May 06, 2007

New airlines are lowering business-class London fares

Business-class fares on transatlantic routes are coming down as lower-fare competition becomes more aggressive.

Two low-fare start-ups -- MaxJet and Silverjet -- say they are creating a bigger pool of business-class passengers who'll pay a little more for a lot more comfort. The third low-fare, all-business-class start-up, Eos, says it has settled comfortably into a new discount-fare niche in the top-quality business-class market across the Atlantic.

On the New York-London route, it's still possible to pay a fortune for a walk-up business-class seat. On Monday walk-up fares at British Airways and Virgin Atlantic, considered to have top business-class service, were slightly more than $10,000.

"They're offering a superb product, but that is really an incredibly large amount of money," said Joshua Marks, vice president for planning at MaxJet, which says a good part of its market is business passengers who used to fly coach or premium coach.

The walk-up New York to London round-trip fare on American Airlines was $7,723. If booked then for a flight in three weeks, business-class fares on major U.S. airlines dropped to the $3,500 level. British Airways was at about $7,000.

Airlines make most of their transatlantic money in first and business classes. Coach is usually a drain on profits, which is why an all-business-class airline with enticing fares can compete.

"We're not subsidizing cheapskates like me, who used to travel only in economy," said Lawrence Hunt, CEO of British-based Silverjet. Its 767s have 100 all business-class seats and an average fare "slightly over $2,000," he said. Walk-up fare can go as high as $4,000 in peak-demand periods, but, Hunt said, "on some days you'll be paying $1,700 round trip."

Silverjet recently bought a second 767 for a second New York to London flight starting in July. The company expects to take delivery of a third aircraft in November for service from New York or another major U.S. city. Silverjet's load factor -- the percentage of seats full -- was 59 percent in March, which Hunt called "almost unprecedented for a carrier in its second month of operation."

MaxJet flies between New York and London and Las Vegas and London and is about to resume flights between Washington and London, which were suspended for the winter. Average fares are about $2,000, Marks said. MaxJet says its business-class service is comparable to that on U.S. airlines.

Eos competes with the luxury service on top-level business and first-class airlines like British Airways and Virgin Atlantic on the transatlantic route. Eos flies 757s, which typically carry more than 200 passengers, outfitted with just 48 lie-flat seats. Its new schedule between New York and London has three flights on most days, for a total of 32 flights a week. Booked weeks in advance, the fare is $3,200 and less.

By Joe Sharkey, New York Times
Via: Star Tribune

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