Business travelers don’t need to sacrifice luxury for low prices, thanks to these innovative low-cost alternatives to the major airlines.

By Julie Moline

One of the strangest paradoxes in the travel industry is that jet fuel prices are near record highs while airline ticket prices on many routes remain near record lows. Why the disconnect? One reason is that low-cost airlines, from JetBlue and Southwest in the U.S. to EasyJet and Ryanair in Europe, trigger intense price competition on the specific routes they fly. Legacy carriers are forced to lower their prices, maintaining the buyer’s market.

As established low-cost airlines continue to expand (JetBlue just announced several new routes, including JFK to Austin, and Southwest just began service to Denver) and new low-cost carriers start up (Virgin America, part of Richard Branson’s growing roster of regional low-cost airlines, is planning a 2006 launch in the U.S. out of San Francisco International Airport), airline ticket prices are likely to remain in check, analysts say. That’s great news for business travelers, who are facing quickly escalating prices in other areas, including hotels and car rentals. (American Express is forecasting increases of 8 percent for car rentals in 2006; the National Business Travel Association is predicting a 9 percent hike in hotel costs.)

High Frills
There’s downward pressure on business-class fares, too—at least on the routes that two startups recently began flying between the East Coast and London. The twist: These carriers haven’t gone the no-frills route. Instead, they’re offering all premium-class seats, but are still underpricing even the lowest business-class fares on traditional airlines.

MAXJet Airways (www.maxjet.com) began offering all business-class flights between New York City and London at heavily discounted fares in November, and inaugurated service between Washington-Dulles and London-Stansted in early April. MAXJet uses Boeing 767s configured with 102 seats, each with 5 feet of seat room per passenger. The current round-trip fare between New York City and London is $1,398, not much more than unrestricted coach walk-up fares. MAXJet also has U.S. Department of Transportation approval to serve other European markets, including Austria, Belgium, France, Germany, Italy and the Netherlands, as well as Canada. A frequent-flier program allows up to five passengers to accrue miles on a single account, making it easier to earn a free ticket, according to MAXJet CEO Gary Rogliano.

Another new discount all-business-class airline, Eos (www.eosairlines.com), started flying daily between New York City and London-Stansted in October, using Boeing 757s configured with only 48 seats—billed by the airline as “suites”—all of which turn into cushy, long (6 feet 6 inches), completely flat beds. The suites are configured so two people can sit facing each other; if their tray tables are open, they abut, creating a large work surface between the seats. Reviews are in, and passengers are enthusiastic. Some describe the Eos experience as more like flying in a corporate jet than a commercial one; one described the interior as resembling a hip but austere New York City restaurant. Eos’ current round-trip fare starts at $3,300, compared to major carriers’ walk-up business-class fares of $8,000 and up. Eos’ rewards program, Club 48, offers points that can be redeemed for golf at private clubs, spa treatments, Thomas Pink clothing, Bose Sound Systems, travel on Eos and weekends at various luxury hotels.

As for Virgin America (www.virginamerica.com), the airline is modeled more on Virgin Blue, a no-frills discount carrier in Australia, than on Virgin Atlantic Airways, which offers three classes of service. The idea, according to the company’s filing with the U.S. Department of Transportation, is to concentrate on longer-haul routes—New York City and San Francisco are specifically noted as “excellent examples” of likely markets. For this year’s launch, Virgin America intends to use 33 new, narrow-body Airbus aircrafts to offer what it calls “convenient, low-priced, high-quality service to a number of the top metropolitan markets.” High quality includes the latest in-flight entertainment equipment.

Julie Moline is a freelance writer, editor and editorial consultant in New York City. She is also the former editor in chief of Corporate Travel magazine.