Easyjet To Challenge Ryanair On Home Turf

LONDON (AFP) - Britain's easyJet is to challenge arch-rival Ryanair on its home turf with the start of flights to Ireland, marking an escalation in the commercial rivalry between the two low-cost carriers.
EasyJet said Thursday it would begin twice-daily services from London Gatwick to Cork in southern Ireland in January.
It will also launch daily flights to Knock and Shannon in western Ireland, with Shannon flights increasing to twice-daily in mid-2005.
The move is expected to spark a new price war on the London to Ireland routes, with Ryanair and state-owned Aer Lingus already operating a total of eight daily services from both Cork and Shannon to London.
"EasyJet will find intense competition, not just from Ryanair but from Aer Lingus, which sees Cork and Shannon as core bases," said Joe Gill, an airline analyst at Goodbody Stockbrokers in Dublin.
"When easyJet comes on we're going to have 10 dailies between both Shannon and Cork and the London region, which is a major step up in capacity in the service," he added.
The move comes as the low-cost airlines brace for a tough winter amid a growing price war between easyJet and Ryanair, as well traditional carriers and new entrants in the no-frills sector.
Ryanair chief executive Michael O'Leary warned earlier this week there would be "a bloodbath in Europe this winter" in the budget air sector.
The foray into Ireland by easyJet comes just two months after Ryanair announced a major expansion at Luton airport, easyJet's base just north of London.
"I think it's easyJet sending a message to Ryanair that if you want to play tough they're prepared to engage," said Gill.
But analysts noted that the Ireland to London routes were relatively insignificant compared with the overall businesses of the two carriers.
A greater concern is the impact of high oil prices on their fuel bills.
Both easyJet and Ryanair need to keep fares low to attract more passengers and fill new planes they are currently taking delivery of.
"The toughest thing about this winter is not so much yields (average fares) at the moment as cost. I'm more concerned about what's going on with the price of oil," said Gill.
EasyJet made the announcement when it reported improved trading conditions during the European summer and raised its full-year profit forecasts.
For the year to end-September 2004 the no frills carrier now expects a pre-tax profit above 60 million pounds (88 million euros, 108 million dollars), compared with 52 million the previous year.
The airline's previous guidance, a profit warning in June, forecast a pretax profit that "at least" exceeds 52 million pounds.
Since the beginning of August, easyJet has announced 16 new routes and nine new destinations, dropped Zurich and reduced capacity to Copenhagen and Amsterdam as part of an ongoing programme to drive costs lower.
But investors appeared unimpressed. EasyJet shares slumped 6.47 percent to 130 pence here.
The airline has seen its share plunge by over 60 percent since mid-January.
Ryanair has seen its shares tumble by about 45 percent over the same period, and has warned investors it expects its revenue per passenger to plunge by 20 percent in the three months to September, its second financial quarter.
Ryanair shares were down 0.71 percent at 4.20 euros in Dublin.