WASHINGTON - A new low-fare airline wants to strike the major carriers in a market they have had safely to themselves: trans-Atlantic flights.
Led by Southwest and JetBlue, low-fare carriers have taken domestic market share, and profits, from the big guys and changed the way they do business. Now a proposed startup called SkyLink Airways aims to replicate that success on flights to Europe.
SkyLink, the brainchild of an industry veteran and a neophyte, seeks to fly scheduled and charter service, beginning in May 2005, from Baltimore to London and Paris. Average ticket prices would be 15 percent to 70 percent below those offered by major airlines, the Dulles, Va., company said in a business plan filed with the Transportation Department on Feb. 20.
Several industry experts said it was only a matter of time and predicted others will follow. At least one U.S. budget carrier, ATA Airlines, has expressed interest in trans-Atlantic service, while Blackstar Airlines, another low-fare startup proposed in December, intends to fly nonstop from Los Angeles to Frankfurt and Paris.
"You have established, well-funded domestic low-cost carriers that are starting to sniff out the Atlantic," said Jon Ash, managing director of Global Aviation Associates, a Washington aviation consulting firm. "While it is an incredibly tough environment, it probably has a little more growth potential than the U.S."
But he has serious doubts.
"You can't give these things very good odds of success," Ash said, referring to all new airlines.
The DOT has expressed concerns about SkyLink's flight certification application, calling the description of its financial plan "materially deficient."
Still, few would have guessed when JetBlue Airways launched in 2000 that four years later it would be the No. 1 carrier out of New York's JFK International Airport - ahead of American Airlines, the world's largest airline. JetBlue no doubt benefited from financial backing from big investors, including J.P. Morgan Chase.
JetBlue, which started with domestic service only, now flies to the Dominican Republic and may expand into Canada, Mexico and Jamaica. Spirit Airlines and other low-cost carriers also serve nearby international destinations.
On trans-Atlantic routes, the major carriers have not faced any recent challenges from low-fare carriers. Trans-Atlantic flying requires larger long-haul aircraft, which are more expensive to buy and maintain and which do not make as many flights a day as shorter-range aircraft, adding another layer of complexity since many aircraft would be needed to offer a convenient schedule.
SkyLink proposes using wide-body 200-400 seat jets that would fly to London and Paris.
The advantage of big aircraft is that the hefty up-front costs can be spread among many passengers. "But it means they have to find more people to put into the airplanes," said Michael Levine, a former airline executive who teaches law at Yale University.
SkyLink chose Baltimore-Washington International Airport because it offers limited service to Europe and because its two busiest tenants, Southwest Airlines and AirTran Airways, already carry loads of budget-conscious fliers to and from Baltimore.
"It's really a new business model," Josh Marks, SkyLink's 27-year-old president and co-founder, said. While conceding that cheap trans-Atlantic tickets are already sold by the major carriers, Marks said this low-price inventory is scant and largely unavailable to last-minute business travelers, a constituency SkyLink will target.
Marks, a Harvard Business School graduate who lectures at Embry-Riddle Aeronautical University, is partnering with chief executive Kenneth Carlson, 59, an industry veteran who has run a couple of small airlines, including Jet Express and Midway Airlines.
If SkyLink gets the OK from federal regulators to begin service, they should expect a fierce counterattack by cheap fares from well-established carriers seeking to defend their turf.
"We have a lot of experience competing with low cost carriers in our domestic markets and we think that we are positioned to compete in any market with any carrier," American Airlines spokesman Tim Wagner said.
