No-frills airlines. They'll never take off, says Lufthansa boss

The chairman-designate of Lufthansa yesterday dismissed the meteoric rise of no-frills airlines such as Ryanair, easyJet and Go, saying the German flag-carrier had no need to follow the example of British Airways and compete head-on with them on price.

Wolfgang Mayrhuber also made light of fears that low-cost carriers would poach large numbers of business passengers away from full-service airlines, arguing it could take decades for them to become a serious threat.

Lufthansa has been engaged in a long-running legal battle with Ryanair over the Irish carrier's entry into the German market and its right to advertise services to Frankfurt when it flies to a secondary airport, Frankfurt Hahn, 60 miles outside of the city.

Mr Mayrhuber described Ryanair as an operator of "ping-pong" flights between secondary airports and said low-cost airlines accounted for only 4 per cent of the European market.

"They don't take away market share, they add to the size of the market," he said. He also highlighted the example of South West Airlines in the US, regarded as the world's most successful low-cost operator, saying it had taken 31 years for them to reach an 18 per cent market share.

Referring to the chief executive of Ryanair, Mr Mayrhuber said: "If [Michael] O'Leary wants to get into the business traveller market then he will need things like a frequent flyer programme."

Despite Mr Mayrhuber's scepticism, low-cost operators say business travellers make up an increasingly large proportion of their passengers. EasyJet, for instance, estimates that about half its 8.25 million passengers over the last 12 months were on business.

"Given that Lufthansa is sitting on the biggest domestic market in Europe, Mr Mayrhuber might come to regret his remarks," an easyJet spokesman said. "This is exactly the kind of thing BA said four years ago and now look at BA's market capitalisation compared with Ryanair."

Mr Mayrhuber, who is chief executive of Lufthansa and takes over as chairman from Jurgen Weber at the end of next year, said he did not rule out launching a low-cost service. But he said the group's strategy remained one of building on its global network and developing relations with the other 14 members of the Star Alliance, including BMI British Midland, in which Lufthansa has a 20 per cent stake and which has started its own low-cost airline.