Price war looms as travel firm takes off

BUDGET TRAVEL, one of the country’s leading tour operators, will spark an airline price war when it announces next Monday that it has gone into partnership with Futura airlines to offer low-cost fares on Spanish routes.

The Irish Examiner has learned that www.budgetair.ie is to compete with schedule carriers operating to sun destinations, using airplanes owned by Futura, a company in which Aer Lingus has a 20% interest.

Initially, www.budgetair.ie will offer low-cost flights from Dublin to Malaga and Alicante from next November, with flights three times weekly. One-way fares will cost from €49, plus taxes. By comparison, Aer Lingus charges €109 and €99 plus taxes respectively for one-way flights from Dublin to Malaga and Alicante.

Ryanair charges €89 plus taxes from Dublin to Malaga and City Jet charges €240 plus tax of €19.73 to Malaga. The City Jet fare takes effect from September 1. These prices are from the airlines’ websites yesterday and may be lower during off-peak times.

Spain and Portugal are the most popular destinations for Irish tourists. In addition, an estimated 30,000 Irish people own a second home in Spain.

While www.budgetair.ie was being treated by the travel industry yesterday as a new airline, Budget Travel operations director Derek Crooks said it was just a brand name, and that Futura aircraft would be used. He also said www.budgetair.ie plans to expand to other destinations next summer.

One of the country’s leading travel agents, Michael Stein of Stein Travel, said the venture would be great for travellers initially, because it will lead to a price war and “blood-letting” within the trade.

“It’s a very brave decision to launch a new airline in the middle of winter on two routes which are already well-served by Aer Lingus, and which City Jet also serves,” Mr Stein said.

He predicted that the low prices are along the lines of the Ryanair strategy of enticing customers who will find that fares will eventually go up.

“In any case, I don’t think there are enough people to go around on this route which is being already well-served,” Mr Stein said. He also said it was “strange” that Budget Travel should be in partnership with Futura, an airline previously the charter arm of Aer Lingus.

In November last year, Aer Lingus sold 80% of its stake in Futura to the firm’s management, in a deal thought to be worth €28 million to the national carrier. Yesterday, it confirmed it still owned 20% of Futura, but a spokesman said it was an independent company and Aer Lingus had no direct involvement in it. The deal with www.budgetair.ie will mean one arm of Aer Lingus is effectively competing against another part of the company.

The Budget flights to Malaga and Alicante will offer flexible durations, a significant development as it means people will not be restricted in their return dates. They will also offer in-flight catering. It will be ticketless travel and on-line bookings can be made from August 25.