Two discount airlines are breaking into the trans-Atlantic market this summer -- just as fares to Europe are climbing. It could signal the start of more flights to come.

Both the U.S. and Europe have enjoyed a large flock of domestic discount airline services, but there have been few attempts in recent years to add low-cost flights across the Atlantic. Now, two former European charter carriers -- Germany's LTU and Italy-based Eurofly -- are both launching flights between New York and European destinations this summer, with prices that start a few hundred dollars cheaper than competitors.

Last week, LTU started flying to Dusseldorf with connections beyond. Eurofly's flights to Naples, Bologna and Palermo in Sicily start next month. They, along with more established carriers like England's bmi, which is flying from Manchester to the U.S., and Ireland's Aer Lingus, are bringing more pricing competition to a hot market.

Summer travel between the U.S. and Europe is booming, airlines are adding flights to and from Europe. But demand has grown even faster, and 2005 could surpass the record traffic levels of 2000.

Fares are also higher, and travelers who haven't already bought tickets should be prepared to pay $900 or more round-trip for a coach seat in the summer months. A pricing spot check last week for a two-week trip in June found New York-Rome at $1,259 on Alitalia, Chicago-Paris at $1,113 on Continental and Dallas-London at $1,002 on British Airways. "A lot of the lower-priced, inflexible fares are all sold out," says John Lampl, spokesman for British Airways. "There just aren't any $299 fares in June, July or August."

Online travel agency Travelocity says Paris fares from U.S. cities are up 10 percent this year. Rome is-- percent higher, Frankfurt is up 12 percent and London fares are a hefty 20 percent higher than a year ago.

The airline industry has been bracing for low-cost competition on international routes -- either in the form of new start-up airlines, or else expanded service from an established discount carrier like Europe's Ryanair or easyJet, or U.S. discounters like JetBlue or Southwest. That hasn't happened because trans-ocean international travel is more complicated than hopping around the U.S. or EU, so the established airlines have considerable advantages. There haven't been many new start-up airlines lately, either, since the cost of leasing long-range, wide-body jets is particularly high right now, as are fuel prices.

But Europe has long had a discount airline sector that flies long distances: its charter airlines. Some have converted to scheduled service, offering meals and even business class. Now, it looks like they may be the ones to bring more trans-Atlantic competition. They are adopting a classic discount carrier strategy: Fly to secondary cities, like Dusseldorf instead of Frankfurt, or Naples instead of Rome.

"No one seems to have noticed that discount airlines are now actually there" on the Atlantic, says Craig Jenks, president of Airline/Aircraft Projects Inc., a consulting firm.

Mr. Jenks estimates overall airline capacity between the U.S. and Europe will be up 5 percent this summer, on top of a 6 percent gain last year. This summer there will be 272 daily flights between the U.S. and Europe in each direction.

Last week, LTU began flying a wide-body Airbus A330-200 between New York and Dusseldorf six days a week (no flights on Wednesdays) with meal service and 18 business-class seats. It's the old-style business class, not a lie-flat bed, priced at $2,631 for a June itinerary. The 305-seat coach cabin is a tight squeeze with each row laid out in 30 inches of space -- the low end of the scale among international airlines. But the price makes up for some of the discomfort: $580 round-trip.

LTU, which has been around since 1956 and already flies European vacationers to Florida, says it plans to expand slowly in the U.S. It priced the New York service lower than incumbents, but not so low that you trigger a pricing war with a bigger competitor. "The minute you come in with very, very low fares, everybody has to match and it's not good for anyone," says Judith Kolakowski, LTU's director of sales for North America.

LTU says the $580 fare is an introductory special, though it's available for summer flights. It remains to be seen how much of a discounter it will be on price since its regular coach price is around $900. That's "almost the same level as other carriers," says Ms. Kolakowski. Indeed, a recent check of Lufthansa flights between New York and Frankfurt found mid-June round-trips at $898.

Eurofly will begin sending an A330-200 to the U.S. on June 13, flying from New York to Naples on Mondays, Wednesdays and Fridays, Bologna on Tuesdays, Thursdays and Sundays, and Palermo on Saturdays. The Milan-based company, launched in 1989, was the charter subsidiary of Alitalia until 2003, when Alitalia sold 80 percent of Eurofly's shares to Effe Luxembourg, a private equity fund. Last year, Effe Luxembourg acquired the remaining 20 percent stake from struggling Alitalia, freeing it to start competing in the U.S.-Italy market, which is particularly hot this summer because of papal interest.

Eurofly's coach price is $962 for a late-June round-trip, a savings off the typical $1,100 to $1,200 or more that incumbent airlines charge from the U.S. to Rome.

Other established brand names are also expanding in the trans-Atlantic market, bringing limited price competition.The airline formerly known as British Midland, bmi, flies from Manchester, England, to Washington, Las Vegas and Chicago with coach tickets priced around $700. And Aer Lingus is transforming itself into a discount carrier, keeping its fares this summer in the $700-$800 range.

That makes Dublin a good place for a money-saving connection this summer. Instead of paying $1,259 to American Airlines for a nonstop New York-Rome coach ticket, travelers could buy an Aer Lingus ticket for $703 round-trip New York-Dublin, then fly on to Rome on Ryanair for about 100 euros round-trip, or about $128. One caution: Ryanair flies into Rome's Ciampino Airport, less convenient than the main international airport. (Though it has perhaps the most distinctive three-letter airport code in the world: CIA.)

U.S. airlines, which account for a majority of the new trans-Atlantic flying, say fuel surcharges have stuck more in international markets than domestic, and there have been fewer trans-Atlantic sales for summer. "We're expecting a good summer," says Jim Compton, executive vice president of marketing at Continental Airlines, which is adding flights from Newark, N.J., to four European cities that didn't have nonstop service from the U.S. last summer: Belfast, Berlin, Bristol and Hamburg.

The weak dollar, which makes purchases in euros more expensive, hasn't slowed down Americans going to Europe, either. Americans still have pent-up interest in European trips, even though the a euro costs about 8 percent more in dollars than it did at this time last year.

Demand is also strong for travel to the U.S. from Europeans, who benefit from a weak dollar, airlines say.

Travelocity says U.S. consumers are opting for less-expensive hotel brands, and looking more at eastern European cities like Budapest, Prague and Moscow, where exchange rates aren't as harsh to Americans. "It's not the year to go to Europe, but everyone wants to go," says Travelocity's Amy Ziff.

First Published: May 10, 2005, 4:00 a.m.