Low-cost threat to Europe’s airlines

Aer Lingus warns airlines about Ryanair discounting

The profitability of airlines in Europe will be hit in the coming months due to a plan by Ryanair to implement heavy discounting. This was the grim forecast of Aer Lingus, Ryanair’s Irish competitor, as it issued a lower profit forecast for 2013.

Ryanair plans to introduce “aggressive” pricing to maintain volumes amid signs of weak demand in the autumn, high fuel costs and weak consumer confidence.

Its plans may result in a price war across Europe and especially markets such as Italy and Poland will feel it with “significant intensity”, Aer Lingus’ chief executive Christoph Mueller said. He believes that Ryanair is selling tickets at up to €20 per passenger below cost on some routes.

“We are less affected than other carriers in Europe, but clearly the offering currently on the market on some of the Ryanair routes is below their own cost level,” he explained.

Reuters


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