Airline Niki submits insolvency filing in Austria

* Niki applies for secondary insolvency filing in Austria

* Passenger rights group wants main case in Austria

* Korneuburg court to decide on Friday at the earliest (Adds detail, Austrian court, background)

VIENNA, Jan 11 (Reuters) - Airline Niki filed for insolvency in Austria on Thursday, in a move to safeguard an agreed sale of the Austrian arm of failed Air Berlin (LSE: 0GPE.L - news) to British Airways owner IAG, its insolvency administrator said.

Niki filed for insolvency in Berlin last month after Germany's Lufthansa (Xetra: LHAB.DE - news) scrapped plans to buy the carrier, but a Berlin regional court said earlier this week that Niki was not under German jurisdiction.

The ruling, which Niki has appealed, has put a question mark over the deal with IAG.

Niki's German administrator now aims to safeguard the sale by filing for a secondary insolvency in Austria. "Niki filed for insolvency in Austria today," a spokesman for administrator Lucas Floether said.

Austria's Korneuburg regional court said it had received a filing for secondary insolvency proceedings from Niki.

"If the court accepts Niki's application, the main proceedings will stay in Germany with Lucas Floether as Niki's administrator," the court's Vice President Gernot Braitenberg-Zennenberg said.

If the court supports a separate claim by Fairplane, a group representing airline passengers which wants the main case to be moved to Austria, the whole insolvency process would have to start from scratch, Braitenberg-Zennenberg said.

He said the court would decide as soon as possible but at the earliest on Friday. (Reporting by Kirsti Knolle; Editing by Shadia Nasralla and Maria Sheahan)