British Airways is to get a low-cost sister airline offering transatlantic flights from £86 this summer as the budget long-haul market takes off.

Level, a new airline from International Airlines Group (IAG) which owns BA, will initially fly from Barcelona, but there are plans to expand to other European cities in a challenge to low-cost long-haul carriers such as Norwegian.

The four destinations for Level flights, starting in June, will be San Francisco (Oakland); Los Angeles; Buenos Aires; and Punta Cana in the Dominican Republic. Level will use two new Airbus A330s operated by crew from Iberia, creating 250 new jobs.

Flights will have 21 “premium economy” seats with free checked-in luggage, meals and films, and 293 economy seats with a range of paid extras. Level will be the fifth airline within the IAG group, joining British Airways, Aer Lingus, Iberia and Vueling.

Willie Walsh, chief executive of IAG, said that Barcelona had been chosen because it was the home airport for Vueling and would allow passengers to connect to Level flights from Vueling’s short-haul network.

“Level is an exciting new IAG airline brand which will bring a stylish and modern approach to flying at prices that are even more affordable,” he said. “It will benefit from having the strength of one of the world’s largest airline groups behind it.”

Describing it as “just the start”, he added: “We’re really excited about the opportunities for expansion and we plan to bring Level to other European destinations.”

Flights will operate to Los Angeles and Punta Cana twice every week, and to San Francisco and Buenos Aires three times per week. Prices will start from £86 each way. Chris Tarry, an aviation consultant, said: “We’ve seen a change in the market where long-cost low-haul is developing — not just Norwegian but in other parts of the world, such as WestJet from Canada or Scoot, which is part of the Singapore Airlines group.”

He said it was possible that Level would start to offer flights from British airports, possibly including Gatwick. “You can’t get in to Heathrow — you would only do that for a more valuable service and British Airways’ network is already established there. The cost of operating from there is higher, so it’s not viable for low-cost, long-haul operators, but it has developed out of Gatwick.” IAG announced its intention to launch a low-cost, long-haul airline this year, four months after Norwegian announced plans to expand the number of flights it offers from Barcelona.

Other big airlines and groups are already experimenting in the low-cost long-haul market. Lufthansa has created the Eurowings brand and Qantas the JetStar brand as low-cost subsidiaries and offshoots.

Some of the destinations offered by Level are already served by Norwegian, including Los Angeles and San Francisco (Oakland), representing a direct challenge to the budget airline.

Tickets went on sale on flylevel.com yesterday as the site went live, with flights to the US from €99 (£86) and to Argentina and the Dominican Republic from €149 (£129).