BA steps up fares challenge to no-frills airlines

British Airways is set to unveil the most ambitious phase yet of its fight-back against the challenge posed by rival no-frills carriers such as Ryanair and EasyJet.

British Airways is set to unveil the most ambitious phase yet of its fight-back against the challenge posed by rival no-frills carriers such as Ryanair and EasyJet.

BA is preparing to announce details of a new low-cost fare structure covering the bulk of its loss making European short-haul network.

The cut-price fares will be introduced in three stages with the first tranche due to be announced before the end of this month. By the end of the summer Rod Eddington, BA's chief executive, aims to have low fares in place across most of BA's European network which spans 60 destinations and more than 150 routes.

Mr Eddington said yesterday that the aim of the low-cost drive was not necessarily to win more passengers but to bring BA's European operation back into profit. In the last three years it has lost £726m.

He also brushed aside the Ryanair chief executive, Michael O'Leary's claim that the Irish carrier would overtake BA to become Europe's largest scheduled airline within five years. Mr Eddington said the success of BA's strategy would not be measured in passengers but in profits.

So far BA has introduced low-priced fares on just 18 domestic and six European routes to the Netherlands and Scandinavia. Flights from Heathrow and Gatwick to Manchester, Edinburgh, Glasgow and Newcastle now start at £69 return and exclude booking restrictions such as the requirement to stay a Saturday night. BA is offering return flights to Amsterdam, Copenhagen, Stockholm and Oslo for £129. But Mr Eddington is conscious that BA will have to role out its new low-cost strategy on a much wider basis if it is to have a real impact on the airlines no-frills rivals.

Mr Eddington also forecast that the number of low-cost operators in Europe would come down from six at present to as few as two as economies of scale and intense competition brought about consolidation. EasyJet is in the process of acquiring Go but that still leaves Ryanair, bmibaby, Buzz and Virgin Express.