Why flying may get a whole lot cheaper

Lauren Lyster

Has the airline industry become ... sexier? Well, consumers are able to fly roundtrip from Newark to Paris on an all-business-class Boeing 757 if they snag a special fare of $2,014 a couple, on a new airline called La Compagnie. It's one of a host of new commercial airline startups taking off, according to a report in The Wall Street Journal, even though the industry has been plagued by bankruptcies and other challenges.

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"The industry goes in these phases -- right now it's hyper-consolidation phase with four airlines serving more than 80% of all domestic travel," explains Yahoo Finance Senior Columnist Mike Santoli in the accompanying video. "That makes an entrepreneur say, 'Disatisfied customers are an opportunity. Underserved routes are an opportunity. Let's get in there and present some competition to this incumbent carrier that people tend to hate over time.'"

Related: Airline mergers are good for consumers, apparently

The result? There's the reinvention of a discount carrier service that went belly up in 1987: People Express Airlines, which has been offering fares as low as $56 one-way from its hub in Newport News, Virginia to Boston, Pittsburgh, Newark and West Palm Beach.

In addition, there is the aforementioned French carrier from Dreamjet SAS focusing on the Newark-to-Paris route, which launched Monday.

Eastern Airlines is trying to revive a brand that was shuttered in 1991 with plans to operate charter flights out of Miami beginning next year. And Odyssey Airlines plans to fly business-class jets from London to New York in 2016. 

It's not without significant risk. According to the Journal, of nearly 400 air carriers authorized to operate by the U.S. government since 1978, 264 flew then shut down, 62 were approved but never took off and only 68 are currently flying. There have been 77 bankruptcies in the past two decades.

Even new services that customers are excited about struggle. Virgin America, one such example, launched in 2007 and has lost more than $600 million, while it just turned its first annual profit of $10 million last year. 

But if the competition flourishes, does that mean a better experience for customers of the big airlines? "I think yes is the short answer," says Santoli. "But it's going to be very localized in those areas, at those hubs where they're presented with a new challenger. That's usually the way it goes."

Related: Can United Airlines stock keep climbing even as customers rank it near the bottom in satisfaction?

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