British Airways Cuts Europe Fares

April 20, 2006

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British Airways reduced fares to more than 65 European destinations by up to 50 percent on Thursday, stepping up its battle with budget carriers such as Ryanair.

The move comes two days after BA announced higher fuel surcharges on long-haul flights, while maintaining its surcharge on shorter routes such as those in Europe.

BA's last full-year results were profitable but showed that it was losing money on short European routes where Ryanair, Europe's largest budget carrier, and easyJet offer stiff competition.

Unlike BA, Ryanair does not impose fuel surcharges and is not hedged on its fuel buying, leaving it fully exposed to crude oil prices that hit fresh record highs on Thursday.

Analysts said the price reductions were a promotion which reflected a similar move last year ahead of the busy summer period.

"They typically do this at this time of the year as we enter the summer and holiday season on their European routes which are the most competitive and price-vulnerable to competition from easyJet and Ryanair," Exane BNP Paribas analyst Nick van den Brul said.

However, BA said it was not a gimmick. A BA spokeswoman said its new pricing would affect about 7 million seats a year.

"This is not a short-term gimmick, but a long-term commitment," British Airways Commercial Director Martin George said in a statement.

One-way fares will begin at GBP