European Low-Fare Carriers Take Off in the U.S.

After an 18-month review process, Richard Branson's Virgin America Airlines recently got the operational green light from the U.S. Department of Transportation, allowing Branson to take his low-cost economic model of Britain's Virgin Atlantic across its namesake ocean to the United States. However, Virgin America—which currently only has plans to fly within the U. S.—isn't the only carrier importing itself from abroad. A handful of Europe's low-fare carriers are taking steps to make affordable European flights available to Americans.  Eurofly USA offers lower-fare service between New York and Italy

U.S. travelers have long been accustomed to pricey transatlantic fares from carriers, but an optimistic look at industry numbers could provide some relief. In his most recent "TransAtlantic" report, Neil S. Martin notes that the top nine transatlantic carriers, which include the likes of American Airlines and Lufthansa, reported slightly bigger—although still weak—off-peak increases for overall transatlantic traffic. Despite the fact that a large increase in U.S. travel to Europe is unlikely (thanks to the weak dollar against the euro), Martin notes that many carriers are adding flights and seats to transatlantic routes this summer. "Because they're adding these seats, presumably the fares could go down and make up for the weak dollar," Martin says. "It's a little iffy, but that's what happened last year: They filled them and it was a record summer."

Now, economic European carriers like Eurofly, Flyglobespan and LTU, are increasing competition with flight services between Europe and large U.S. cities like New York and Las Vegas for up to $200 less than major carriers. Of course, the catch is that most flights are seasonal and some of these carriers charge fees for services like meals and entertainment. Even so, such airlines can be an attractive alternative to a couple on a budget or a family looking to cut costs in some places in order to splurge elsewhere.

LTU plans to expand its U.S. service, offering more business class seats

"It's the same seat," says Rosario Mariani, general sales agent in North America for Eurofly USA, which just kicked off its third season of service between New York's John F. Kennedy International Airport and various points in Italy. "You're not getting any more service from a major carrier than you would from us, unless you go business or first class."

How can carriers like Eurofly keep costs lower than their major competitors? "We keep an eye on being less pricey than the competitors," Mariani says of Eurofly's strategy, noting that competition includes U.S. carriers like Continental, as well as overseas airlines like Air France. "Our strategy has been to see what the benchmark is and then price ourselves $150 to $200 below that."

Another part of the success strategy is to remain focused. "We are point-to-point," Mariani says. "Our attachment area is the northeast, so we don't have any agreements for any domestic carrier to feed us flights. Because I don't share that revenue with other airlines, I can charge less and keep more of it."

Expansion Plans

Through November 13, Eurofly is operating nonstop flights from JFK to Naples, Bologna and Palermo, as well as Pescara and Lamezia Terme. Because traffic to Rome is so strong, the airline is considering extending its services there through the winter.

"For 2008, we're looking at expanding in Italy and in 2009, we may be able to look at opening other gateways in Canada or Florida," Mariani says. "We'll see where the opportunities lie at that time." Should the carrier ever expand service to the west coast, Los Angeles would be the obvious choice, he adds.

Just two weeks ago, Scotland-based Flyglobespan began daily service between Boston and Glasgow, Scotland, as well as between New York and Liverpool, England. Most recently, the airline inaugurated its nonstop flight from JFK to Ireland's WestAirport in Knock, which serves as a gateway to Donegal, Sligo, Leitrim, Roscommon, Galway and Mayo. The flight operates three times a week and is available through October.

One-way rates begin at $259, exclusive of taxes and fees. Flyglobespan currently operates a fleet of 21 aircraft that travel to 31 destinations in Europe, North America and Africa.

Germany-based LTU International Airlines operates direct flights between Düsseldorf, Germany and Los Angeles, New York, Las Vegas, Miami and Fort Myers, FL. Early last month, flights from Los Angeles began operating five times a week and flights from Las Vegas revved up to twice weekly, with one-way fares starting at $388 for economy class. In the first quarter of 2007, the airline posted a sales growth of 12.5 percent and it expects to see a five percent overall annual growth, due in part to the expansion of LTU's long-haul business in the U.S.

LTU will start operating new service from Melbourne, FL to Berlin's Tegel airport on November 3, says Pierre de la Motte, a spokesperson for the airline. In addition, some services are transitioning from seasonal to year-round, mainly due to demand from business travelers.

"We come from more of a holiday background and now we are looking at business travelers more and more," de la Motte says, adding that the airline plans to increase its number of business class seats from 18 to 30.

"That is the reason we have been changing our whole business model." Further U.S. expansion plans are in the works, he notes, but details were not ready for discussion at press time.

What to Expect From Virgin America

Now that Virgin America has received its approval from the Department of Transportation, the carrier hopes to begin operations as early as mid-summer, with an inaugural flight departing from its San FranciscoInternationalAirport hub to New York's JohnF.KennedyInternationalAirport. Within nine months of that first flight, the airline also plans to begin servicing Washington, DC's Dulles, Los Angeles' LAX, San Diego and Las Vegas.

Virgin America owner Richard Branson

Virgin America will operate 33 Airbus A320s and A319s that will feature in-flight entertainment systems with on-demand movies, satellite TV, games, music and online chat rooms. Though an exact date has yet to be set, the carrier hopes ticket sales to begin early this summer. Agents can sign up for updates at www.virginamerica.com.

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