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Business

Bye-Bye Lufthansa?

The Sept. 11 attacks were good for one segment of the airline industry in Europe: low-fare carriers. Spurred by the success, wily young competitors like Ryanair and Germania have been taking the big boys head on.

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Michael O'Leary has never had this much fun

A plucky Irishman is wreaking havoc on Germany’s aviation industry.

Michael O’ Leary, head of Ireland’s low-fair carrier Ryanair has decided to take Germany’s flagship Lufthansa on in its own backyard. He has brought a mothballed US Air Force base in Southern Germany back to life, ordered no less than 100 new planes from Boeing and painted "Bye-bye Lufthansa" on the sides of them.

"I’ve never had so much fun in any market as we’ve had in the German market with Lufthansa," he told Deutsche Welle television a week ago.

Maybe that’s because his fledgling airline is leading a charge of low-fare airlines seeking to upend established stalwarts like Deutsche British Airways and Lufthansa – and seeing impressive results.

‘No-frills," big numbers

Rather than destroying them, the Sept.11 attacks only boosted the success of the low-cost, "no-frills" airlines, according to the British Airways Factbook. Passenger counts soared and airlines like Ryanair began making forays into continental Europe.

"Some opinion states that "no-frills" carriers could have over half the intra-European market within five years," according to the factbook.

Especially if the numbers keep climbing the way they have been recently. Ryanair had increased its passenger count 30 percent from the year before to 2.7 million in the three months following the Sept. 11 attacks, according to figures released in February.

Low-fare carriers Go and Easy Jet have also seen double-digit percentage increases in their passenger counts and have placed new plane orders with Boeing. And German carrier Germania announced last December that it would offer a Berlin-Frankfurt route at the one-way ticket price of 55 euro ($48), a price more than 50 euro lower than Lufthansa.

The biggies fight back

The German flagship carrier has not taken it lying down, dropping round-trip prices down to 105 euro. The move brought accusations of dumping by Germania and drew interest from Germany’s Federal Anti-trust Office.

The authority ruled last week that Lufthansa could not drop its prices that low, leaving Lufthansa fuming. The airliner responded by filing for an injunction in a higher court.

British Airways’ German daughter has also been active, announcing this week that it would completely re-structure it’s operations in face of the new low-fare competition. In the works are plans to sell more aggressively over the Internet, devote more aircraft on routes inside Germany, and increase the frequency with which they fly within the country. The airline also plans to withdraw from their London-Berlin routes, leaving British Airways control over those routes.

Consumers benefit

Yes, the market looks good for frequent fliers in Europe.

Especially since the low-fare battle has not been waged in Germany alone. This week French carrier Air Lib announced it was taking on Air France on domestic flights.

Their offering price for a one way ticket? 29 euro.

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