Ryanair lowers prices to raise ticket sales

Ryanair drastically reduced the price of every one in five of its seats yesterday after admitting that it was not able to fill its planes – a necessary step as it has determined that it would be unable to cover the high price of fuel if it raised it fares.

The low-cost carrier’s move came in contrast to industry-wide cuts in capacity that were introduced to drive up airfares. Ryanair fired the opening shots in what is likely to be an airfare price war by cutting its cheapest fares in half, effective next month. It is offering one million seats to its customers at £5 - including taxes and fees. The airline has confirmed that it will be losing at least £5 per ticket in Britain, as the £10 air passenger duty charge will not be covered by what passengers pay.

The chief executive of Ryanair, Michael O’Leary, has explained that the main reason for the fare cut is to stimulate demand that has decreased over the past months. The already-low-cost carrier’s cheapest fares will be reduced by 50 per cent, and the cheapest fare represents approximately 50 per cent of all seats sold on the airline. The chief executive added that Ryanair hits profit targets when its planes are 80 per cent full and that the main reason to “dump” fares now is to fill the planes in this current period of weak demand.

“We will dump the price to wherever it needs to be in order to get to 80%,” O’Leary confirmed. “If passengers are booking ahead of the 80% seat target, we will close off the cheap seats. If we are booking behind it, we will open up more cheap fares.”

www.ryanair.com