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Quick Hits: Ryanair Flies London to New York - for $13


Brief scrutiny of today's headlines.

Want to fly to England or Ireland for about $13, before taxes?

Next year, Ryanair (RYAAY) plans to offer flights from Dublin and Stansted, an airport about 40 miles northeast of London, to New York, Boston, San Francisco, Los Angeles and Florida at that price.

Round-trip London-to-New York flights booked 2 weeks in advance on competing carriers with a 2-week stopover are now about $1,620.

The hook: Ryanair travelers have to book early. Though the airline hasn't said how early, you can bet the tickets will be non-refundable. At these prices, it's not hard to imagine an entrepreneur scooping up buckets of tickets in advance and selling them at a hefty premium during peak travel periods, or to students during the summer. This could damage the airline's marketing effort.

Economy class will be cheap, and, one assumes, sharply limited, but the airline says business class will be "very expensive." Heh. Imagine that.

Ryanair, a discount carrier, plans to buy about 50 planes competitors have grounded due to high fuel costs. Ryanair is betting the cheap seats will get the airline noticed and the extra capacity will allow it to build market share when the economy rebounds.

That's a reasonable bet - if shareholders are willing to take a short-term hit in earnings.

JetBlue (JBLU) and Southwest (LUV) are successful discount carriers, but their fares are gold-plated compared with Ryanair's proposal. The difference is that the US carriers offer one class, and don't sell cheap seats as a loss-leader.

Selling a buck for 99 cents will send sales through the roof, but the bottom line will never catch up. Ryanair's proposal will get the airline noticed, but it's unlikely that customers looking for a cheap seat will upgrade to business class. Still, flying cheap seats across the Atlantic beats flying empty seats.

Ryanair has a bold plan in a struggling industry - but if it places too many restrictions on the cheap seats, it will kill the buzz.

Keep an eye on this. Someone at Ryanair is smart.
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