Business Travel: All systems go for no-frills flights

Budget operators will need to revamp their image if they're to keep business travellers onboard, says Simon Calder

"In 10 years' time, everybody in Europe will be flying on a low- cost airline." Four years ago, Stelios Haji-Ioannou's prediction would have been ridiculed: his easyJet airline was about to start its first routes, using a borrowed plane, linking unfashionable Luton with Glasgow and Edinburgh. But it would be an unwise airline executive, or business traveller, who ignores him now.

Between the English and Scottish capitals, there are now a dozen no-frills flights each way, each working day, operated by easyJet and its arch-rival Go. One-third of the passengers on board are business travellers.

November 1995 was when the aviation map of Britain was redrawn. The Greek shipping millionaire had travelled widely in the United States on board Southwest Airlines, which has been consistently profitable while sharply reducing fare levels on every route it serves. "All you had to do was compare what people paid in the US relative to what people paid in the UK and Europe, and I said to myself there must be money to be made here."

Southwest's secret was hardly rocket science: it involved looking at each stage of the operation of an airline, and stripping out all but the essentials. But safety was never negotiable: Southwest also happens to be the safest airline in the world. Having emulated the model, and nailing down the easyJet's cost base as low as possible, it was necessary to create a market. Lurid orange advertising hammered home the message that you could fly between England and Scotland for pounds 29. The paint job on the planes consisted of the easyJet telephone number.

Initially, the intention was to create new leisure traffic, but business travellers soon saw the logic of flying for a quarter of the fare that the established airlines were asking. There was also an unexpected benefit: people running small businesses identified with easyJet much more than with British Airways and British Midland.

BA's response showed how seriously Britain's biggest airline takes the threats, and opportunities, of no-frills aviation. It has so far pumped pounds 20 million into Go, the low-cost offshoot that started flying last year. The airline's intention, says sales and marketing director David Magliano, is to expand the market: "In the States, low-cost airlines account for 25 per cent of all passenger journeys. That figure's only five per cent in Europe, so there's plenty of room for growth."

Not everyone would agree that BA's motives are entirely expansive. Since Go commenced, two rival no-frills airlines - AB Airlines and Debonair - have gone out of business in the face of intense competition.

Loyal customers of KLM UK, too, were dismayed to lose long-established domestic links when the carrier restructured its business (see panel, right). The airline has now launched its own no-frills operation, Buzz which will take over five KLM UK routes in January.

Increasingly in business, image is improvement, and that has been a problem for easyJet and Ryanair. "The trouble with easyJet is that its whole look is cheap", says one frequent flyer. Ryanair also has a tired logo that is at odds with its brand-new, hi-tech 737-800 aircraft, and its position as Europe's biggest no-frills airline with 1,200 flights each week. Virgin Express, too, has failed to achieve the usual Branson marketing success. The need for sharp, stylish design was recognised early by Go; the airline says its image is well-regarded by the 30 per cent of its passengers who are travelling on business.

Another impediment for no-frills airlines seeking business custom is that most bookings are made direct - little or no commission is paid to travel agents. But in the past few years, agents' resistance to booking low-cost carriers has diminished as more companies move towards a fee- based arrangement.

The next step for easyJet is likely to be at ground level, but of equal interest for business travellers. This month, the airline is expected to sign an agreement with a motor manufacturer that will enable it to start a car rental business. Initially, the fleet will be based in the UK and Spain, but is set to expand to all easyJet destinations. The easyEverything Internet bureaux are already popular with business travellers, and there are rumours of an easyHotel chain. Let us hope that there are also plans for a new logo.

BUZZ FOR BUSINESS

TEN DAYS ago, KLM followed BA's example by establishing a no-frills operation, Buzz, which begins flying on 4 January. KLM UK has been struggling in the face of fierce competition at its Stansted base from Ryanair and Go.

Its first response was to cut back sharply on existing domestic routes this autumn. Dr Trevor Field of Aberdeen was one of many KLM UK customers dismayed by cuts, which ended a four-times-daily link with Essex: "Those of us who used the Stansted service valued the ability to reach London via an efficient airport and rail link."

The low-cost alternative, Aberdeen to Luton on easyJet, is less effective because Luton Airport Parkway has still not opened.

The next stage in KLM UK's new strategy is to "de-frill" services from Stansted to Berlin, Dusseldorf, Frankfurt, Milan and Paris. They will be re-badged as low-cost flights on Buzz, and joined by new links to Lyon and Vienna.

"It was a defensive move," says Tony Comacho, commercial director of Buzz. "We were middle ground, offering a commuter-style service, but falling between the two stools of being a premium point-to-point carrier and the low-cost entrants at Stansted."

The new airline is targeting the business market, promising a "pay as you go" operation. "You can tailor your own food and drink choice," says Comacho. "You don't have to buy a business-class ticket to get a better meal, or lounge access."

Each of the Buzz destinations has plenty of existing services from the London area. Rivals say offering optional frills does not fit the low- cost model, and that Buzz is using the wrong aircraft - BAe 146s, rather than the larger, industry-standard Boeing 737. The airline says it has ordered two Boeings and will buy more as passenger numbers build.

From January, the airline's fate will rest with the business traveller.

You're going WHERE?

ONE UNEXPECTED bonus of low-cost aviation has been a new range of destinations. In the search for airports with low fees, the no-frills carriers have targeted a range of destinations that were previously not served from the UK. These are among the links have opened in the past five years where previously there was no service.

Bournemouth to Dublin on Ryanair

Liverpool to Belfast, Luton, Geneva and Malaga on easyJet

Prestwick to Dublin, Stansted and Beauvais on Ryanair

Stansted to Kristianstad and Skavsta (both Sweden), Torp (Norway), Hahn (Germany), Ancona and Treviso (Italy), Carcassonne, Dinard and St Etienne (all France) on Ryanair

Stansted to Shannon on Virgin Express