Average fares at Ryanair have increased by 7 per cent in a year, according to figures out today.

Ryanair’s Michael O’Leary put the sizeable increase down to “the impact of competitors’ excessive and unjustified fuel surcharges as well as revenues from checked baggage charges which were introduced in March ’06”.

He added: “We anticipate that the baggage charges will encourage passengers to travel with fewer checked bags thereby reducing the revenues from this source, and more importantly, reducing baggage handling costs.”

When per-bag charges were introduced for checking in luggage last year, the airline argued that the measures would be revenue neutral for the financial year.

The airline is increasingly profitable too. In the nine months to the end of December 2006, the carrier made €376.9 million (£264 million), up by 35 per cent on the previous year.

The money that the airline makes from extras has contributed strongly to the buoyant figures. Ancillary revenues grew by 61 per cent from the third quarter of 2005 to the same period in 2006. The carrier now makes almost £70 million a quarter from these charges, which include ticket change fees and onboard sales.