Open Skies

Tyler Durden

Following the 'Open Skies' agreement, the companies that will be looking to utilise this market have revealed more of what they will be offering, specifically Ryanair.

It looks as though a £7 (about $15) flight to the US will, after tax and charges, cost around £80 ($180).

From The Times of London

The bargain flights common in Europe yesterday looked set to spread across the Atlantic, as the budget airlines announced plans to challenge the dominance of British Airways and Virgin Atlantic.

Ryanair’s Michael O’Leary promised £7 tickets to the US and Southwest Airlines, the American pioneer of no-frills travel, signalled its intention to start flying to the UK.

The prospect of cheap flights from London to New York will revive memories of Freddie Laker’s ultimately doomed challenge to the flag carriers 30 years ago. However, liberalisation of air travel through last month’s “open skies� agreement promises to revolutionise transatlantic travel.

Ryanair, Europe’s biggest low-cost carrier, yesterday unveiled plans to offer flights to Baltimore, Rhode Island and New York for as little as 10-12 euros each way, but the service is likely to face stiff competition. The Times understands that Southwest Airlines is considering going international, while Jet Blue, another US low-cost airline, is also thought to be keen to join the fray.

If the plans are carried out, prices for passengers would be slashed and a much wider choice of service would be available, from the top end offered by BA and Virgin, to aircraft on which everything from food to entertainment costs extra.

The opportunity to launch low-cost fares across the Atlantic has been made possible by the “open skies� agreement, which will lift the restrictions on where airlines can fly. Only BA, Virgin, American and United are currently allowed to fly from Heathrow to the US. From next year this will be opened to all carriers. Technology is also making budget flights possible as the next generation of aircraft will be at least 20 per cent more fuel efficient and less expensive to maintain.

Mr O’Leary, Ryanair’s chief executive, said he was looking to buy between 30 and 50 long-haul jets. These would be either the Boeing 787 or Airbus A350, neither of which are yet flying. He is proposing to launch a company, wholly owned by Ryanair, which will start flying within four years to up to half a dozen US cities. Ticket prices will start at 10-12 euros but the company will use the typical low-cost model of increasing the price as more tickets are sold.

This would challenge the already competitive market for economy passengers between the UK and the US, potentially forcing BA and Virgin to offer similar promotional fares.

BA and Virgin are also experiencing competition in business class, which accounts for most of their profits. Silverjet, Maxjet and Eos have all begun operating business-class-only flights for substantially lower prices.

However, the real threat to all these operators will be if Southwest launches international flights, possibly through its code-share partner ATA. Southwest said: “It is definitely something we are looking at.� The prospect of America’s and Europe’s largest budget airlines going head to head could mean flights to New York costing less than the journey to the airport.

I'm a little torn on this. One part of me is thinking "cheap flights to NYC" on the weekend, though obviously if this just adds to the number of flights as opposed to just providing more competion, then international flights (one of the great world polluters) are going to increase.

I think the no frills side of things wouldn't bother me. I can go eight hours or so without a film or horrid airline food.