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European low-Cost Air Sector To Face Further Competition

Europe's thriving low cost air carrier sector could be set for a new entrant...

Europe's thriving low cost air carrier sector could be set for a new entrant, after German travel giant Preussag revealed plans to expand into budget travel.

The firm is considering launching a no frills airline under the name TUI, the firm's overarching brand, board president Michael Frenzel told German news magazine Focus.

?We are looking very seriously at the question,? Mr Frenzel said ?The low budget airline sector has great potential for the future?.

Charles Gurassa, a UK board member at the group, which owns tour giant Thomson in the UK, said ?We have the means to found a new airline company.?

The move would add a new name to a sector that is poised to lose Go, the British Airways launched carrier which Easyjet has bought from venture capitalist group 3i. Go planes are to be repainted in Easyjet livery.

And it would give Preussag, Europe's largest travel and tourism group, which owns eighty planes, the opportunity to tap into one of the region's most buoyant travel sectors.

While longhaul carriers found their taking severely dented by a passenger slump following the 11 September attacks on the US, budget airlines found their takings supported by low fares and a resilient shorthaul market.

Existing budget carriers, based in the UK and Ireland, have long recognised the potential of tapping markets in central Europe.

Tour operators have also seen takings slide, with UK firm MyTravel, formerly Airtours, stunning markets last week by warning that more than 1 million of its summer package holidays remained unsold, following a collapse in bookings for family breaks in the Mediterranean.

Preussag has said that Thomson has not suffered a similar decline.

?Recent announcements from competitors, especially in Great Britain, do not reflect the situation in the general market nor in our development,? Mr Frenzel said on Friday.