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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 forced them to change 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 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.-based 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 existing U.S.-based budget carrier, ATA Airlines, has expressed informal interest in trans-Atlantic service, while Blackstar Airlines, another low-fare startup proposed last December, intends to fly non-stop 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 had serious doubts about the startup's viability.
"You can't give these things very good odds of success," Ash said, referring to all new airlines.
The DOT has already 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 was launched in February 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 strong financial backing from big investors, including Western Presidio and J.P. Morgan Chase.
While JetBlue started with domestic service only, it now flies to the Dominican Republic and plans to eventually expand into Canada, Mexico and Jamaica. Spirit Airlines, Frontier Airlines, America West Airlines and other low-cost carriers also serve nearby international destinations.
On trans-Atlantic routes, however, 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, by definition, do not make as many flights per day as shorter-range aircraft, adding another layer of complexity since many aircraft would be needed to offer a convenient schedule.
SkyLink proposes two classes of service on wide-body 200-400 seat jets that would fly to Stansted Airport in London and Charles de Gaulle Airport in 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 E. Levine, a former airline executive who teaches law at Yale University.
Levine said he was "skeptical" that a startup could attract large volumes of passengers quickly enough to make the venture work.
SkyLink chose BWI Airport because it currently 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 countered that this low-priced 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.
Jet Express, which provided regional service for US Airways in the 1980s, acquired the name Midway Airlines in 1993. In 1994 Carlson left Midway, which filed for bankruptcy in 2001 and recently liquidated.
SkyLink is still negotiating aircraft agreements with Boeing and Airbus and is "close to announcing a deal," Marks said.
If SkyLink gets the OK from federal regulators to begin service, they should expect a fierce counterattack in the form of lots of 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.
In order to seriously contend against carriers such as American and British Airways, analysts said SkyLink will need deep pockets. Marks said SkyLink is attempting to line up more than $130 million in financing from venture capitalists, though he would not name potential investors.
The uncertainty surrounding SkyLink's financing is no small problem: it could actually lead to the demise of the young venture before the end of April.
Last month the Transportation Department threatened to dismiss SkyLink's application outright without more "evidence" of who its financial backers are and how much they will commit. In a March 18 letter, the chief of the agency's air carrier fitness division, Patricia Thomas, gave SkyLink 30 days to "demonstrate" its financial plan.
Marks said he is "confident that the funding process is moving on track."
A spokesman at BWI, Jonathan Dean, said the airport fully supports SkyLink's proposal. "It is very early in the process, but SkyLink does offer great potential," Dean said.
Led by Southwest and JetBlue, low-fare carriers have taken domestic market share _ and profits _ from the big guys and forced them to change 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 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.-based 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 existing U.S.-based budget carrier, ATA Airlines, has expressed informal interest in trans-Atlantic service, while Blackstar Airlines, another low-fare startup proposed last December, intends to fly non-stop 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 had serious doubts about the startup's viability.
"You can't give these things very good odds of success," Ash said, referring to all new airlines.
The DOT has already 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 was launched in February 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 strong financial backing from big investors, including Western Presidio and J.P. Morgan Chase.
While JetBlue started with domestic service only, it now flies to the Dominican Republic and plans to eventually expand into Canada, Mexico and Jamaica. Spirit Airlines, Frontier Airlines, America West Airlines and other low-cost carriers also serve nearby international destinations.
On trans-Atlantic routes, however, 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, by definition, do not make as many flights per day as shorter-range aircraft, adding another layer of complexity since many aircraft would be needed to offer a convenient schedule.
SkyLink proposes two classes of service on wide-body 200-400 seat jets that would fly to Stansted Airport in London and Charles de Gaulle Airport in 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 E. Levine, a former airline executive who teaches law at Yale University.
Levine said he was "skeptical" that a startup could attract large volumes of passengers quickly enough to make the venture work.
SkyLink chose BWI Airport because it currently 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 countered that this low-priced 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.
Jet Express, which provided regional service for US Airways in the 1980s, acquired the name Midway Airlines in 1993. In 1994 Carlson left Midway, which filed for bankruptcy in 2001 and recently liquidated.
SkyLink is still negotiating aircraft agreements with Boeing and Airbus and is "close to announcing a deal," Marks said.
If SkyLink gets the OK from federal regulators to begin service, they should expect a fierce counterattack in the form of lots of 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.
In order to seriously contend against carriers such as American and British Airways, analysts said SkyLink will need deep pockets. Marks said SkyLink is attempting to line up more than $130 million in financing from venture capitalists, though he would not name potential investors.
The uncertainty surrounding SkyLink's financing is no small problem: it could actually lead to the demise of the young venture before the end of April.
Last month the Transportation Department threatened to dismiss SkyLink's application outright without more "evidence" of who its financial backers are and how much they will commit. In a March 18 letter, the chief of the agency's air carrier fitness division, Patricia Thomas, gave SkyLink 30 days to "demonstrate" its financial plan.
Marks said he is "confident that the funding process is moving on track."
A spokesman at BWI, Jonathan Dean, said the airport fully supports SkyLink's proposal. "It is very early in the process, but SkyLink does offer great potential," Dean said.
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