Ryanair could slash the cost of your summer holiday

Airline predicts price war and says it will win

PRAGUE, CZECH REPUBLIC - MAY 07: Ryanair Boeing 737-8AS lands at PRG Airport on May 07,2015. Ryanair is an Irish low-cost airlin

Holidaymakers could benefit from an airline price war this summer, following a pledge from Ryanair to cut its prices by seven percent.

Chief executive Michael O'Leary yesterday promised to follow EasyJet's lead and said he expected to win any price war. Summer prices are set to fall by 7%, with as much as 12% coming off winter fares.

"If there is a fare war in Europe, then Ryanair will be the winner. We will take whatever price we get as long as we fill our aeroplanes," he told shareholders.

"I think business will be strong in terms of traffic but weak in terms of pricing. We see growth opportunities for Ryanair's lower fares and AGB programme. We are, on average, 2% better booked for the peak summer months than this time last year but at lower fares."

The company's able to do this in part because of falling fuel costs, which it expects will drop by £154 million in the current financial year.

Smaller seats are also enabling it to pack in more passengers to keep prices down.

Demand for flights has fallen over the last year, with many travellers put off by the attacks in Paris and Brussels or concerned about terrorist activity elsewhere. Indeed, said O'Leary, last week's EgyptAir crash will have a similar effect, whatever the cause turns out to be.

Now, with both EasyJet and Ryanair cutting prices, it's likely that others will follow.

According to the International Air Transport Association (IATA), fares to and from European destinations have already fallen 11.4% in the first three months of 2016 compared with the same period last year.

"Ryanair is a major player in many of the markets and airports it flies to," Robin Byde, a transport analyst at Cantor Fitzgerald, tells the BBC. "If it cuts prices, other airlines will have to respond to that."

Ryanair has recently been offering low fares to expats under a 'Brexit special', allowing overseas voters to 'fly home to vote "remain"' for just €19.99 on 22 or 23 June.

However, these fares are now under investigation by the Metropolitan Police, following a complaint from the Vote Leave campaign that they break the Bribery Act by offering a discount in exchange for votes.

Fare war looms as Ryanair cuts prices

Holiday of a lifetime

Holiday of a lifetime