News Budget airlines face competition from possible merger

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Budget airlines face competition from possible merger

Europe's biggest travel group revealed plans to create a new low-cost carrier.

Budget airlines such as Ryanair could be facing some new competition after Europe’s biggest travel group revealed plans to create a new low-cost carrier. The deal would see TUI AG merge with Lufthansa’s partners Germanwings and Eurowings.

Although the plans have not yet been confirmed, Bloomberg reports that a memorandum of understanding has been signed between the two companies regarding the new budget airline. If it was to go ahead, it would see TUI AG and Lufthansa own 40 per cent of the new airline each, with Germanwings holding the remaining 20 per cent, according to reports in the German press.

The low-cost airline would aim to fly around 30 million passengers a year and close the gap on the current leading German budget carrier, Air Berlin.

It comes as TUI AG reports that despite the global credit crunch seeing many consumers tighten their belts, summer holiday bookings are still on the up. Peter Long, chief executive officer of TUI Travel, said: "People won’t sacrifice their summer holiday."

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