Holidaymakers are set to benefit from a fresh price war among European airlines this summer, with Ryanair about to slash costs and competitors likely to follow suit.
After reporting a 43% rise in annual profit to €1.24bn, Ryanair yesterday said it expects its average fares to fall by around 7% this year and said it is fully ready for the competition.
“If there is a fare war in Europe, then Ryanair will be the winner,” the airline’s chief executive Michael O’Leary said, adding that if other airlines want to compete on price, then Ryanair will simply lower its fares even further, even if that eats into its earnings.
“We see growth opportunities for Ryanair’s lower fares and ‘Always Getting Better’ programme. We are, on average, 2% better booked for the peak summer months than this time last year, but at lower fares.
“We expect our fiscal year 2017 load factor will be similar to last year, 93%, as we grow traffic by 9% to 116m,” he added.
Easyjet has already said that it will consider summer price cuts.
IAG, Lufthansa and Air France-KLM have also all warned of rising competition from lower fares and analysts feel all will have to follow Ryanair’s lead.
“Ryanair is a major player in many of the markets and airports it flies to.
“If it cuts prices, other airlines will have to respond to that,” said Robin Byde at Cantor Fitzgerald in London, with another London-based broker saying Ryanair has “thrown down the gauntlet” to its budget airline rivals”.
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