LUTON is not often linked with Manhattan in the public imagination – except at the Bedfordshire town’s airport, where posters proclaiming “Luton, twinned with New York” line the roads and terminal walls.

The airport is normally associated with flights to Mediterranean holiday hotspots, but the posters advertise its new star turn – Silverjet, a business-class-only airline that flies well-heeled travellers to New York in a silver Boeing 767.

Silverjet, which has raised £50m from investors in London and is listed on the Alternative Investment Market (AIM), operates from a private terminal opposite the main airport building. Its plane has 100 seats, half the number it would carry if flying for a conventional airline. The luxurious service, which costs from £999 return, is proving popular: in June, Silverjet ran 70% full.

The British company is part of a new wave of carriers opening the first new niche in air travel since low-cost airlines became widespread in the early 1990s.

The movement’s focal point is London. Eos, a privately owned American group, flies from Stansted to New York, as does Maxjet, an American airline with a listing on AIM. From the Continent, L’Avion flies between Paris and New York, while Privatair, a Swiss airline, runs business-class-only flights from Germany to America for Lufthansa.

Unencumbered by the high staff costs and bulky infrastruc-ture of traditional airlines – and borrowing some of the cost-sav-ing tricks adopted by budget airlines – the new wave is offering business-class service for as little as half the price of that charged by carriers such as British Air-ways and Virgin.

The timing of their launch has been opportune. Transatlantic business travel is booming, thanks to healthy economies, steady stock markets and a boom in mergers and acquisitions. As demand has grown, so has customer dissatisfaction with crowded airports and traditional services, a backlash epitomised by the recent public outcry over standards at Heathrow, London’s largest airport.

Yet the jury is still out on whether all the start-ups can survive. All have aggressive expansion plans, may need to call on investors for more money to finance them, and their ability to withstand a market downturn has not yet been tested. And the big boys are unlikely to let them exploit their niche unchallenged for much longer. BA and Virgin are working on plans for their own business-only planes and are likely to make life more difficult for the fledgling carriers.

On the face of it, the three London airlines are all chasing the same market – London-New York business travellers. Lon-don-New York is the most lucrative international air route – worth $1.4 billion (£680m) a year, according to one analyst – with 7,000 seats a day, 2,950 of which are provided by BA, which has 11 daily flights.

But in reality, Silverjet, Maxjet and Eos are after different parts of the market. Eos, which flies the smallest aircraft of the three – Boeing 757s with 48 seats – is unashamedly upmarket, going after the cream of City bankers. Maxjet is a value proposition, targeting small-business people, leisure travellers, and middle management. Silverjet is between the two, looking to pull in both well-heeled individuals and suits.

Silverjet, which has been flying since January, does not put much effort into getting corporate deals, which are the bread and butter for conventional airlines. Typically, airlines like BA and Virgin will negotiate a special rate with large companies, with a travel agent making the bookings on the firm’s behalf.

“We don’t really want corporate deals. They always want you to give them a rate, and our prices are keen enough anyway,” said Lawrence Hunt, Silverjet’s chief executive.

“What has been surprising to us is how many people are able to find us directly. About 80% of our passengers are buying direct, either on the internet or by phone. We are spending £200 a week on Google and it’s bringing us £60,000 in sales.”

Maxjet, which sold 83% of its seats in June, also has an aversion to corporate deals. Chief executive William Stockbridge, a veteran of the America aviation industry with spells at Pan Am and People’s Express, said he did not expect business from top-ranking executives.

“We are not going to get a managing director of Goldman Sachs travelling with us. They want to go first class and if it costs $5,000, they don’t care; they are not paying.

“With our prices [Maxjet return fares start at £349], we can attract people who would be flying economy or premium economy. These days economy is always crowded – it is a much less pleasant experience than it used to be, so we offer good value.”

Stockbridge said Maxjet had “borrowed a page out of Ryan-air’s playbook”, including extreme vigilance on costs.

One example is Maxjet’s choice of seat – rather than bed seats, which fold flat, it has gone for a traditional armchair style. “They cost $5,000 each, while the Silverjet bed seat is probably $25,000 and the Eos one $50,000. And those bed seats weigh a lot, which increases your fuel burn.”

At Eos, only 25%-30% of passengers are booking direct, said chief executive Jack Williams. “We have a completely different business model from the other two airlines. We are offering first class at a business-class price,” he said.

Research by the airline, which first flew in October 2005, shows that it is attracting a “younger, wealthier, and better educated” group than forecast. It has also become something of a City and Wall Street favourite; Williams will not say exactly what proportion of passengers come from the financial-services industry, but admits it is “the largest sector”.

“What we are finding is that there is a real community feeling on board – these people have the same mindset. Eos is moving past being an airline and is becoming a lifestyle brand,” said Williams, who said the airline planned to announce sponsorship deals shortly.

And while Eos is the most expensive of the trio, it is still much less expensive than another option for travelling tycoons – chartering a business jet. According to brokers, a transatlantic return flight on a chartered private jet would cost about £60,000. The aircraft would carry 10 people, giving a per person trip cost of £6,000 – about the same as a first-class air fare.

All three of the new airlines plan to expand quickly. Hunt said Silverjet would eventually triple the size of its Luton terminal and had plans for extra flights not only to New York, but also to Chicago, Dubai and cities in India and South Africa. It had also held discussions with Asian investors about setting up a Silverjet franchise in the Far East.

Those expansion plans struck a problem last week when the introduction of Silverjet’s second 767 was delayed by an unforeseen technical problem, which Hunt said will require structural work by Boeing to sort out. It is now unlikely to join the fleet until next month. When the news was made public on Wednesday, Silverjet’s share price fell 13%.

Maxjet already has the most extensive network of the three, flying to Washington and Las Vegas, with Los Angeles flights starting tomorrow. Stockbridge said he would take a cautious approach to expansion – “we recently turned down two more aircraft, one because we didn’t like its pedigree, and one because of price” – but will eventually fly to cities east of London.

Eos has concentrated on building up its frequency to New York, and now operates 40 flights a week, with more starting next month when a fifth aircraft enters service.

“Frequency is a big deal for our customers, and we are now at the stage when they do not have to change their business schedules to fit our timetables,” said Williams.

He said the company planned flights between New York and Paris in 2008, and flights to other American cities from London. Eos would expand its fleet to include larger 767 aircraft for flights to the west coast of America, probably late next year or in 2009.

Expansion plans might require more cash. Having raised £25m from its stock-market float in May last year, Silverjet went back to the markets in April to raise another £27m.

“In this phase, the faster we grow, the more capital we need,” said Hunt. “If we wanted to ramp up our expansion, we would look to increase our capital base.”

Stockbridge will also not rule out more fundraising, although he said his company’s AIM listing in June left it well-financed.

Eos is not a public company. It was launched in 2005 with £87m in equity provided by a range of investors, including Golden Gate Capital, Sutter Hill Ventures, and Maveron, a venture-capital firm co-founded by Howard Schultz of Starbucks.

In November last year, after a loss-making first year, it said it had raised a further $75m from its existing shareholders and four new investors.

“We will probably be doing another round of funding,” said Williams, “but we are way beyond the proof of concept on this – if it was going to fail it would have failed when we were doing just one flight a day for several months. Now it’s about managing a successful business.”

All three airlines believe they can withstand an economic slow-down, something that could be on the way after stock markets tumbled on both sides of the Atlantic last week as fears of a credit crunch grew.

“We are not talking about a major collapse here, but a correction,” said Hunt. “And it works in our favour, because history has shown that, in downturns, business travellers don’t stop travelling but they do reduce how much they are willing to spend. We will pick up corporate business in that situation.”

As well as an economic slow-down, the trio face potentially greater competition from established airlines. Not only are BA and Virgin working on their own all-business-class plans, but from next April, an open-skies agreement between Europe and America will liberalise flights from Heathrow.

Until then, only four carriers– BA, Virgin, United and American – are able to serve America from the London hub. BMI British Midland and a phalanx of powerful American airlines, including Delta, Northwest and Continental, are likely to start services from Heathrow, with a corresponding increase in flights to New York. American Airlines, meanwhile, is starting the first New York flights from Stansted, home of Eos and Maxjet.

Airline executives say the emergence of business-class airlines shows that the transatlantic aviation market might be fragmenting, and established carriers could find themselves under attack from above and below.

Zoom, a low-cost airline owned by the Scottish leisure entrepreneurs Hugh and John Boyle, started flying from Gatwick to New York in June. Zoom has low fares – from £129 one-way – and offers upgrades to premium economy for an extra £99. In July, its first full month of operations, it sold 91% of its seats – an astonishing performance fora start-up airline.

Jonathan Hinkles, managing director, said the airline was attracting young travellers who were making short stays in New York. “Half of our passengers are between 21 and 35, and one quarter are not staying a Saturday night in New York, which has always been the prerequisite for a cheap fare from one of the big airlines.”

While Zoom does not keep tabs on who is flying on business, Hinkles said it was obvious that some of its passengers were not holidaymakers. “We have passengers who are going for short stays with hand baggage only, so it’s fair to say we are attracting business travellers.

“We are the only airline witha premium economy service from Gatwick to New York – all of the others are flying from north of the Thames.”

SILVERJET v MAXJET

JUMP OFF the train at Luton Parkway station and a taxi in Silverjet colours is waiting to take you up the hill to the airport. Silverjet’s choice of Luton as its base raised some eyebrows, but the airport gives it one thing none of its rivals has – its own private terminal.

Silverjetters use part of what was Luton’s old terminal. It has been refurbished into a large lounge, and from there passengers are taken through a dedicated security channel, and on to a small bus to the plane.

Staff take your passport and check you in as you arrive, or will come to you in the lounge if you want to take a seat first.

Silverjet says many of its passengers are going on holiday rather than for business. There were several families with children, and a group of women heading to New York for a shopping trip.

Sitting beside me was a claims adviser at Lloyd’s. He chose Silverjet because he wouldn’t have to use Heathrow and he liked the service. “I would think that at these prices they would be taking lumps out of BA and Virgin,” he said.

My flight was an hour late taking off. The cabin staff were excellent, and the service was good. The seats fold out into a bed, but not flat – you sleep on an incline. Movies are on a hand-held player.

AT the airport, Maxjet is the most like a conventional airline. At New York’s John F Kennedy airport you go to an ordinary check-in desk (without queues), through security and into a lounge provided by Korean Air.

My fellow passengers were mainly American. Not many knew where Stansted was. “How do you get to London from there?” said one man. He normally flew with Continental, but the Maxjet fare he paid ($1,000) was unbeatable. “To go business class on a normal airline it would have been at least double,” he said.

JFK is convenient for New York, but crowded for airlines. Maxjet can’t always get a gate, and we were taken to the plane by one of those machines you only see at American airports – a combination bus and scissor lift. Once on board, we had a long wait to take off. Due to depart at 8.15pm, we left at 9.35pm.

The Maxjet cabin is not as luxurious as Silverjet’s – conventional cradle seats rather than seatbeds – but it has masses of leg room. My food was fine, without being sensational, but the highlight was the staff, who were eager to please. The in-flight entertainment is a hand-held player with preloaded movies – not a fabulous selection.

The arrival at Stansted was painless. I was through immigration in minutes.

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