Blue-sky thinking on prices

MAINSTREAM airlines are finally winning back bookings from cost- conscious business travellers after deciding that it was time to play their low-cost rivals at their own game. British Airways, bmi British Midland and other European airlines are biting back against the everexpanding no-frills market by adopting their more flexible pricing policies and slashing fares on domestic and European routes.

BA got the ball rolling by lifting its Saturday-night stay and advance-booking restrictions, which had traditionally penalised business travellers requiring last-minute midweek flights.

As a result, its lowest yearround midweek return fares from Heathrow and Gatwick to Paris have been reduced from pounds 298 to only pounds 69, while cheapest midweek flights to Brussels have been cut from pounds 359 to pounds 69.

Furthermore, BA allows passengers to mix fixed fares with flexible ones, so that a cheap outbound flight to Paris can be combined with a flexible return and now costs pounds 199 instead of pounds 311.

Bmi British Midland quickly followed suit by scrapping the same restrictions, and went one step further by introducing a one-way pricing structure ( previously only used by low-cost airlines). One- way fares from Heathrow are as low as pounds 34 to Paris and pounds 29 to Brussels, but these vary week to week.

Like the no-frills airlines, BA and bmi have limited the availability of these lowest fares, so the earlier you book the less you pay. They have also restricted them to online bookings only (see Flyer Beware).

Although mainstream airlines have dramatically reduced fares, they have still not been able to match the lowest prices offered by the no- frills companies.

But, according to BTI UK, the UK's largest business travel agency, fares have been reduced enough to woo back corporate travellers who have become disillusioned by the low-cost operators. "More and more business travellers are simply not satisfied with the product they get from the low-cost carriers, but until now the price differential has been compelling," said BTI UK managing director Mike Platt.

"Now that the price gap is narrowing, business travellers who defected to the low-cost airlines are coming back."

Like many in the travel industry, Platt believes that in the longer term mainstream airlines will have to cut frills in order to maintain these low fares, and that in turn low-cost airlines will have to increase their fares to improve their services for business travellers. "I can see the two blending into one another as their differences blur," he said.

"Frills such as frequent-flyer programmes, food and airport lounges are history, particularly in the current market conditions, but corporate travellers are still concerned with ease of booking, being able to change flights, the provision of management information, frequency of flights, convenience of airports, and reliability."

Of all short-haul bookings made by BTI UK, only 2.7 per cent were for low-cost airlines, he said. "The no-frills airlines have been a great catalyst for change, bringing down short-haul fares and providing much-needed competition, but they have a long way to go," he added.

Indeed, there has been a recent public backlash against low-cost airlines after several highly publicised incidents. In one, 130 passengers staged a sit-in on board an easyJet flight after being asked to make way for another group of passengers who had been stranded for five hours. A week later easyJet scaled back its frequencies on selected routes after admitting its new staff roster system could not cope with an increase in passengers.

Ryanair, meanwhile, was criticised by the Air Transport Users Council for its poor attitude to customers over lost luggage.

Now low-cost carriers face the threat of new European Union proposals that will force all airlines to pay a minimum of pounds 125 in compensation for passengers who are bumped from overbooked flights - double the current amount. easyJet has already warned that such legislation would hit profits and could put low-cost airlines out of business.

For the time being, business travellers are enjoying the lowest short-haul fares in recent history, but just how long this price war can continue remains to be seen.

Flyer beware .

Lowest fares are only available online. BA charges a pounds 10 supplement for telephone bookings, while bmi British Midland charges pounds 2.50.

. BA's lowest fares only apply to return flights and cannot be changed. Bmi passengers can change flights, but must pay the difference plus a pounds 25 fee for each sector. Low-cost airlines have the same policy, Ryanair, bmibaby and Buzz charging pounds 15 per one-way sector, Easyjet and Go charging pounds 10.

. Low-cost airlines fly to tight schedules. If they miss a takeoff slot or an aircraft has to be repaired, the whole schedule can be thrown.

. Low-cost airlines often use secondary airports, which are farther from city centres.

Ryanair's Frankfurt service uses Frankfurt Hahn airport, 124km from the centre.

How the fares compare

We searched four websites for the lowest London-Paris Charles de Gaulle fares available for a day return flight this Friday (leaving before 9.30am) and then for an overnight return flight leaving Wednesday 13 November (after 9.30am) and returning Thursday 14 November. Fares include all fees and taxes.

Here's what we found.

DAY RETURN

British Airways pounds 308.80

(Heathrow-CDG-Gatwick)

Bmi British Midland pounds 135

(Heathrow-CDG-Heathrow)

easyJet pounds 105.90

(Luton-CDG-Luton)

Buzz pounds 86.28

(Stansted-CDG-Stansted)

OVERNIGHT RETURN

BA pounds 62

(Gatwick-CDG-Gatwick)

bmi pounds 75

(Heathrow-CDG-Heathrow)

easyJet pounds 36.30

(Luton-CDG-Luton)

Buzz pounds 46.98

(Stansted-CDG-Stansted)

Copyright 2002
Provided by ProQuest Information and Learning Company. All rights Reserved.