A new high-speed budget rail link between London and Edinburgh aims to compete with domestic airlines.

FirstGroup said fares would cost “less than £25” on new a service inspired by Japanese bullet trains.

Regulator, the Office of Rail and Road, approved the new entrant which will compete with exiting operator London North Eastern Railway (LNER) from 2021.

FirstGroup confirmed a £100 million order for five new 125mph intercity electric trains with manufacturer Hitachi Rail to enable the new service to start in autumn 2021.

The single class service with on board catering and Wi-Fi aims to make the journey between the English and Scottish capitals in four hours with calls at Stevenage, Newcastle and Morpeth in Nortnumberland.

The first service of the day from London is set to arrive in Edinburgh by 10am, designed specifically to attract business passengers who usually fly.

The aim is encouraging people to use trains rather than planes, FirstGroup said. Currently two-thirds of journeys between the two capitals are made by air.

FirstGroup already operates Hull Trains on the east coast mainline with 90 journeys a week.

Hitachi’s latest AT300 electric trains will have five carriages providing a total of 400 seats with new interiors, Wi-Fi and power sockets.

Steve Montgomery, managing director of FirstFroup’s rail division, said: “We’re excited to announce the next step to providing our high-quality low fare service for customers linking London and Edinburgh.

“There’s a real gap in the market for truly affordable rail travel between the two capitals – our plans show we are serious about competing with low-cost airlines and opening up rail travel on this key route to thousands of new passengers.

“The new trains we are introducing will provide the highest level of comfort and service, whilst being great for the environment and air quality.”

Hitachi Rail Europe managing director Karen Boswell added: “Our Japanese-bullet train-inspired fleet will play a vital role in supporting FirstGroup’s exciting new service.

“These trains have been designed to increase the number of seats available whilst harnessing the latest in comfort design to boost passenger experiences.

“Today’s deal extends our long-term relationship with FirstGroup, who already use our pioneering intercity trains in other parts of the country to boost reliability and passenger satisfaction.”