This volatile market shows no signs of settling down in 2008

Prior to October 2005, fares to the UK and Europe were usually predictable, both in cost and restrictions. Then the all-Business Class carriers, Eos, Maxjet, and Silverjet, took off and that changed everything. Here’s a peek into how the latest developments will play out in 2008.

Eos will continue to offer low fares. When it launched, the carrier thought it could hold fares to the $6,000 level. It didn’t take long for Eos to realize that to sell its inevitable excess inventory it would have to drop prices to $3,000, the going rate from Premium Service Carriers (PSC) like British Airways and Virgin Atlantic. Expansion—the carrier now offers 44 flights from New York/JFK to London/Stansted—has forced it to cut further. Fares are $1,955, the lowest of any carrier—perhaps a sign it has reached critical mass for the number of seats it can sell at higher yields each day, from New York.

Moreover, now that American Airlines is flying JFK-Stansted, rolling out a big ad campaign, and offering mileage bonuses to attract travelers to the route, Eos will feel even more pressure to be competitive on price, even though it offers a far better product than American. That $1,955 fare is only $75 more than American’s. This could be one of the top values in 2008.

But Virgin and British Airways aren’t blinking. Virgin is charging $3,668 for an Upper Class seat and British Airways is maintaining its fare at $2,950.

However, BA, trying to be clever, has come up with a wacky scheme: Fares that are “flight specific.” BA flight 114, which leaves only 30 minutes later than flight 116, offers the more deeply discounted Business Class fare: $2,950 vs. $3,600. A 21-day advance fare can be $1,250 less on flight 114 than 116, and walk-up fares $3,700 less. This is odd.

BA just launched a nice new Business Class seat and a one-way upgrade to First Class as an inducement to try it. Now it’s playing US-carrier fare games.

While MAXjet launched new service from Los Angeles, it is often ignored by the major carriers, and will have little influence on fares in this market. Sign up for the airline’s special email alerts and you’ll be the first to know about fare sales that will likely start in the $998 range from LAX.

On the topic of travel from the West Coast: Fares from the east are significantly more competitive; consider purchasing separate tickets to these low-cost gateways. Similarly, consider London as a starting point in Europe, with some of the lowest Business Class fares available, and navigate through the continent with the many connecting flights available.

Contrary to what most surveys say, if you’re willing to search a little for a deal or employ an Advanced Ticketing Strategy, 2008 should again be a year of great comfort in the air!