Diane Francis Business Profiles

Tuesday, September 12, 2006

Brian Fetherstonhaugh, CEO Ogilvy One

Brian Fetherstonhaugh, Chairman and CEO of OgilvyOne Worldwide, spent the last 18 months touring his company's 100 offices hunting for trends and found the "monster" that is affecting all businesses.

"The monster is that consumers everywhere are seizing back control through the use of technology," he said in an interview with the Sun. "The iPod is not about a technology. It's people seizing back music agendas from the DJs of the world. TiVo isn't a storage device but it is people choosing their own television agenda. Google isn't a search technology but a new shopping agenda for consumers. These are all the same thing. Power to consumers."

Businesses must understand that the technology is being used to change what he calls the "consumer journey".
"We tell clients to forget the technology. Watch how people shop," he said.

For instance, he noted the changes in his own buying habits.

Two years ago he bought a guitar in a music store. His most recent guitar purchase was different.

"I searched about guitars on the Internet and read the different manufacturers' websites. I went to comparison websites which contained third party referrals, then went to eBay to check out residual value, or what a used version of each was worth these days," he said.

"I still went to the store to buy the guitar because you need to hold and play a guitar before you buy it. But I spent most of my time setting up my purchase digitally. Then I signed up for an e-catalogue to create the next journey," he said.

Everything from cameras to cars and colleges are being researched and bought online these days. But advertising budgets are not reflecting this behavioural sea-change, he said.

"Consumers spend 18% to 25% of their time with digital media and yet advertisers invest 6% of their dollars there," he said. "There is a digital spending gap and a catch-up coming. So we tell our clients to find out how their potential customers are shopping and to match budgets with shopping behaviour."

OgilvyOne is part of the storied Madison Avenue great, Ogilvy & Mather, and specializes in what's known as "direct marketing". This is advertising aimed at individuals and measured by actual sales as a result of mail, e-mail, 800 numbers, pay-per-click ads or interactive websites.

OgilvyOne devises campaigns or acts as a consultant to clients such as Dove, Nestle, Kraft, IBM, Cisco, Amex, Mattel and Motorola.

And while the "monster" trend is global, the use of technology varies around the world.

"Consumers have taken control but technology usage varies. There is six times as much e-commerce on telephones in Japan and South Korea as on computers," he said. "And Asia is ahead in the digital wallet and other cell phone use."

The "wallet" consists of swiping cell phones in retail outlets or train stations in order to make secure transactions that are added to phone bills.

"Japan and Korea are also ahead in terms of gaming and television shows on cell phones. There are 30 TV stations available on phones in Korea such as news or live sports," he said.

OgilvyOne advises clients on how to follow all this consumer fickleness.

"Advertisers must get the wake-up call and understand how people spend their time and how they spend money, then hit the refresh button every six months or a year," he said.

Mr. Fetherstonhaugh personally knows about adaptation and flexibility. He travels 110 days a year in this job and has lived in a number of cities. He's a Montrealer who was recruited in 1997 to advertising's mecca, New York, after running Ogilvy & Mather's Canadian operations.

"At first, I didn't think I'd like New York. I thought it was interesting and important, but nasty like taking cod liver oil," he said. "I underestimated the vibrancy and diversity. There are 20 Broadway shows and 500 really good restaurants and a lot of energized people within walking distance of here."

But he finds the "headspace" is different.

"Canadians are collaborative and globally minded which is helpful in this job," he said. "We try to create a sustainable collaboration not based on a compliance mentality. I lead with my ears, not my mouth."

In addition to being CEO of the direct marketing efforts, he is also COO of Ogilvy's $1-billion-a-year IBM account. This dual role, of shepherding a specific client and running a full-service operation, is not unusual to Ogilvy.

"It's a unique model having client and operating responsibility but it grounds us," he said. "It's a very good idea."

Tuesday, August 29, 2006

Taxi NYC and Paul LaVoie

Paul LaVoie was inspired by famous ad man, Jay Chiat, who said: "How
big do we have to get before we get bad?"

Mr. LaVoie, founder and chief creative officer of hip new ad boutique
in New York called Taxi, believes the answer is 150.

"There is an African tribe which gets to 150 people then sends two of
its leaders out to start another tribe," he said in a recent
interview. "The US army never has more soldiers in a unit than 150 or
else it's dysfunctional and dysfunctional in military terms means
means dangerous."

He took his epiphany to the bank and two years ago left his Canadian
agency behind with its 150 employees in order to start another

"It was time to go and I said `where do Iwant to live? New York City
of course,'" he explained.

Almost immediately, Taxi New York and Mr. LaVoie made a splash. The
firm is moving into bigger premises and has turned down business. For
his part, Mr. LaVoie just became President of the prestigious New York
Art Directors, an 85-year-old club which has had members such as Walt
Disney and other notables.

"I love New York. It has great attitude and anything is possible with
yelling or grease. It's friendly," he said. "I'm from Quebec City and
started Taxi after being creative director of Cossette [in Montreal].
Then I moved to Toronto until two years ago. Personally, I needed to
go and Taxi Canada has really taken off since I left. Maybe I should
leave New York quickly too."

Taxi began in 1992 and the name was chosen because it was unique, but
also symbolic.

"When I was working at a large agency I saw all those silos. Solving a
big problem requires you to think holistically. Agencies are ghettoes.
You don't make big things in ghettoes. You need clear focus and
collaboration, good mojo with the client and only three or four people
involved. You can only get four people into a taxi and there's more
accountability in a small group," he said.

Taxi was also different because it was art and design driven.
"We started by merging design and advertising and got involved in
client packaging, retail space design," he said.

Success came immediately to Taxi in New York which is surprising
since, unlike other agencies, Taxi's New York office was not opened
strictly to serve an existing Canadian client but a start-up hoping to
tap into fresh business.

"Most advertising agencies go to new countries on behalf of their
clients. The problem with Canada is we don't have global brands, apart
from Four Seasons, BlackBerry or Cirque du Soleil," he said.

So far, the gamble paid off for him and his 10 Canadian partners. Mr.
Lavoie said the firm is up to $100 million in billings and was
profitable in its first year. The tiny start-up's first big American
gig was to rebrand College Sports TV which was then subsequently sold
for $360 million. This generated attention and more business for the
firm than Taxi is able to, or wants to, handle.

"Turner Broadcasting invited us to do a pitch," he said. "We were too
busy so I referred them to Toronto and they won it. We have three or
four full-time gigs and a lot of project work. Clients, which have
agencies, want to use other agencies like us. They are not cheating
but curious."

Its New York clients also include Amp'd Mobile and Rail Europe. In
July, Outdoor Life Network -- a hockey broadcaster owned by Comcast
and soon to be known as Versus -- picked Taxi to handle its major
rebranding campaign this fall.

Taxi is moving to larger premises to accommodate its growing staff,
who are all in the twenties.

Last month, Mr. LaVoie hired former Euro
RSCG President, John Berg, to "operationalize" the company as well as
to relieve Mr. LaVoie from his role as acting President.

Taxi is now moving beyond its niche mandate into media planning for
its clients only because the media is changing.

"In 1960, if you advertised on the three networks, you could reach 90%
of housewives," he said. "Today, you need 100 networks to do that. Now
the media is a dialogue. We're conversing. It's not talking at me
anymore and the conversation is going on in all kinds of places."
But the firm will remain focused.

"We have no departments. We don't do direct mail or media buying," he
said. "Big agencies create beasts. They become a pitch machine and
pitch anything that moves. We're small. We politely decline, not
arrogantly. We chose our clients as they choose us. Just like
marriage. There are lots of bad marriages creating bad sex. We don't
want to do that."

Thursday, August 24, 2006

Saatchi & Saatchi and Kevin Roberts CEO

Kevin Roberts was kicked out of school at 17 in northwest England, but immediately landed a marketing job in the 1960s with British designer Mary Quant in swinging London.

Years later, he and his family live in remote New Zealand but he globetrots the world as CEO of Saatchi & Saatchi, a giant ad agency with 134 offices in 84 countries and 7,000 employees.

With far-flung operations and a home "on the edge of the world", as he puts it, he is a denizen of airports and hotels. This is why last week his assistant suggested an e-mail interview be best and he responded to the Sun's questions within mere hours on a myriad of topics.

"I became a brand manager for Mary Quant's cosmetics ["Make Up to Make Love In!"] and I learned about creativity, connectivity, emotional leadership and collaboration," he e-mailed. "But advertising today is the most fun it's ever been."

Saatchi & Saatchi was launched in 1970 in the UK by two brothers, Charles and Maurice, and became the world's biggest ad agency with more than 600 offices. It pioneered public ownership of an industry that had been characterized by entrepreneurship. In 1995, the brothers were ousted after a boardroom dust-up, and five years later, in 2000, their namesake firm became part of The Publicis Group holding company out of Paris.

Mr. Roberts entered the agency business late and at the top. He toiled on the client side of advertising going from Mary Quant to Gillette, Procter & Gamble and Pepsi. In 1997, he joined Saatchi and believes the industry has a huge upside.

"I'm a radical optimist," he wrote. "We live in the Age of the Idea and the Consumer is Boss. Mass marketing is dead. Creativity rules OK!! It's the most exciting it's ever been. Our challenges are two-fold -- a) keep attracting the bravest and most innovative, and b) have the courage to unleash and inspire 'em by getting out of their way!"

One of his trademarks is "lovemarks" and "lovemark thinking" which he defines as brands that inspire loyalty beyond reason. In other words, the challenge is to create marketing/advertising that gets consumers emotionally attached, or in love with, products or services.

To promote "lovemarks" all media must be brought into play and this won't change in future.

"No one medium will replace another. The consumer wants `and/and' -- not `either/or'," he writes. "All four media - print, television, radio, web - will be interactive. All will be consumed on-the-go. All will be idea/content driven. All will have some digital component. All will engage, not just inform."

Likewise, he believes that the advertising industry will shift to a new set of paradigms, including becoming predominantly female.

"Agencies will be full of connectors not directors, will be fast not slow, will be 70% female, will be full of inspirers not managers, will be partners not servers, will be diverse, will have lots of anthropologists/sociologists on staff and will be full of noise, fun, passion and success," he wrote.

Another shift is that consumers are not only the boss, but they are more skeptical than ever. This means that tried-and-true techniques such as product placement in movies or television as well as celebrity endorsements are no longer always successful in promoting sales.

"Celebrities sell magazines and reality TV shows that's for sure. But products? Less and less ... consumers are confident in their own judgment. They're more convinced by a friend than a celeb," he said.

Changing consumer attitudes plus a shift in media emphasis has made advertising more challenging, but there are many innovators on top of trends.

"Clients get the advertising they deserve. You see bravery everywhere from Procter & Gamble to Wal-Mart, Toyota to Honda (even from Detroit), Sony to Samsung. Clients are on the move. They get it," he said.

A mix of disciplines, including public relations, is necessary to orchestrate intelligent campaigns these days.

"Great ideas come from anywhere ... the client, the agency, the media agency, the consumer. It's about getting round the table together at briefing time, developing a holistic consumer-driven idea together, then figuring out how to emotionally engage with the consumer at every touch point in new, exciting ways. As partners," he wrote.

The most innovative advertising nation is New Zealand, in his opinion.

"I live there," he added. "Great ideas come from the Edge. Brazil, Argentina, Thailand are very hot right now. The US is doing some great stuff - especially in 'new' media - and the best ad in 2006 came from the UK (Fallon's `Sony Balls')."

Wednesday, August 16, 2006

Google, Fox Interactive, MTV and XM Radio

Every time someone searches for "mesothelioma", a form of asbestos cancer, Google Inc. receives $50 from law firms and other advertisers.

This is the highest "key word" auction price paid by advertisers to Google and it guarantees that their ads appear beside any "mesothelioma" search results.

Google's system of matching "key words" with content is transforming advertising. So is Google's pay-per-click advertising charges.

But Google announced three high-profile deals with media companies recently with Fox Interactive, MTV and XM Radio that notes a new advertising thrust.

"We are a real partner to the world's largest publishers [content providers] as well as ad agencies and advertisers," said Patrick Keane in a recent telephone interview with the Sun. He is head of Google's Advertising Sales Strategy.

The media companies have agreed to let Google provide search technology for their websites and to sell advertising on their sites in return for a share in the proceeds.

Google's partnerships with media companies and other content-providers allows it to place advertisements "inside" sites, not merely beside search results.

"You could be reading an article in the New York Times on Tiger Woods' recent victory and you might actually see Google ads around that article. We match our ads to the content on that page. We have many partners, About.com, AOL, the Times and now Fox, MySpace, MTV and XM," said Mr. Keane.

These partnerships also help Google do "site targeting" for its advertisers.

For example, a Hollywood studio promoting "An Inconvenient Truth" will provide Google with audience research such as their interest in energy, conservation, environmental, eco-tourism.

"We will help them identify a network of sites across the web to reach that psychographic audience to promote that movie," he said.

This move by Google into media partnerships is designed to expand its advertising revenues beyond search results which comprise only 10% of web usage, he said.

"Ninety percent of web use is reading and buying," he said.

Despite win-win partnerships, some content providers and ad agencies worry that Google will eventually enter their turf. Ad tycoon, Sir Martin Sorrell of WPP Group in Britain, has posed the question "is Google friend or foe?"

"We are a friend. We are a great mechanism for advertisers and their agencies by providing accountability, scale, relevancy, a great user experience," he said.

"We also work with small advertisers as well. Google means that the smallest advertiser has the ability to compete with the greatest. We have democratized advertising."

Google has also expanded from its original simple, text ads.

"We started with just 95 characters of text but that's broadened," said Mr. Keane. "We have click-to-play video, banner ads, but one thing we certainly have a strong aversion to is interruptive user experiences such as pop-up ads or continuing animated ads."

Google has video ads now but they must be clicked on by the users.

"With our videos, the user must initiate the experience. Interruptive advertising is not useful or relevant for a user," he said.

Google's mission is to provide search for free and make money by providing a tasteful electronic billboard aimed at pleasing, not jarring, viewers.

"Our advertising platform is much broader than the flat, two-dimensional content of print which is why we like to work with Fox, XM and others," he said. "We can bring the same relevancy to other forms of media like radio."

When asked whether Google will move into content like Yahoo, which employs journalists, he said that's not in the cards.
"We're pretty comfortable where we are. We are a great conduit for publishers [content providers] to syndicate [sell ads] through us. Our partners already have great content and we are a mechanism to tap that content," he said.

Google's advertising strategy continues to result in huge revenue jumps, but one cloud on the horizon is the issue known as "click fraud" which involves unscrupulous competitors clicking continuously on rivals' advertisements in order to run up their costs. Google recently settled a court case with an advertiser who had been over-charged due to this type of fraud and the company agreed to set aside $90 million in free advertising for future successful claimants.

"Invalid clicks is a problem in the industry," said Mr. Keane. "We want to build a system that's even more sophisticated to quickly see where some of the clicks are invalid and be able to filter those out. We have a lot of technology in place that finds that behavior before it hits our advertisers and publishers. We have the world's best engineers, scientists and mathematicians focused on this. And we will refund our advertisers and publisher partners who are victims of click fraud."

Tuesday, August 08, 2006

Hill & Knowlton Paul Taaffe

Paul Taaffe immigrated in the 1980s to London from Australia as a young advertising executive and eventually fell in love with the city.

When asked in 2002 to move to New York to run the worldwide operations of public relations giant Hill & Knowlton, he balked.

“I suggested I could run Hill & Knowlton from London, but my chairman, Sir Martin Sorrell of WPP Group, said `there are only six multinationals in the UK and we’re one of them’,” recalled Mr. Taaffe in his New York office.

“He was right. There are 500 global titans here, located in New York or a two to three-hour plane ride from New York. London is 13 hours away. So if you are serious about communications or changing the business model you have to be in America,” he said.

Hill & Knowlton is one of the world’s biggest public relations firms, with more than $300 million in billings. Mr. Taaffe is its Chairman and CEO worldwide which involves managing 73 offices in 36 countries. Hill & Knowlton became part of the WPP fold years ago, along with a number of advertising agencies and public relations giant Burson-Marsteller.

Roughly 75% of Hill & Knowlton’s work involves routine public relations, but 25% involves high-profile government lobbying and policy advice drawn from Hill’s worldwide a-list of high-profile former generals, civil servants, politicians and their advisors.

“We give more policy advice than political advice and we hire all parties. In the U.S., for a few years, Democrats have been cheaper than Republicans, but there’s a resurgence and Democrats are now asking for more money,” he said.

Washington’s lobbying rules are the strictest in the world. There is a lifetime ban for former government officials involving any projects they were directly involved in while in office and a two-year ban on anything involving their former department.

Conflict rules are less rigorous elsewhere, but lobbying and policy advice is restricted to English speaking countries, he said.

“It’s uncommon throughout Europe but in Brussels, where it occurs, it is called the American system. It is seen as an anglo-saxon disease,” he said.

“My personal theory is policy advice and lobbying thrives where you have free media, which governments listen to, capitalism, democracy and where there is an educated citizenry and lots of controversy,” he said. “English-speaking countries have the longest history of those four elements in place and also have little concensus. So government-oriented public relations becomes one of the agents in the court of public opinion.”

Broadly speaking, Mr.Taaffe defines public relations as any effort that helps a company, person, government, or organization get its message across to the audience it chooses.

In China, for instance, that involves helping corporations deal with the “dual system” there which involves dealing with Communist party officials and then with government officials.

Hill & Knowlton also have governments as clients such as Pakistan, the Maldives and the U.S. State Department in Afghanistan where a campaign to encourage poppy growers to switch crops met with some success, he said. So did its California government initiative to reduce teen pregnancies.

“Public relations has more credibility than advertising and we help get messages across through the media, blogs, influencers, commentators or by creating coalitions of like-minded persons or groups,” he said. “The public relations space has grown in five years, by $1 billion to $4 billion.”

Like others, Hill & Knowlton also deploys proprietary research tools to enable clients to find, monitor and keep audiences.
“We can do a brand map which shows whether your brand [or message] is strong or weak, ascending or descending, where investment is needed and where it isn’t,” he said. “For instance, Coca-Cola would not need to invest in awareness but it may have weaker areas such as health issues, the fact it’s too American or its credibility.”

The company also tracks journalists and media outlets to monitor the “conversation”.

“There is a marketplace theory that markets [for products, people or policies] are a series of conversations and our core competency is who’s in that conversation, who’s online, who are the influencers. I can map the conversation and show a client how to get a part of the conversation,” he said. “It’s also about limiting your rivals’ conversations and accelerating yours’. And whoever gets the most attention, wins the commercial battle.”

Hill & Knowlton also answers corporate “911” calls.

“Take what was left of WorldCom. We worked for the bankruptcy administrator and there were problems. AT&T and Verizon took a run to destroy it. We had public opinion, justice department, bankruptcy and European and Asian issues. We put together a global crisis team because that’s what was needed.

Monday, August 07, 2006

MediaCom Chairman Jon Mandel on everything

Jon Mandel loves to fish as a hobby, but his day job, as Chairman of MediaCom, consists of trying to land the best places for clients to advertise. His company is one of the media buying and planning arms of global advertising conglomerate WPP Group PLC.

These days, though, the "fish" aren't exactly jumping.

"Advertisers must be more targetted and find communities or small groups where there is a commonality of interests," he said in a recent interview in his New York office. "For instance, there is no more prime time TV. Everyone has a different prime time. Lifestyles have changed since the 1950s. Now it's the individual's priority and choice. The News at 6 may work for some audiences, but not all audiences."

He and his 450 professionals monitor and research the media, then help advertisers plan campaigns. MediaCom's clients include Procter & Gamble, Shell, GlaxoSmithKline, Royal Bank of Scotland, Nokia, Masterfoods, VW and Universal.

The good news is that advertising budgets are growing overall, but the challenge is for advertisers and their agencies to pick the right spots then tailor their messages.

"It's ironic that we can highly craft media `buys' to meet the targeted audience and then the advertiser blows it by using the same exact commercial on the weather channel as they do for MTV, CNN or the show `The Office'. That's absurd. This happens constantly. Then they think it's TV's fault," he said.

"They should have the guts to make four or five commercials. If they are not willing to spend an extra $1/2 million to make more commercials, they might as well take the $3 million they spend on media, and just throw it away or give it to charity."

He said that newspapers and some magazines have challenges too such as declining circulation. There have been some scandals too with certain publications misleading advertisers about numbers.

"If only print did as credible a job with their numbers as broadcasters did," he said. "Circulation is one of the biggest issues, like the primetime question. Also, do people care about newspapers anymore? I can get even more cynical and say people think they've read a paper when they've only read the food section or sports section. I can get all depressed about the newspaper industry if I want to."

He believes that newsweeklies are doomed.

"How do they stay relevant weekly? They must do more in-depth analysis to survive," he said.

Likewise, traditional radio has challenges.

"I'm a huge fan of satellite radio, I have it in all my cars which is ridiculous since [radio] commercials pay my mortgage," he said. "But local radio became un-listenable with all the clutter."

Radio has also suffered, along with the music publishing business, as a result of technologies such as iPods, iTunes and file-sharing on the Internet.

"The problem wasn't kids stealing music online. The problem was that the record companies made you buy a CD with eight songs on it that you didn't care about and didn't want to buy. It's the same problem with local radio," he said.

Media buyers and planners also get frustrated, he said, with advertising clients who don't pay attention to their research or pick the wrong outlet at inflated prices.

"Take the Today Show. The reason why advertising on that show is overpriced is because every brand manager watches it. The question is, are you advertising to yourself or to your customers? We always tell advertisers to force yourselves as media professionals and put yourselves in the rest of the world's shoes," he said.

For instance, Mr. Mandel said he forces himself to watch hours of television every weekend tuning into channels he would never have been interested in personally in order to research the available menu of offerings.

The media continues to fragment, as a result of lifestyle changes and technology, but the media itself will continue to grow and adapt.

"The media companies own print, television and web stuff. They don't care which of their outlets wins attention. They're agnostic. They're utilities," he said. "And the advertisers don't care whether it's a wood-burning stove, gas or oil heat. They just want to be warm. And sell their messages."

Mr. Mandel is a fan of "user-generated content".

"I go to a fishing site that fishermen contribute to that will tell me how to catch striped bass in Montauk," he said. "There's a guy that runs this site, he sells a few ads to bait and tackle or charter boat guys and probably makes a living. It adds up."

Monday, July 31, 2006

Ryanair and EOS -- great airline models

Two exciting airline business models -- one Irish and one American -- will hopefully come to Canada one day.

Paradoxically, Europe's most profitable airline, Ryanair, gives away 25% of its flights for free. In the last 12 months, it has flown 35 million passengers to more than 100 European destinations for an average cost of just US$53.

"I flew Ryanair from London to Ireland and they charged me one Pence (a little more than two Canadian pennies)," said a friend recently. "I went online at their site and when I booked my flight they charged me next to nothing. This was because I had booked in advance."

On its current website, Ryanair says it will give away four million tickets between October to December for only 19 Pence apiece. Passengers wishing to take advantage of these freebies must book during off-peak times of the day, well in advance of their trip and between cities that have lots of vacancies.

Ryanair's strategy is inspired. By giving away flights, it has created a huge storm of publicity in Europe, built huge traffic to its site and filled their flights. In essence, Ryanair has people racing to fill its airplanes way ahead of time.

The Irish company was founded by the Ryan family years ago in Dublin and is now a successful public company, listed on the Dublin Exchange. Latest results are 2006 revenues of E1.69 billion (Euros); profits of E302 million and 35 million passengers. At the same time, the airline enjoys a 22% net profit margin, compared with Southwest Airlines' net of 7.2%.

The rest struggle. There is no other airline like it. Revenues increased by 12% despite a 74-per-cent fuel cost hike that year. Traffic growth increased 26% along its 330 routes. The fleet now numbers 103 aircraft and Ryan Air (ryanair.com) is adding 46 new routes this year.

In March, Ryanair CEO Michael O'Leary said he wanted to make air travel completely free one day, then promised by the end of 2010 that 50% of Ryanair's customers would fly at no cost to themselves. This is accomplished by a number of techniques. He calls the company the "Wal-Mart of flying" because it assiduously watches costs. Some 98% of flights are booked online which saves a bundle every year. The Irish airline, however, charges for services other than tickets. It sells seat-back advertising and charges for food, beverages and baggage check-in services. Charging US$3.50 per bag discourages check-in which reduces the aircraft's weight, thus reducing fuel costs. It gets a percentage of car rental or hotel bookings made by its passengers through its site too and has even "sold" some of its planes' fusilages as gigantic billboards to be painted by advertisers.

In 2007, on-flight gambling will be available, allowing the airline to earn a small percentage of the house proceeds. The airline, like Southwest, also uses only one type of aircraft to keep maintenance costs lower and only flies between small, secondary airports.

Another innovator is newly-launched EOS Inc. which dramatically undercuts big airlines by offering a business-only transAtlantic service between New York City and London. EOS is not a no-frills operator like Ryanair but a high-end one.

In October, the airline began operating a service between John F. Kennedy International Airport and London Stansted Airport, with one daily flight in each direction. It has three Boeing 757s.

"Eos" was the Greek Goddess who heralded the arrival of dawn. Fares are US$6,500 round trip, roughly 20% below the big airlines' high-end business fares. Even better than such a savings, these flights are more like a journey on a private jet than a trip flown on a commercial carrier.

Each 757 can fly up to 220 passengers but EOS only has 48 seats on board. These are configured into seating areas with fold-out tables so that passengers can hold meetings or eat around a table. In addition, passengers' seats fold out to private, 78-inch beds. Bathrooms have fresh flowers, shaving cream and disposable razors by the sink. The meals are gourmet and passengers can cuddle up with cashmere blankets in their mini-suites.

The airline was started by a director of strategy at British Airways in 2004 and the management team includes a number of former airline executives who plan to expand their fleet to 20 planes within five years.

EOS provides its business class passengers with a number of advantages. Savings are available for those booking seven days in advance, and even greater if bookings are made 14 days ahead of time. There are weekend specials too. But fares are flexible and unrestricted. EOS permits one-way travel, does not require a minimum stay or a Saturday night stay.

Meanwhile, the world's "legacy" carriers lost about US$42 billion last year collectively.