"IF you think our prices are mad, you should see our chairman, says the garish orange poster. "EasyJet between London and Scotland. £29 one way. Call us." The 28 year old chairman of this Luton based air line, Mr Stelios Haji Ioannou, offers a refreshing, rather cheeky approach to the airline business.
His 18 month old airline is cheap, cheerful and light hearted. Its planes are painted a lurid orange, complete with its phone number emblazoned down the side.
EasyJet refuses to deal with travel agents, so it doesn't have to pay them commission, and offers no in flight food. Its planes are operated and maintained by other companies, and the passengers don't even get a paper ticket. But they do get low fares, and they like them. So much so that EasyJet's planes fly 70 per cent full, often with people who otherwise would have taken a train or coach, or not travelled at all.
EasyJet is the best example yet of the tidal wave of low cost new airlines which is threatening to engulf Europe's more traditional airlines. With Europe's airways fully deregulated, its economies booming, and many of the state owned airlines still fighting to cut costs, there has never been a better time to start a new airline, or to expand an existing one.
At 12 years old, Ryanair is a relatively elder statesman among Europe's low cost airlines. Launched in 1985 to offer cut price competition between Ireland and Britain, Ryanair has since formed a British subsidiary, initially to fly from London/Stansted to Prestwick in Scotland. Ryanair UK is now launching flights to a series of European destinations, including Paris, Brussels and Stockholm, using smaller secondary air ports rather than the main hubs.
Four other substantial low cost airlines have begun operations in the last two years:
. EasyJet flies from Luton to Scotland and a growing array of European destinations, including Nice, Amsterdam and Barcelona;
. Debonair, also based at Luton, has a crisscross network which encompasses, Dusseldorf, Munich, Barcelona and Copenhagen;
. Virgin Express came into being a year ago, after Richard Branson took a controlling interest in an existing airline, and immediately started to expand aggressively. As well as its own routes, Virgin Express has taken over Sabena's flights from Brussels to London, Barcelona and Rome. With its lower costs, it can make money when Sabena struggles.
. Air One flies domestic routes in Italy, notably the lucrative Milan Rome trunk route which used to be an Alitalia monopoly.
Several smaller airlines have joined the fray too. There is Azzurra Air in Bergamo, near Milan and Air Belfast, whose AB Shannon subsidiary flies from Shannon to Gatwick, with a Gatwick London route launched this month. City Bird has just begun long haul flights from Brussels. And Ireland's CityJet has a new lease of life following a capital injection earlier this year.
In almost every other European country, the major airline is facing new competition in one form or another. In Spain, two charter airlines, Air Europa and Spanair, have expanded to scheduled services, taking on Iberia's monopoly on domestic routes. Several Scandinavian independents, Braathens Safe, Transwede, Maersk Air and Malmo Aviation are now competing aggressively against SAS when they used to avoid direct competition. British Airways is restructuring its French and German subsidiaries to make them tougher competitors for Air France and Lufthansa.
The sceptics said that low cost airlines would never take off in Europe. Operating costs are too high here, they said, and all the major airports are too congested to allow new airlines in. The major airlines hold too much sway with travel agents, and they can woo passengers with air miles, comfortable lounges and sumptuous meals. All these factors do make life tough for low cost airlines. Some are certain to fall by the wayside - indeed, several small start up airlines have done so already - but others will succeed.
Launching an airline is a bit like launching any other business, except that the risks are much greater and the opportunities to slip up more numerous. A scheduled airline seat is a perishable commodity; it has absolutely no value unless it is sold by the time the plane has taken off. An airline has to fill an average of 60 per cent of seats on all its flights throughout the day and throughout the year, and it needs some punters paying higher fares to balance out the punters enjoying the headline grabbing, bargain basement fares.
To survive, a low cost airline needs a remarkable combination of factors. It must have the right routes, where there is plenty of demand but not too much competition. Good marketing, reaching potential customers without blowing millions on advertising, is also required. It also needs a steady management, ready to take bold steps, but not too eager to grow too fast. And it needs deep pockets to cover the inevitable losses in the early years. It must have a safe and reliable operation and low costs, naturally. And, finally, it requires rather a lot of luck.
