Competing for Business Class

Despite the grim atmosphere in the airline industry, business- and first-class passengers remain a lushly profitable segment. That's why two new carriers, Eos Airlines and MAXjet Airways, both flying between New York City's J.F.K. Airport and London's Stansted Airport, are going after them. Eos offers only 48 flat-bed seats on each Boeing 757 flight (price: $6,500 round trip, about 50% less than first-class fares on the major carriers), while MAXjet boasts an all-business-class, 102-seat cabin in Boeing 767-200s ($780 each way). "We want to bring affordable business travel to a wider segment of the market," says MAXjet CEO Gary Rogliano. Eos is better positioned to be profitable, says Michael Mankins, a consultant with Marakon Associates. Reason: its fleet of retrofitted workhorse Boeing 757s. "The use of this plane is quite clever," says Mankins. "It's an aircraft with a low lease rate. For every seat that Eos sells, MAXjet will need to sell 10."

The bean counters will like the fares, but frequent flyers might balk if they can't rack up miles. Eos CEO David Spurlock is convinced that his airline's quality of service will keep luring the high-paying customers. "We're betting that product quality, not price, will drive the market," he says. Forecast ahead: unclear.