Boom times for budget airlines

Go airlines was set up as a low-cost operation by BA

LONDON, England (CNN) -- Budget airlines are celebrating as a growing number of business travellers turn their backs on the major carriers.

The low-cost airlines -- buzz, Go, Ryanair and EasyJet -- say up to 40 percent of their passengers are now business travellers who have put aside executive egos in return for a bargain ticket.

The airlines get away with the lower fares by using smaller, secondary airports and others charge for in-flight food.

But in spite of this, the savings are considerable for the passenger, while the airlines report soaring profits.

VIDEO CNN's Richard Quest: Business travellers turn to budget airlines Real Windows Media Quicktime   Barcelona to Geneva Iberia -- $734 EasyJet -- $185 London to Frankfurt British Airways -- $722 Ryanair -- $294 Prague to London Czech Airlines -- $668 Go -- $377 London to Milan buzz -- $388 British Airways -- $660 Alitalia -- $660

EasyJet saw its shares rocket in its debut on the London Stock exchange last year. Ryanair also beat expectations with a 26 percent rise in annual earnings in 2000.

CNN's Richard Quest took a trip to Milan to find out how the airlines operated.

"The passengers on the afternoon buzz flight from Milan back to London looked more like those usually found on the airline's more expensive competitors -- suits and ties abound. It's only the prices that are different," he said.

One passenger, Malcolm Andrews, took the buzz flight from London to Milan, shunning the full-fare tickets.

A ticket with buzz -- KLM's low-cost operation -- cost $388 compared to BA and Alitalia's $660 ticket.

He was still able to serve his clients champagne -- but the cheaper tickets meant he could save a fortune.

"If we went by conventional airline it would have been three times more than we paid. Cost was the main factor in deciding to fly with buzz," Andrews said.

Flying by airlines like Buzz can bring considerable savings

Meanwhile, a flight from Barcelona to Geneva cost $734 with Iberia airlines but a ticket with EasyJet was a quarter of the price at $185 -- saving 74 percent.

All the bookings were made to travel within 24 hours with no Saturday night stay.

Similarly, a London to Frankfurt flight with British Airways cost $722 compared to $294 with Dublin-based Ryanair.

Such uncertain economic times prove to be a bonanza for the new airlines.

"When every penny counts, saving money on this scale becomes the order of the day. It's taken business some time to use low cost airlines -- now they are well and truly on the route," Quest said.

The Association of British Travel Agents, ABTA, said the development was "not a bad thing" for customers and overall more people were being encouraged to travel.

"Low-cost airlines since they came into existence five years ago in larger numbers have encouraged greater numbers of people to travel in Europe, particularly on city breaks," said spokesman Sean Tipton.

"However, in addition many corporate accounts have attempted to cut costs by moving from traditional to low-cost airlines.

"Clearly this places more pressure on traditional airlines to provide either better value for money or higher levels of service."

Shares of U.K. budget airline easyJet climb in trading debut
Nov. 15, 2000
UK airline upstart to float
Oct. 16, 2000
Ryanair beats forecasts
Jun. 20, 2000
Low-fare airlines set for take off in Europe
Sep. 22, 1999

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