Amex Director predicts that budget airlines will not stay budget

Matthew Davis Amex director said: “High operating costs, such as fuel prices and airport fees, are starting to affect the financial performance of the low-cost airlines.
The fare gap between traditional and low-cost airlines is narrowing and this is likely to continue into 2001.”
Easyjet has long been complaining about increased Airport costs. When EasyJet first flew from Luton Airport, it signed a five-year deal where the airport earned just £1.60 per passenger plus a 62p handling charge. Luton after an extensive rebuild and improvement of transport facilities now wants £7.89 per passenger. After negotiation it is belived that EasyJet will pay a fee to be £5 to £6 per passenger.
However both RyanAir and Easyjet have claimed huge savings from the movement of sales from Agencies to the web. For the first half of 2000 Ryan Air made of saving £20 million (US$28 million) in costs by moving sales and distribution to the Internet.