RPT-Ryanair seizes Lufthansa's crown as Europe's biggest airline by passengers

* Lufthansa (Xetra: LHAB.DE - news) 's 109.7 mln passengers in 2016 below Ryanair's 117 mln

* Most budget rivals saw strong passenger growth in '16

* Lufthansa expanding Eurowings budget brand

* Ryanair has set sights on Germany

* Graphic on European airline traffic http://tmsnrt.rs/2ffWrq0 (Repeats with link to Breakingviews)

By Victoria Bryan

FRANKFURT, Jan 10 (Reuters) - Ireland (Other OTC: IRLD - news) 's Ryanair has overtaken Lufthansa as Europe's biggest airline by passenger numbers after the German carrier on Tuesday reported a meagre 1.8 percent rise in the number of people it flew in 2016.

Lufthansa's 109.7 million passengers last year fell short of the 117 million passengers reported by low-cost carrier Ryanair last week, a 15 percent increase on the previous year, as Ryanair pulled in passengers with low prices.

The year saw strong performances from other budget carriers, with Norwegian Air Shuttle (LSE: 0FGH.L - news) reporting passenger numbers up 14 percent to 29 million and Wizz Air (Frankfurt: WI2.F - news) up 19 percent to 22.7 million.

EasyJet (Frankfurt: A1JTC1 - news) , which suffered more than low-cost rivals from strikes in France and tourists avoiding destinations hit by attacks, grew passenger numbers 6.6 percent to 74.5 million.

Lufthansa is expanding its Eurowings budget brand to try and regain market share lost in Europe and it is set to grow fast this year with deals to lease planes and crew from Air Berlin (LSE: 0GPE.L - news) , plus take over Brussels Airlines.

However, Ryanair has set its sights on Germany as one of the countries in which it wants to expand and will in the summer start flying from Lufthansa's home base of Frankfurt.

Lufthansa remains the largest airline group in Europe in terms of revenue because it does more long-haul flying and has its own catering and aircraft maintenance units.

Air France-KLM (LSE: 0LN7.L - news) reported a 4 percent rise in group passengers to 93.4 million, helped by low-cost unit Transavia, which carried 23 percent more passengers.

IAG carried 100.6 million people in 2016, an increase of 14 percent and overtaking its Franco-Dutch rival, after it acquired Aer Lingus in August 2015.

(Additional reporting by Ludwig Burger; Editing by Christoph Steitz and Adrian Croft)