UPDATE 1-Stansted to cut Ryanair fees in return for more flights
By Rhys Jones
LONDON, Sept 16 (Reuters) - Ryanair has persuaded London's Stansted airport to cut the fees levied on the low-cost airline in return for a promise of sharply increased flights to and from the airport in coming years.
Ryanair CEO Michael O'Leary had earlier this year threatened to cut flights through Stansted by 9 percent because of a planned 6 percent increase in fees at the airport, bought by Manchester Airport Group (MAG) from Heathrow Ltd in February.
But the Irish airline, Europe's largest low-cost carrier, said on Monday it would boost flights at Stansted by 50 percent over the next decade, having secured a commitment to undisclosed fee cuts linked to passenger targets.
Stansted will only cut its fees after the increases in passenger numbers had been delivered, O'Leary said.
"If we don't hit the targets we don't get the discounts," O'Leary told journalists, adding Ryanair would have to offer discounted tickets, hitting profit margins, and divert capacity from other airports to meet the targets.
The deal with Manchester Airport Group will involve an additional 1.3 million Ryanair passengers flying through Stansted next year, with the aim of increasing total numbers to 20 million from 13 million within a decade.
Last year Ryanair flew 12.5 million people to and from Stansted, two-thirds of the total traffic from the airport and down from a peak of 15 million in 2007. Under Stansted's previous owners, passenger numbers fell from a peak of 23.8 million in 2007 to 17.5 million last year.
The deal announced on Monday could increase its share of the airport's traffic to 80 percent over the next five years, Citi Bank said in a note.
The deal also accounts for a quarter of Ryanair's growth plans over the next five years, the airline said.
MAG is owned by 10 boroughs of the city of Manchester in northwest England and Australia's Industry Funds Management.
Earlier this year MAG signed an deal with Ryanair's budget rival easyJet aimed at doubling its traffic at the airport to 6 million over the next five years.
Single-runway Stansted, 30 miles northeast of central London, is mainly a low-cost leisure and holiday airport. It negotiates price increases with Britain's Civil Aviation Authority every five years, like London's Heathrow and Gatwick airports.
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