New Low-Cost Airline Zooms Into JFK
By JOHN WILEN, AP Business Writer
Wednesday, June 20, 2007
(06-20) 21:48 PDT NEW YORK, (AP) --
Low-cost Canadian carrier Zoom Airlines makes its first foray into the U.S. market Thursday when it launches a daily flight from New York's John F. Kennedy International Airport to London's Gatwick Airport.
Zoom is offering one-way fares of $199 on its 266-seat Boeing 767-300's. Slightly larger "premium economy" seats can be had for an additional $179 each way.
In comparison, the cheapest round-trip flight between New York and London in mid-July is listed at $753, or about $377 each way, according to SideStep.com.
"It's a very low price for the summer," said Bob Mann, an airline consultant with R.W. Mann & Co. in Port Washington, N.Y.
Zoom does not require passengers to buy a round-trip ticket or stay over on a Saturday night, both typical requirements for a cheaper flight on most airlines. Zoom, based in Ottawa, Canada, and at Gatwick, already operates 10 to 12 daily flights between Canada and the U.K.
Zoom is adding the New York-London route because nearly 42,000 people travel between the two cities every week, said chairman Hugh Boyle.
"It's the daddy of them all," Boyle said.
Some analysts doubt Zoom will last.
"The problem with the Zoom concept is that it doesn't fill a market gap," said Mike Boyd, president of The Boyd Group in Evergreen, Colo. "There are now plenty of low-fare airlines across the Atlantic. ... It's called the economy cabins of American (Airlines), British (Airways PLC), Continental (Airlines Inc.), etc."
Boyle said the four-year-old company is profitable, and knows what it's doing.
"We know it works between Canada and the UK," Boyle said.
Zoom is a full-service carrier, Boyle said, meaning it serves food and hands out pillows at no extra charge. There is an additional charge for seat selection.
Most passengers book online, which keeps Zoom's costs low, Boyle said. The airline will sell as many as 25 percent of its seats at the $199 rate, but other seats will be more expensive. There will be 88 "premium economy" seats on each flight. Zoom will also carry cargo.
Boyle boasted flight occupancy rates of 90 percent, compared with an industry average of about 81 percent, according to Goldman Sachs.
Low-cost carriers have tried international routes before, Mann said, but few have stuck with it. That's because low cost carriers prefer to fly planes four to six times a day on busy domestic routes that let the airline quickly turn each plane around for another trip, Mann said.
"It's just a fundamentally different business," Mann said.
But Zoom's 767-300s are the perfect plane for a company trying Zoom's model, he said.
"That's an airplane on which $199 each way, you can cover your costs," Mann said.
Zoom's low fares will put pressure on other carriers, he said.
"This will limit some of the traditional guy's ability to sell some of their more expensive seats," Mann said.
And Zoom's not done. Boyle said the privately held airline is looking at other busy domestic routes and may add new flights early next year.
"The U.S. from the U.K. is a huge market, and we will roll it out," Boyle said.
