways announced the biggest fuel surcharge increase in its history.

He predicted mainstream carriers will have to fall into line with their no-frills rivals as they look to cut costs. The same has already happened in America.

“People have to realise it is going to get more expensive to travel,” said Mr McCulloch, whose group includes British Airways, Cathay Pacific, Iberia and Qantas.

“Airlines would argue that it is the right way to do it. It will be £20 for a bag, £10 for a meal, you are going to see much more of that.

“I think charging for meals will become standard practice.”

As oil prices continue to set records, reaching $135 a barrel yesterday, airlines are coming under increasing pressure from soaring costs.

Several airlines, including Oasis and US operator Eos Airlines, have filed for bankruptcy recently, as the oil surge has hit the smaller, budget companies hardest.

UK business carrier Silverjet may be the next victim, as its shares were suspended this morning as the company admitted a loan is urgently needed to continue trading.

The budget airline, Mihin Lanka, has been dogged with financial trouble since it began commercial operations last April.

“They (Mihin) don’t have an aircraft to fly passengers since the beginning of this month,” Sri Lanka’s civil aviation chief, Parakrama Dissanayake told AFP.

Mihin’s last aircraft, an Airbus A321 taken on lease, was reclaimed by its Bulgarian owners at the end of April, as the airline was unable to make payments, an airline industry source, who declined to be named, said.

South African budget airline Nationwide stopped operations with immediate effect Tuesday because of financial problems.

The company has a fleet of 17 planes which mainly cover domestic and short haul routes, with flights to London three times per week. It was not immediately clear how many passengers were stranded.

“Our cash-flow has become critical and as a result we have decided to voluntarily cease all flight operations until further notice,” Nationwide chief executive Vernon Bricknell said in a statement carried by the South African Press Association.

The bankruptcy filing by Oasis stranded thousands of passengers in Hong Kong, London and Vancouver, British Columbia. Many of the would-be passengers stuck in Hong Kong are children trying to return to British boarding schools after going home for the spring break.

High jet fuel prices have taken a heavy toll on the airline industry and particularly on budget carriers trying to compete on price with low profit margins. The other three to shut down since March 31, all in the United States, are Aloha Airgroup, ATA Airlines and Skybus Airlines.

Speaking to the Australian Aviation Press Club in Sydney, chief executive Tony Davis said the Australia-New Zealand service was on the radar.

Earlier reports said Tiger was eyeing Palmerston North, among other New Zealand airports, where competition was low or non-existent.

Mr Davis said Tiger, which is part-owned by Singapore Airlines and Ryan Air, would take delivery of two A319 aircraft toward the end of the year as it prepared to launch more services to regional destinations in Australia.

Tiger would also add a fifth A320 jet to its Australian fleet next month, which together with the A319s would expand its seating capacity by 65 per cent.

Six of them cost between 55 and 80 percent of the ceiling fare, and the remaining super-cheap tickets cost from VND15,000 to 50 percent of the maximum fare.

Pacific Airlines had a makeover as a no-frills airline in February last year.

The state-run Vietnam Airlines too has submitted to the Vietnam Civil Airline Bureau for approval new airfares on domestic routes.

Budget Long Haul

Even foreign budget airlines have turned their eyes to Korea’s domestic market. Tiger Airways, a budget affiliate of Singapore Airlines, is planning to advance into Korea by joining forces with the city of Incheon.