Business Travel: Cheap Euro Airfares

Air travel remains one of the last bastions of rigid social stratification. First- and business-class flyers enjoy expedited check-in, curtained-off cabins and a lot more legroom. But with the economy heading toward recession, fewer companies are willing to pay for such perks. In fact, more employers are pushing their executives onto discount airlines--even in Europe, where intercity air travel has long been more expensive than in the U.S.

As he waits in a serpentine queue in the crowded departure terminal at Stansted Airport near London, pinstripe-suited Canon executive Brian Owen, 58, is an easy-to-spot casualty of this corporate belt tightening. He's on his way to Ireland via Dublin-based Ryanair, and it's his first business trip on a low-fare carrier. Despite the daunting check-in wait, Owen--who like most discount flyers bought his ticket online--pronounces the experience so far "pretty painless." By comparison, Glasgow-bound Adrian Eve, 27, a marketing executive for aerospace firm BAE Systems, is a veteran of the low-cost skies. He's on the road at least twice a month and estimates that 10% of his travel is on discounters. His round-trip fare cost $47 on Ryanair, and would have cost at least four times as much on British Airways, British Midland or Lufthansa. But he's found out that reduced flexibility is part of the price business travelers pay to get a cheap fair on the discounters. "When your ticket is completely nonrefundable, you have to make your flight," he says ruefully. "That can be a major problem when meetings run late."

Like the big U.S. carriers, Europe's major airlines--many of which were already struggling before Sept. 11--have been crippled by the drop in transatlantic traffic and passengers' reluctance to take to the skies. Belgium's Sabena declared bankruptcy earlier this month, the day after B.A. announced that its pretax profits for the third quarter had plunged from $290 million to $7.3 million and that it was expecting a significant loss for the year. But not all European carriers are struggling. Ryanair, easyJet, Buzz and Go--inspired by U.S. discounting pioneer Southwest Air--concentrate on short-haul routes, and have been almost impervious to the downturn in transatlantic traffic. Sure, there are fewer American tourists booking weekend excursions from London to Dublin, but business traffic and leisure travelers taking advantage of sale fares have more than made up for their absence. Ryanair recently announced a 39% rise in profits and a 37% load increase for the six months ending Sept. 30, while easyJet posted an annual pretax profit of $58 million--even higher than its pre-Sept. 11 projections.

Because most don't offer different classes of service, discounters can only estimate (on the basis of, say, how far in advance tickets are sold) which of their customers are business travelers. Jeremy de Souza of London travel agency Rosenbluth International says about 15% to 20% of business travelers in Europe are flying on low-cost carriers. "Three years ago, the figure was 4% or 5% at the very most. The reason it isn't greater is that the major corporations often have special deals with the major carriers."