Richard Branson's Virgin Atlantic on Tuesday said it would enter the short-haul market with the launch of a London-Manchester flight following rival British Airways' takeover of bmi.
"Virgin Atlantic Airways Ltd today announced plans to fly from London Heathrow to Manchester Airport (in northwest England) from March 2013 - providing competition to BA's short-haul service.
"The new route is the airline's first foray into domestic flying; signaling the start of a new network which will provide regional feed to its long-haul service," the company added in a statement.
Virgin Atlantic chief executive Steve Ridgway added: "Flying between Heathrow and Manchester is just the start for Virgin Atlantic's new short-haul operation.
"We have the means to connect thousands of passengers to our long-haul network as well as to destinations served by other carriers. Our new service will provide strong competition to omnipresent BA; keep fares low and give consumers a genuine choice of airline to fly to Heathrow and beyond."
British Airways earlier this year bought regional carrier bmi from Germany's Lufthansa - angering Virgin Atlantic which said the deal would lead to fewer flights and fare hikes.
Virgin Atlantic's long-haul routes include flying from London and Manchester to the United States and the Caribbean. It also flies between London and Africa, Asia and Australia.
The airline's announcement on Tuesday comes after Branson's Virgin Rail Group last week lost a long-held deal with the British government to run a major route linking London with Glasgow via Manchester.
British tycoon Branson hinted that losing Virgin Group's only railway franchise could see him exit the trains business.