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Low-cost Zoom challenges traditional carriers

Zoom Airlines, a low-cost Canadian carrier, began non-stop flights between New York and London on Thursday, challenging major airlines on lucrative transatlantic routes.
This handout picture obtained 18 April 2
Low-cost Canadian carrier Zoom offers transatlantic flights from New York to London for as little as XX- / AFP/Getty Images
/ Source: Reuters

Zoom Airlines, a low-cost Canadian carrier, began non-stop flights between New York and London on Thursday, challenging major airlines on lucrative transatlantic routes.

Zoom, which began operating transatlantic flights between the United Kingdom and Canada in 2003, is offering daily flights between New York’s John F. Kennedy International Airport and London’s Gatwick Airport for as low as $199 each way, excluding fees and taxes.

That is significantly lower than fares generally available from major carriers such as British Airways Plc and Delta Air Lines Inc.. A round trip ticket in mid-July runs about $800, or $400 one-way, according to a search on travel Web site Expedia.

The savings Zoom offers are somewhat mitigated by its use of only one aircraft on the New York-London route, which make passengers more vulnerable to delays and cancellations, said Terry Trippler, an airline expert who operates travel club Tripplertravel.com.

“Under normal conditions, United (Airlines) or American (Airlines) would be a better deal,” Trippler said.

Both airlines offer similar flights for $50 or $100 more.

Low-cost carriers have made a huge impact in the airline industry, with carriers such as Ryanair Holdings Plc and Southwest Airlines Co. taking market share and dragging down air fares. But they have generally focused on domestic or short-haul routes so they could increase frequency.

Traditional network carriers in the United States have in recent years expanded their international service in part to escape low-cost competition domestically.

Start-up transatlantic service has generally focused on all business class flights. And it remains to be seen whether the low-cost model can work for international traffic, where comfort plays a bigger role.

But Zoom claims it works.

“We’ve been successful in the Canada to UK (market), so we’re bringing the low-cost, long-haul model into the U.S.,” said David Clements, vice president of sales and marketing.

He said the carrier is able to offer lower fares because it makes sure planes fly at 85 percent to 90 percent capacity — which is typically fuller than rivals.

Also, the relatively new company is not burdened with unions and other expenses like the “legacy carriers,” he said.

Economy class tickets can run as high as $399, depending on demand and season, but 20 percent to 25 percent of the seats will be available for the base fare, said Clements.

Slightly roomier premium seats are available for an additional $179 one way. Premium passengers are also entitled to express baggage claim and check in and an open bar.

All Zoom passengers receive a meal, snacks and in-flight entertainment included in their fare.

The low-cost carrier is hoping to expand its routes in the United States to one or two other cities, such as San Francisco or Boston within the next year, Clements said.