Airline offers tax-only flights in fares war

A LEADING no-frills airline is warning of a fare war of "bloodbath" proportions over the next two months. A week after a low-fare airline went bust, Tim Jeans of Ryanair said prospective customers were saving their money for millennium celebrations. "We are having to give seats away to fill our planes," he said yesterday.

A LEADING no-frills airline is warning of a fare war of "bloodbath" proportions over the next two months. A week after a low-fare airline went bust, Tim Jeans of Ryanair said prospective customers were saving their money for millennium celebrations. "We are having to give seats away to fill our planes," he said yesterday.

The UK's cut-price airlines are taking delivery of new Boeing 737 aircraft at the rate of one a month. Awash with capacity, the carriers are being forced to flood the market with cheap fares. Ryanair is offering one-way flights to Europe to anyone prepared to pay just the tax and passenger service charge of £15, while some rivals have cut UK domestic fares to their lowest levels for 30 years.

"The fare war is being fought out by us offering free flights, and easyJet and Go selling Internet specials," said Mr Jeans. Ryanair hopes to persuade most passengers to buy slightly more expensive return flights to allow Ryanair to make a small profit on most bookings rather than sell at a loss. Even so, industry experts do not believe a profit can be made on fares as low as £40 return to Frankfurt and Turin.

Fierce competition forced Debonair to cease trading a week ago, but its demise does not appear to have affected fares. Debonair was much smaller than its rivals and flew to obscure airports such as Cergy-Pontoise near Paris, Monchengladbach in Germany and Perugia in Italy.

Its withdrawal leaves easyJet as the only Luton-based low-cost airline. Yesterday easyJet claimed to be the first airline in the world to take a majority of its bookings on the Internet. "In the past week we've sold 60 per cent of seats through the Internet", a spokesman said. The airline offers what it claims is the lowest air fare in Europe - £26 return on its new route between Luton and Liverpool.

In common with Ryanair and British Airways' no-frills offshoot Go, easyJet offers a discount to Internet users, reflecting the savings made in comparison with telephone sales. "If we can make 20 or 30 pence per head at this time of year we're happy," said an easyJet spokesman. The airline's usual profit margin is £1.70 per passenger.

Go, based at Stansted, is selling seats for as little as £35 return to Edinburgh and £50 return to Munich and Milan. About £20 of this goes straight to government and airport operators. Go's rivals claim BA is subsidising its offshoot to try to drive out the competition.

KLM UK, which has suffered most from no-frills competition, plans to launch its own low-cost operation. The new carrier, Buzz, will increase competition at Stansted. The Essex airport is also a hub for Virgin Express, which next month begins serving Berlin.

Long-haul flights are also being sold at some of their lowest fares yet. Yesterday KLM began selling flights from Gatwick via Amsterdam to California for £202 return. Airtours was offering charter tickets from Gatwick and Manchester to Sydney for £429 return.