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European Low Cost Air Sector Set For Further Competition

The package holiday operator MyTravel, formerly known as Airtours, is to...

The package holiday operator MyTravel, formerly known as Airtours, is to start up its own low cost airline in an attempt to win back customers from carriers such as Easyjet and Go.

MyTravel plans to repackage its airline operation, which is under new management, and present it as an an alternative to the established no-frills operators, offering more departure airports and more destinations.

The company operates from twenty one British airports and flies to seventy overseas destinations with a UK based fleet of thirty aircraft. Easyjet has a 31 strong fleet serving seventeen destinations while Ryanair offers thirty six foreign destinations with a fleet of 44 aircraft. The Irish carrier operates at fifteen British airports but most of those offer only flights to Dublin.

MyTravel chief executive Tim Byrne said that the initiative, planned for the autumn, will mean the company's traditional charter airline becoming far more flexible. It offers only one week or two week return flights at present but under the new plan it will provide mix and match one way flights, in the same way as the low cost airlines.

Mr Byrne has said that traditional tour operators had allowed the low cost airlines to steal their value for money image. ?We have given away our value proposition,? he said. ?And we are determined to get it back.?

He insisted that the company had not lost customers to the new airlines but said there was a new market of DIY holidaymakers and weekend break trippers which MyTravel had not cashed in on. He plans a ?more flexible approach? to attract this new business.

MyTravel flights will be sold via the web and by phone. They are also likely to be offered through the MyTravel chain of travel agencies. The shops were previously known as Going Places and Travelworld but are gradually being rebadged under the new corporate banner.

Mr Byrne is not planning a price war with the existing low cost airlines but admitted that it was inevitable when departure points and destinations overlap with his rivals.
He believes that as a tour operator MyTravel is at a cost disadvantage to the existing no frills airlines. The company has to put up a GBP 300m tour operators' bond, costing the group some one million pounds per annum, which guarantees that its customers would be returned to the UK should MyTravel go bankrupt. There is no such obligation on carriers such as Ryanair, Go and Easyjet.

One of the obstacles that MyTravel is likely to face as a low cost airline is the reputation of charter airlines on delays.

Mr Byrne said, however, that the company's record on delays had improved dramatically since last year, when a new airline chief was brought in from the logistics company Christian Salveson.

?We now have ninety four percent of our flights departing within thirty minutes of their scheduled time,? he said. Much of the improvement, he believes, is due to a get tough approach to laggardly passengers, who check in and then turn up late at the departure gate. ?We are just leaving them behind,? he said. A new system to identify the bags of latecomers is letting the airline get their luggage off quickly.

Travel, holidays and flights have been one of the success stories of e-commerce. Low cost airlines generate more than eighty percent of their sales via the web. The MyTravel website, in which sixty three million pounds will have been invested by the end of this year, generates only two percent of group sales so far. It is being updated to incorporate the new airline offer. Mr Byrne hopes web sales will bring in twenty percent of business within five years.