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A Good Flights Sleep: Financial Pain




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The following article was authored by Joe Curry. Acknowledgements: Updesh Kapur and Supply Management 9th. September 2004 Penny Haw and Business Day

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A Good Flights Sleep: Financial Pain

Taking short-haul to new extremes are the low-cost airlines, which have not only mushroomed across Europe, but are multiplying so quickly that it's hard to track the players in an increasingly crowded market - some 80 budget airlines have sprung up in recent years in Europe.

Saturday-night stopovers and paying through the nose for flexible tickets that allow you to change dates and times without extra cost always cursed companies before.

"You pay for what you get" was the motto of the airline industry, and many flyers suffered financial pain because of the excesses airlines charged before the budget boom changed their business models.

Ryanair and easyJet are by far the biggest no-frills operators in Europe, with more than 200 aircraft carrying 24 million passengers a year between them. They are being joined by established full-service airlines with their own low-cost versions, such as Scandinavian carrier SAS's Snowflake, which operates to 21 leisure destinations in the Mediterranean, eastern Europe and Scotland (Edinburgh).

Britain's FlyBe, formerly Jersey European, turned its business model upside down, focusing on one-way low fares and Internet distribution, while Air Malta has jumped on the bandwagon, taking advantage of Malta's accession to the European Union in May by launching a low-cost brand, Fare 4U.

But the budget arena is not as bright as it appears, with casualties along the way due largely to insufficient resources, excess capacity and heightened competition. Recent closures in Britain and Ireland include the Birmingham-based Duo and Air Planet, along with JetGreen and JetMagic, which had their operations in Dublin, while Luton-based carrier Now Airlines collapsed without ever getting a flight off the ground.

But for the smaller players in the business travel market, such as Carphone Warehouse, booking early for the lowest fares is the best way to contain costs.

"Generally we go for prices that are not flexible and that helps to bring the cost down," says Ian Rodriguez, Carphone Warehouse's travel manager, whose company has a policy of flying only in economy across Europe with low-cost airlines the preferred method of travel.

"The no-frills operators are a blessing in disguise, there's definitely a long-term future for them. They have already forced flag carriers to bring down their prices and the likes of British Airways are becoming more competitive."

The "Big Four" in the UK three years ago turned into the "Big Two" when Stansted-based Go, once the low-cost subsidiary of British Airways, was swallowed up by easyJet to consolidate its orange empire at Luton Airport.

Dublin-based Ryanair ate another Stansted airline, KLM-backed buzz, which was closed down and its network consolidated into the Irish carrier's huge operations at the Essex airport. Ryanair is now Europe's largest low-fare airline handling 15 million passengers a year, flying 149 routes from 11 European bases covering 84 destinations.

Ryanair is turning its growth plans to Nottingham East Midlands, home of rival bmibaby and a target of easyJet, which has a small operation at the airport.

But it is Gatwick that could be the main battleground for all three, with Ryanair and bmibaby reportedly looking to expand their tiny operations out of the London airport. Expansion will pitch them against easyJet, whose operations at an airport not known for its low-cost base has 13 aircraft based there, flying to 22 destinations. The fight could be fierce.

Continue to A Good Flights Sleep: from Business Day or go back to A Good Flights Sleep: Intro.Also see How Many Hours Do You Need to Sleep?.

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