Airline price war sets fares tumbling

BRITISH Airways fired the first shots in an air fares war yesterday with the announcement that its low-cost, no-frills carrier - Go - will offer pounds 100 return tickets to European capitals.

The new airline will begin flying to Rome, Milan and Copenhagen from Stansted. The planned two flights a day, which start in May, will offer "quality food" for sale and Go promises to do away with tickets and boarding passes. "All you will need to travel is your passport," claims Barbara Cassani, the company's chief executive.

The 300 seats a day being offered by BA's Go operation are merely the first steps in the airline's attempt to stave off the flock of low-cost carriers that have sprung up over Europe.

Ms Cassani yesterday confirmed Go was also considering flights to Stockholm, Paris, Edinburgh, Nice and Amsterdam. "Germany has great potential too. Basically nothing is sacrosanct," she said. "We will be up to three services a day later this year." Combined with the strong pound, European fares are likely to drop to their lowest level.

The rapid expansion will alarm other smaller competitors worried that BA aims to put them out of business. EasyJet, which flies from Luton, said Go had chosen deliberately not to fly to any of its destinations because of a pending legal action. "We see this as a temporary situation. With our 12 aircraft to be delivered within the next 18 months, and their own growth plans, we will be crossing swords very soon," said EasyJet's chairman, Stelios Haji-Ioannou. He added that all three cities chosen by BA were on EasyJet's schedule for 1999.

To start with all 148 seats on Go's Boeing 737 will be priced at pounds 100 - a departure for the airline industry which usually only offers a tenth of a plane's capacity at its lowest price. Go will be operating three leased Boeing 737s initially.

Debonair, which flies from Luton, will be meeting Go's challenge head- on as both will fly to Rome. "But it is not just us - they will be poaching passengers from British Airways which flies six times a day to Rome," said Franco Mancassola, Debonair's chief executive.

Michael O'Leary, who runs Ryanair - which also flies from Stansted, reacted "coolly" to BA's move pointing out the pounds 100 fare was "an introductory offer only". Ryanair has announced six new routes from Stansted this summer, including three to Italy. Although Ryanair appears indifferent to BA's new airline, it will face tough competition. Its flight to Malmo will compete for virtually the same market as Go's trip to Copenhagen - when a bridge connecting the two cities opens.