Low cost transatlantic flights on horizon
[October 8th 2008]
Air fares to the USA could be set to tumble if Ryanair goes ahead with plans to launch a new transatlantic airline.
Ryanair chief executive Michael OLeary has expressed an interest in starting a new long haul airline offering flights to the USA. The economic crisis and the consequent downturn in the airline industry could now give him his opportunity.
OLearys business plan for a new low cost transatlantic airline depends on acquiring long haul aircraft at a significant discount. With more airlines going bust and cancelling orders for planes there could soon be the opportunity to negotiate some attractive deals on new planes. But with the strength of the demand for the new Airbus A380 superjumbo and Boeing 787 Dreamliner it seems unlikely that OLeary could get his hands on these planes at a discount.
Low cost transatlantic airlines have had a troubled history. One only needs to think of Freddie Laker, and much more recently Zoom, which went bust in August. But Ryanairs size and financial resources suggest that it could have a much better crack at operating a successful no frills transatlantic airline.
How cheap OLeary and the investors he brought on board would be able to offer fares to New York and other transatlantic destinations remains to be seen. Ryanair is currently offering one million free seats, including taxes and charges, in its latest promotion.
So could we see free seats to New York within the next few years? It would be dangerous to say never, but free or very cheap transatlantic flights are likely to be the exception rather than the norm. Indeed some industry sceptics doubt whether a new low cost transatlantic airline would be able to offer seats much cheaper than the cheapest economy seats offered by airlines like BA and Virgin Atlantic.
And it would be at least two years before any new airline set up by Ryanair and OLeary would start to offer flights. In the meantime Ryanair has launched another scathing attack on airlines such as BA, Air France and Lufthansa to reduce their fuel surcharges.
BA should explain why it has reduced its cargo fuel surcharges, but is still screwing its customers for passengers fuel surcharges which reflect oil prices of $146 per barrel, says OLeary.
Written by: Nick Purdom
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