Ryanair could spark an airfare price war, with radical steps to boost passenger numbers. Michael O'Leary is cutting prices an incredible 8% this winter. He also says he wants to work with other airlines, so they publish each other's prices on their websites - making it easier for people to go direct and find the cheapest deal.
O'Leary announced that over the previous three months, the average Ryanair fare fell to £32 - as lower fuel prices were carried forward into lower airfares. However, he said the firm wouldn't stop here, and that airfares would be cut between 4% and 8% thanks to 'very aggressive pricing'. These price cuts will apply to flights between November and March.
The cuts are partly because he is flying more planes on more routes - increasing capacity by 15%. It's a bid to grab more passengers from his competitors, and because Ryanair prices to fill the planes, it means the average airfare is likely to fall in order to persuade more people to fly.
Will this mean a price war?
There a chance this could prompt a price war - particularly in areas where Ryanair is expanding most aggressively. A key battleground will be Dublin where Are Lingus has been taken over by AIG (Ryanair owned 30%), and both firms are committed to winning passengers from one another. The number of Ryanair aircraft based at Dublin will rise from 21 to 25, and is expected to rise still further, in an effort to keep prices down and passenger numbers up.
However, elsewhere there's less evidence of a likely price war. It's worth bearing in kind that this isn't the first time that O'Leary has talked-up the possibility of a price war. It's in his interests, as he wants to see his competitors taking a hit in order to reduce air fares, but it doesn't mean other airlines will take the bait.
We will have to see whether this ends up being a full-on price war, or just the chance to snap up a few bargains from Ryanair.
O'Leary has also contacted four other airlines to try to persuade them to share their prices on each other's websites. Again this is something that would make a price war more likely, but he says he has not heard back from them - so at this stage it's uncertain whether this move will generate anything more than more publicity for Ryanair.
The airline also announced that it posted a 25% rise in quarterly profits, which owes a great deal to higher passenger numbers: the number of people flying with the firm over the previous three months rose from 24.3 million to 28 million.
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