EXCLUSIVE-New airline plans London City-NY link

TORONTO/PARIS Mon Dec 19, 2011 12:17pm EST

A scale model of a CS100 Bombardier airplane is displayed beside a mock-up of the future CSeries Bombardier aircraft at the Bombardier Inc. Montreal offices September 14, 2009. REUTERS/Christinne Muschi

A scale model of a CS100 Bombardier airplane is displayed beside a mock-up of the future CSeries Bombardier aircraft at the Bombardier Inc. Montreal offices September 14, 2009.

Credit: Reuters/Christinne Muschi

TORONTO/PARIS (Reuters) - Bankers may be languishing in popularity polls but a new airline wants their business and is prepared to challenge British Airways (ICAG.L) for it once the financial crisis is over.

A British venture called Odyssey Airlines hopes to start non-stop all-business class flights from London City to New York and other locations using 10 newly-ordered Bombardier CSeries passenger jets, aviation industry sources told Reuters.

The disclosure lifts a mystery surrounding the identity of one of the buyers for a Canadian jet which aims to break into a market long dominated by Airbus EAD.PA and Boeing (BA.N).

Train and plane maker Bombardier (BBDb.TO) said in June it had sold two sets of 10 aircraft to customers that preferred to stay anonymous, one of which was an "unidentified European buyer" and the other was an already established airline.

Bombardier declined any further comment.

The start-up directly targets BA which offers twice-daily all-business flights using Airbus A318 aircraft from London City, a small business airport near the capital's financial district which can handle only moderately-sized jetliners.

The idea is to capture demand for bankers and other professionals for transatlantic travel without a time-consuming journey across the capital to London's congested Heathrow. Using the future CSeries jet would also eliminate the need for a fuel stop in Ireland when travelling westbound to New York.

The new airline may hope to entice executive travellers away from other business jet schemes such as NetJets.

But its path is strewn with potential hazards and previous failures.

Several all-business airlines have been killed off by high costs and the difficulty niche airlines face in matching benefits offered by big players. U.S.-based Maxjets filed for bankruptcy in 2007 and UK-based Silverjet collapsed in 2008.

"It is difficult for small companies to make money in this type of market. Business travellers usually belong to frequent flyer schemes and loyalty programmes are difficult to crack," said John Feren, executive vice president of U.S. lessor Aviation Capital Group, owned by insurer Pacific Life.

Analysts say that to succeed, new entrants into business travel must have an alliance with a major airline.

Even then, the number of previous casualties suggests the margin for error is small.

"If you find a niche that looks attractive, it just takes two seconds for somebody to come in like a freight train and usurp the market," said Ray Neidl, Senior Aerospace and Airlines Analyst, Maxim Group investment bank in New York.

"It is a tough environment because of high oil prices, tight capital markets and all of the consolidation which has made the competition stronger."

NON-STOP FLIGHTS

Odyssey Airlines is keeping a low profile, as is common for new entrants in the cut-throat travel industry, but at least two web addresses -- www.odysseyairlines.com and www.odyair.com -- have been reserved for "Future Odyssey Airlines International".

The company was incorporated in the UK in September 2010 and its main director is Adam Scott, according to public UK records.

When contacted via an email address hosted on the company's web domain, a person identifying himself as Adam Scott replied from a personal account and denied all links with the project.

Reached later by telephone he denied any links with the airline industry and said he could not explain how he had received email via Odyssey Airlines' web domain.

A former Air France executive said to have been involved in the project also denied any involvement.

None of the sources agreed to be named because the project has yet to be launched.

The CSeries is a major bet too for Bombardier. Its decision to enter the $100 billion-a-year jet market partially prompted Airbus and Boeing to revamp their best-selling narrowbody jets.

Bombardier's firm orders since then have been somewhat sluggish with 133 confirmed sales, a tenth of the combined total of the revamped alternatives. Industry analysts monitor the types of buyer on the backlog as well as the number of orders.

The CSeries is due to enter service in late 2013 and Odyssey would not be likely to start operations before 2014 or 2015, hoping Canada's new jet will change the competitive landscape.

Built from new lightweight materials, the CSeries aircraft could be attractive because it would be able to cross the Atlantic in one hop when carrying a small load of passengers.

When travelling westbound, BA's twice-daily flights have to stop in Ireland to refuel. That is because the A318, the smallest member of the Airbus fleet, lacks enough range to make the whole trip against prevailing headwinds.

(Reporting by Tim Hepher; Editing by Chris Wickham)

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