A new regional airline could soon be launched in Plymouth.
British Airways will be selling all its turbo-prop planes
Sutton Harbour, owners of the city airport, have confirmed they are in talks with British Airways.
Neither company will say any more about what the talks involve, but it is thought Sutton Harbour will take over the running of BA's Dash-8 planes and launch a new service later this year.
The talks follow news last year that British Airways is to sell all its turbo-prop planes, including the Dash-8s, as it moves to an all-jet fleet.
That would mean pulling out of its service from Plymouth City and Newquay airports, which are too small for jets.
BA has said it will be keeping the existing services, at least until 2005.
Reports say that the new airline could be called Air South West.
The new regional carrier would be run by Malcolm Naylor, a former managing director of Brymon Airways.
He joined Sutton Harbour in November as head of aviation strategy.
British Airways said: "We talk to many companies and airlines on a number of issues most of which come to nothing, hence our policy on not commenting unless there is something to say."
Devon and Cornwall Business Council (DCBC) said it would welcome Sutton Harbour taking over the planes.
However, a question mark remains over whether any new service would be able to retain the existing slots at Gatwick.
Business leaders say these slots are critical for the future economic success of the region.
DCBC chair Tim Jones said: "It is vital to the region and to the region's economy that we have links into an international hub such as Gatwick.
"We have very poor infrastructure in every other respect and we are not going to get the investment we need in rail or the roads, so we have to keep the air link."