A new wave of cut-price flights to Australia looks likely if embryonic airline Backpackers Xpress gets permission to launch services between Melbourne and Manchester.

The carrier expects to charge around £650 return and promises karaoke and dancing on board.

The fare would be higher than many of those already available for limited periods through travel agents specialising in cheap flights. But unlike those budget deals, this fare would carry no restrictions governing dates of travel, would be available year round and would allow travellers to stop off en route.

The airline is seeking permission from Australia's International Air Services Commission to operate three round trips a week. If it gets the go ahead, it will be in competition with British Airways and Qantas, opening up the prospect of a fare-cutting war.