Holidaymakers are being accused by Ryanair of giving their young children suitcases to wheel on to aircraft to avoid hand baggage limits.

Finance director Neil Sorahan said the airline was “looking at the impact” of passengers who exploit cabin luggage rules to avoid paying up to £60 to check cases into the hold.

“Only 16% of our passengers are now checking in bags, instead taking advantage of our policy of allowing two carry-on bags,” he told The Times.

“We are now seeing two-year-olds dragging along their own wheelie bag to maximise the baggage allowance. Perhaps we are becoming the victims of our own niceness but we are looking at the impact.”

Ryanair also said that holidaymakers were effectively paying fares that were 10% lower than a year ago to make up for the collapse in the value of the pound.

The budget airline said that it was having to slash summer fares and would have to cut ticket prices this autumn and winter by a similar level to keep people flying.

“The greatest competitive pressures we are seeing are in the UK, where we are having to stimulate demand because of weaker sterling, and in Spain and Portugal,” Sorahan said.

He said that fares to the Iberian peninsula were dropping because of unprecedented competition in the region.

Scheduled carriers and tour operators have diverted many of their aircraft there and away from resorts in the Middle East and North Africa because of terrorist fears.