Low air fares boom for Internet users

O'Leary: "Internet is enabling us to eliminate large chunks of [travel] costs"

LONDON (CNN) -- Internet users will soon be able to take advantage of an airline price war -- with flights as low as £9.

A boom in Internet bookings is enabling Europe's biggest low-cost airline to offer a series of fares for under £30, Ryanair's Chief Executive Michael O'Leary told CNN.com.

He has forecast that the number of bookings made on the Web will double this year, helping to cut operating costs for his airline.

Ryanair announced a big rise in profits on Wednesday as it launched a series of fares under £20 on a number of European flights.

It is offering the £9 fare, before taxes and airport charges are added, on five routes -- between London and Stockholm, Malmo, and Kristianstad in Sweden, Oslo in Norway and Aarhus in Denmark.

Fares of £19 will also be available on three routes -- between Frankfurt and London or Glasgow in the UK, and Frankfurt and Shannon in the Republic of Ireland.

The Ryanair chief said he expects the company to continue to make a substantial profit, despite introducing the new low fares.

He said: "Analysts are predicting 25 percent profit growth for us this year, and we remain fairly comfortable with that kind of a number.

"The Internet is enabling us to eliminate large chunks of costs like travel agency commissions and CRS (computer reservations systems) distribution fees. We are taking these savings and passing them on to the consumer," he added.

He said Internet sales now represent some 40 percent of ticket sales, up from 25 percent at the end of March, and he is hoping to achieve 50 percent Internet sales by the end of the year.

O'Leary sounded a warning note for rival low cost airlines that have emerged in the last few years, naming Go, Buzz, easyJet and Virgin Express.

He said: "We are the only low fares airline here in Europe that has been profitable for 10 years now.

"All of the others are losing money or haven't demonstrated any ability to make money on a continuous basis, so I think the jury is still out on their long-term survival."

Ryanair, the largest of Europe's budget airline operators, reported a jump in pre-tax profits of 26 percent to 22.7 million euros ($20.64m) in the three months to the end of June.

Total revenues in the quarter rose by 37 percent to 115 million euros, reflecting a 32 percent increase in passenger volumes to 1.7m.

The airline aims to carry seven million passengers in the current financial year It has launched 10 new routes and taken delivery of five more 737-800 series aircraft.

Daily services have been launched from London Stansted to Perpignan and Nimes in France, Hamburg in Germany, Malmo in Sweden, and Alghero, Lamezia, and Brescia in Italy.

It has also introduced routes from Glasgow to Frankfurt, and from Shannon to London and Frankfurt.

Ryanair shares, which have climbed some 70 percent this year and now trade on a forward price earnings multiple of around 38, fell 20 cents to 9.30 euros in Dublin.

Analysts said the shares were clearly on a premium rating in the sector but that this had been justified by Ryanair's strong performance in recent years.

"They generate twice the operating margins of the flag carriers and are the leading player in the fastest growing sector of the market," ABN Amro analyst Pat O'Sullivan Greene said. He has the stock on a "hold" rating given the recent surge in its share price.

Ryanair

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