Simon Calder: The Man Who Pays His Way

Two new transatlantic carriers are the business. But will they last?
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The Independent Travel

Two weeks later, another new airline is set to begin a business-class-only service on the same route. MAXjet is reducing the carrying capacity of its Boeing 767 by about one third, to 102.

The two airlines were originally planning to start flying on the same day, with the first flight from New York on 1 November, but Eos moved its maiden voyage to steal a march on its rival.

As an opening offer, Eos's return fare is £2,500. "We've raised the bar on what business travellers should expect and deserve", says David Spurlock, the airline's founder. That involves "an innovative seat design with an unprecedented 21 square feet of space and lay-flat beds".

Maxjet is asking only half as much, but you don't get a flat bed, more of a 1990s-business-class product. Gary Rogliano, the airline's chief executive, says he is not alarmed by Eos offering much the same concept on exactly the same route. "We're not competing. We're focusing on the business traveller who normally books close in, and is paying full-fare economy".

In effect, Eos Airlines is flying a plane that equates to a BA Club World cabin, while MAXjet represents a superior version of Virgin's Premium Economy product extended to a whole aircraft. You can imagine how pleased the two leading airlines on the London-New York route feel about this.

Each of the newcomers appears to have the edge on the incumbents in pricing. BA's flexible Club World fare from Heathrow to New York is more than £4,000. But those who travel most frequently will routinely pay around 40 per cent less than this - about the same as Eos is asking. Virgin's Premium Economy fare is around £1,350 return, but many in those seats will be paying much less to upgrade from the class that Branson once wanted to call "Riff Raff".

Unlike previous ventures, both Eos and MAXjet look like getting off the ground. It is after this that things start getting expensive. Even though each airline is beginning with just one flight a day in either direction, the investment required to start an intercontinental airline is huge - and both can expect to lose money in the short term. But will either work in the long run?

A business-class only airline is a neat idea, and far from new. In the early days of Sir Richard Branson's airline career, he envisaged Virgin Atlantic as a posh-seats-only product. A "paper" airline called Blue Fox was set to take off on the route from Stansted to New York JFK , but the business plan fell apart after September 11.

For several years, Lufthansa has successfully operated several business-class-only jets across the Atlantic. The advantage that the German national airline has is feeder traffic both in Germany and the US, thanks to the Star Alliance and its own network.

Alliances and baggage transfer are expensive, which is why European no-frills airlines like easyJet and Ryanair shun them. Stansted is, of course, the UK's leading no-frills airport. The dedicated traveller will be able to fly on Ryanair or easyJet from Newquay or Newcastle to Stansted, connect there to MAXjet or Eos, and on arrival at New York JFK switch to a JetBlue flight to Florida. But with the need to collect bags and check in at each connecting airport, this hardly looks like seamless travel.

No scheduled airline flies transatlantic from Stansted. Continental and El Al both tried flights from the Essex airport to New York, and gave up. There is clearly some demand from the hi-tech firms in Cambridgeshire's "silicon fen" for transatlantic flights on their doorstep, but Eos and MAXjet will need to attract passengers away from the existing airlines flying from Heathrow to New York.

Both airlines started on the London-New York link because it is by far the busiest intercontinental route. But it also has a vast amount of competition: two world-class airlines in the shape of BA and Virgin Atlantic, US competitors who are catching up fast, and Air India and Kuwait Airways, which both offer very cheap business class fares.

You may conclude that exactly what the market doesn't need is any more competition. Unsurprisingly, Rogliano disagrees. "We are clearly the low-fare model. We are bringing affordable business-class fares to a broader segment of the market."

The existing airlines will hardly welcome a pair of new arrivals seeking to pinch high-revenue passengers, but they believe they have some solid advantages. Indeed, the prevailing business-class fares across the Atlantic are supported by high-flying executives for one reason: frequency. If your business meeting over-runs in Manhattan, or traffic on the freeway to JFK is too heavy, then missing the 6.30pm BA flight to Heathrow is hardly a concern as there are four more in the next four hours. Miss the only departure of the day on either of the new airlines, and you are grounded for 24 hours. And should an aircraft "go technical", recovery is far easier if you have an entire squadron.

Then there is the frequent-flyer scheme - or, in the case of Eos and MAXjet, there isn't. But Rogliano is relaxed about loyalty programmes: "We can't give you an upgrade, which is where most people use their points."

One final objection, this time from the planet: with around one in four seats over the Atlantic being empty, do we really need another pair of airlines configured to use much more fuel per passenger than normal, high density, aircraft? The market, not the planet, will decide. I foresee that some travellers will decide to go outbound on MAXjet for the daytime flight, on which a flat bed is not much of an attraction, and snooze back on Eos - total investment, at present prices, under £2,000. I'd rather fly there and back eight times, which I could do in economy. But the new boys do have one price advantage: every passenger on a one-class plane pays Air Passenger Duty at the lower rate, which represents a £20 saving - just like Concorde, which ceased to fly two years ago this month.

Eos: 0800 019 6468, www.eosairlines.co.uk. MAXjet: 0800 023 4300, www.maxjet.com

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