Five rupees for a Glasgow to Milan trip. At this price, you?d be forgiven for thinking about travelling on a donkey?s back. In fact, it?s the cost of a one-way ticket (excluding taxes) on a Ryanair Boeing 737. Last year, Ryanair and Easyjet, two of Britain?s low cost airlines, flew more passengers around Europe than British Airways. Welcome to the crazy world of no-frills flying.

This phenomenon is a direct consequence of the deregulation of the airline industry in Europe. Since 1997, liberalisation has caused the mushrooming of budget airlines, forcing fares to plummet and causing a revolution in air travel.

?We took the supermarket concept of pile it high, sell it cheap to the skies,? says Michael O?Leary, Ryanair?s flamboyant boss. His airline aims to carry more passengers than British Airways by 2006, and he can?t wait to snatch the ?world?s favourite airline tag? off Britain?s national carrier.

Low cost airlines have a common strategy: they cut costs as much as possible so as to offer the cheapest fares. They fly to short haul destinations (usually less than 1500 kms) using aircraft that are cheaper to operate and maintain and whose crew need a minimum of training.

These aeroplanes are usually modified to accommodate the highest number of seats so as to maximise aircraft utilisation. In the cut-price travel industry, the percentage of seats filled is crucial. Anything below 80% is considered as dramatic. For comparison, British Airways load factor is below 60%.

The budget airlines tend to fly from uncongested hubs. For example, Easyjet?s Lon-don flights depart mostly from London?s out-of-town airports such as Stanstead, Luton and Gatwick. Ryanair doesn?t fly to Paris Roissy or Orly but to Beauvais. This allows the airlines to benefit from cheaper tariffs and, in some cases, subsidies from local councils. The European Commission recently ordered Ryanair to pay back £ 3 million received as subsidies to fly to Belgium?s Charleroi airport.

Flying low-cost for the first time can be a bit of a culture shock. Booking is mostly done on the Internet or by phone. By avoiding the middlemen (including travel agents), the airlines cut out all commissions. They also provide e-tickets, saving on service fees and staff. These paperless tickets (sent by e-mail) are handy as they only contain a reference number that is stored on the airline?s computers.

<B>No free lunch</B>

Travelling to a far-flung airport should set you in the mood for your journey. At check-in, no seat number is allocated. This induces passengers to arrive at the departure lounge well in advance in order to find the more comfortable seats on board. Such a strategy means that low cost airlines reduce their turn-around to 25 minutes while others require at least an hour.

Once on board, you had better forget about any free food or drink. If you want a Coke, you?ll have to buy one. The idea is to reduce the cleaning and loading time as well as employing a limited crew.

?There is no such thing as a free lunch?so we do not offer one!? says Easyjet founder, Stelios Haji-Ioannou.

The world of no-frills airlines sounds mind-boggling but more people are using their jets for one simple reason: the cheap fares. It is human nature to look for the lowest prices when booking a trip. Paying for what you want to consume is the order of the day.

?What frills do you get on the traditional airlines? Old aircraft. Crap seating. They screw you for a high fare, serve you with reheated crap you would never eat in a roadside cafe, and you notionally get free drink you have actually paid for 40 times,? says Michael O?Leary.

The low cost airlines? strategy clicks with the public?s psyche. Last year, Easyjet flew 20.3 million passengers and Ryanair 22.4 million. A string of other cut-price airlines have jumped on the bandwagon, including Flybe and Bmibaby. This has stirred up competition in the market, forcing fares to fall further. For example, the recent launch of Bmibaby services at Gatwick airport caused an immediate price war with Easyjet.

?Real time competition is the shape of things to come in our industry,? said Tony Davis, managing director of Bmibaby.

The popular myth is that low-cost airlines are small operations. It is true that Easyjet started with two aircraft in 1995 but today, it has 72 aeroplanes. Ryanair is now one of the largest and most profitable airlines in the world.

While some national airlines are creeping into recovery, others remain engulfed in persistent problems. On the other hand, low cost airlines are booming around the world and are now considered as prime targets for aircraft manufacturers. The Boeing 737 has long been the choice aircraft of cut-price carriers, but Airbus took the world by storm when it became Easyjet?s preferred aircraft supplier last October. The airline will order 120 Airbus A319 by 2005 and a further 120 by 2012.

<B>Lean, efficient operations</B>

Ryanair has stuck with Boeing for the time being but is taking the no-frills concept to a different level. Its new fleet of Boeing 737 will have no reclining seats, window blinds, headrest covers and seat pockets. This should produce a much leaner bill from Boeing and create faster turnaround times for Ryanair.

The success of low cost airlines has forced conventional airlines to take notice. Some have gone back to the drawing boards. BA can now compete on fares on the most popular routes. Others such as Singapore Airlines and Qantas are setting up their own low-cost offshoots.

This hasn?t been such a good idea in the past. British Airways and KLM had to give up and sell their budget operations, Go and Buzz, to Easyjet and Ryanair respectively. Despite the booming of cut-price travel, the airline industry is still in crisis.

Costs are soaring ? fuel, insurance premiums, security costs and passenger taxes ? while ticket prices are falling to a point where few carriers can make money unless they run lean efficient operations. To illustrate this point, there are now 1,700 surplus airliners mothballed and parked in the Arizona desert in the US. These represent a cheap pool of jets for new operators.

?Low-cost airlines are everybody?s favorite success story in Europe these days. Will this British phenomenon conquer the world?? is the question on Mc Kinsey?s lips.

Airbus and Boeing are licking theirs.

Ryan Coopamah

Outlook correspondent in London