Germany's railway operator has announced cuts in prices to try to win customers back from low-cost airlines.

For millions of people, rail travel will never have been so cheap

Hartmut Mehdorn Deutsche Bahn

Deutsche Bahn is introducing a new tariff structure and an airline-style price system that reward passengers for booking in advance.

It said the changes would boost its revenues by about 3%, or about 100m euros ($98.7m) a year from 2004.

"We may not win over the hard-core motorist or the passionate flyer, but our attractive prices will persuade certain people to switch to the rails," said Deutsche Bahn's head of marketing Hans-Gustav Koch.

Fierce competition

The rail operator has been facing growing competition from low-cost airlines.

On the Berlin to Frankfurt route, for example, budget airline Germania sells one-way tickets for 99 euros.

Berlin Jet was offering tickets for 33 euros, but its planned launch on Tuesday had to be cancelled because there was no plane.

The national carrier Lufthansa runs 12 flights a day on the route.

Deutsche Bahn has now cut its Berlin to Frankfurt price by 19% and is offering a 40% saving to those who book a week in advance.

"For millions of people, rail travel will never have been so cheap," chairman Hartmut Mehdorn said.

Fitness programme

The company is hoping to increase the proportion of seats it fills from the current 40-45% to 60% by 2010.

Deutsche Bahn is state-owned and is due to be privatised, although the government has not set a target date.

"If we were privatised it would have to be fully, not in parts.

"As to the timing, it would be up to our owners," said Mr Mehdorn.

"What we can say is we have to be fit and this is an important part of our fitness programme," he added.

Deutsche Bahn's image has been damaged by several train crashes including the 1998 Eschede crash which killed 101 people.