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British Airways to launch new direct service

British Airways plans to launch a new airline in June that will offer direct service between New York and the European mainland.
/ Source: The Associated Press

British Airways plans to launch a new airline in June that will offer direct service between New York and the European mainland, catering mainly to business and affluent leisure travelers.

The new carrier, named "OpenSkies," will begin with service to either Brussels or Paris using a single Boeing 757, British Airways said Wednesday. The carrier plans to add a second aircraft to the other destination later this year, and four more aircraft by the end of 2009.

The airline is aimed largely at business and well-heeled leisure travelers. Only 30 of each plane's expected 82 seats — five rows in the back of the plane — will be economy class. The rest will be almost evenly split between business class and a new mid-priced level known as "premium economy."

"We don't intend to be a mass-market type of vehicle," said Dale Moss, British Airways' former director of worldwide sales, who will serve as the new venture's managing director. "We're a very special point-to-point application."

OpenSkies will draw on elements of British Airways' existing business, from the Union Jack-themed logo on the planes' tails to the carrier's sales force and frequent flier plan. It will also be able to take advantage of its parent's fuel hedges, which will allow the new carrier to lock in advantageous fuel prices.

The new airline takes its name from the Open Skies agreement hammered out between the U.S. and the European Union last spring. The agreement allows airlines to fly from anywhere in the Europe Union to the United States and vice versa — something they couldn't do in the past.

By launching a new carrier flying directly from the continent, British Airways will be taking on not just established U.S. carriers such as UAL Corp.'s United Airlines and AMR Corp.'s American Airlines, but also European airlines such as Lufthansa and Air France-KLM. On the Paris route, it will also compete against L'Avion, a new all-business class carrier.

"Our competition will be formidable," Moss said.

OpenSkies is meant to complement British Airways' overall business, not compete against it, Moss said.

But as a separate brand, OpenSkies will be able to serve as a "research and development lab" for its parent that can try out new ideas and implement ones that work quickly across its small fleet. It will also operate under a separate cost structure, and possibly separate labor contracts, from British Airways.

"We've got to use the entrepreneurial spirit of a small company — the hungriness, and a little bit of the fear — that says 'hey listen, if we're not successful, we don't exist,'" Moss said.

Moss said the airline is working on "some great ideas for pricing, not just for promotional fares to start," but was unable to discuss ticketing options without receiving approval from U.S. and U.K. regulators.

Jonathan Wallden, finance director for OpenSkies, said the airline expects to confirm the details of the inaugural route by the middle of next month. The carrier hopes to operate out of New York's John F. Kennedy International airport, but may be forced to shift its operations across the Hudson River to Newark Liberty International.

Other destinations on both sides of the Atlantic could be added later. In Europe, Moss said OpenSkies is considering flying to Amsterdam, Frankfurt, Madrid, Milan, Zurich and Geneva. Additional U.S. destinations could include Boston, Washington and Philadelphia, he said.