German flag carrier Lufthansa is to axe return ticket prices by as much as 80%, hitting back at the low cost carriers which have encroached increasingly onto its home turf.

Lufthansa said it would charge as little as 88 euros, equivalent to $86.29 or �56.35, for round-trips within Germany from October.

With the new fares Lufthansa will achieve a better use of seats

Ralf Teckentrup, Lufthansa

A return trip on Lufthansa from Dusseldorf to Stuttgart can currently cost 443 euros.

Fares on flights to the UK and Turkey, two of the most popular destinations for German travellers, are also set to be reduced, although details of the discounts are yet to be made available.

But the discounts will apply only to a limited - and variable - number of seats on each flight, and full reductions will be available only to passengers booking over the internet.

Growing competition

The reductions will allow Lufthansa to ensure fewer seats go empty, airline executive Ralf Teckentrup said.

"With the new fares Lufthansa will achieve a better use of seats that had remained unused until now through the more even distribution of bookings," Mr Teckentrup said.

The move will also bolster Lufthansa's defence against low-cost carriers which have viewed Germany as a market ripe for exploitation.

Ryanair revealed in November it was to open a European hub at Frankfurt's Hahn airport.

In May, German travel giant Preussag, now called TUI, revealed plans to launch a budget airline.

And Easyjet is considering taking over of BA's German arm.

"Germany is the biggest domestic air market in Europe," Easyjet chief executive Ray Webster said in May.

"But it is very poorly served by low-cost airlines."

In the domestic market, low cost carrier Germania offers flights from Cologne-Bonn to Berlin for 77 euros.

Lufthansa's fare reductions follows a period of aggressive cost cuts aimed at supporting the firm's performance amid the travel slump stemming from the 11 September attacks.

While the company, which has axed routes and grounded aircraft to save cash, lost 27m euros during the first half of the year, this performance was rated as "outstanding" by chief executive Juergen Weber considering the market conditions for leading carriers.

Availability of the discounted fares will vary, with a greater proportion of discounted seats on off-peak flights, Lufthansa said.

Discounted seats on internal flights will be bookable from 10 September, and apply on flights taken from 28 October.

Details of reductions on UK and Turkey services have yet to be published.