Despite One Failure, Growth Is Seen in Coachless Flights
By JOE SHARKEY
Published: January 1, 2008 – The New York Times
By JOE SHARKEY
Published: January 1, 2008 – The New York Times
Michael Falco for The New York Times
Eos Airlines flies 757s with just 48 seats that fold into flat beds
Maxjet Airways, a pioneer as a discount all-business-class airline, failed Dec. 24. Is the concept that it helped invent two years ago fated to die as well?
Judging from what the competition is planning, the answer is no.
Judging from what the competition is planning, the answer is no.
For one thing, the remaining three start-up carriers still flying discount-fare all-business-class routes across the Atlantic — Eos Airlines, Silverjet, and l’Avion — are all looking to expand.
Meanwhile, both British Airways and Virgin Atlantic Airways are planning to experiment with their own all-premium-class discount airlines on trans-Atlantic routes.
Much of the attention will be focused on British Airways, which is expected to introduce a “mini-airline” on Jan. 9.
Meanwhile, both British Airways and Virgin Atlantic Airways are planning to experiment with their own all-premium-class discount airlines on trans-Atlantic routes.
Much of the attention will be focused on British Airways, which is expected to introduce a “mini-airline” on Jan. 9.
The discount start-up, developed under the code name Project Lauren, plans to begin service in May, flying a Boeing 757 configured mostly with premium-class seats between a European city (Paris and Brussels are the leading candidates) and New York (either Kennedy International Airport or Newark Liberty International Airport).
People involved with Project Lauren said the name of the new airline is likely to be Open Skies, a nod to a new agreement that takes effect in late March and greatly expands the ability of international airlines to choose new routes between Europe and the United States.
But plenty is still up in the air. “The plane hasn’t even been painted yet,” said a person involved in the planning. “Everything is still in flux.”
However British Air’s initiative evolves, and whatever the effect of an anticipated entry by Virgin Atlantic in 2008 or early 2009 in the boutique premium market, the remaining players insist they are on solid financial footing, despite surging oil prices and the prospect of an economic downturn this year.
Part of the reason for optimism at Eos, which like Maxjet began operations in late 2005, is that its average fare — about $4,000 round trip between New York and London when corporate and advance-purchase discounts are calculated — generates more revenues than Maxjet did but is still considerably less expensive than its major competitors.
Given that some corporations will never fly their most valuable business travelers in coach seats on long-haul routes, Eos stands to gain even if travel budgets shrink, said Adam J. Komack, whose title at Eos is “chief lifestyle officer,” and whose job it is to market the airline.
“We know of at least one large bank that’s starting to cut down on air travel,” he said. “They’ve mandated necessary travel only. But they’ve also mandated that if you have to fly to London, you have to fly on Eos because our fares are better than the network carriers.”
In contrast to Maxjet, which flew long-range 767s and expanded its trans-Atlantic nonstop routes rapidly beyond New York to Los Angeles and Las Vegas, Eos has limited itself so far to flying between Kennedy and London’s Stansted Airport, which is more convenient to the City, London’s financial district, than Heathrow.
Eos also went more squarely after the corporate customer than Maxjet, which offered some of the lowest fares but whose cabins were outfitted with 102 business-class seats that only partially reclined. Eos flies smaller 757s, but they are configured with just 48 seats that fold into flat beds, which are now the business-class quality standard.
In general, the walk-up fares for a round trip from New York to London on major airlines are $9,000 to $10,000. Some people actually pay that, but big corporations can negotiate discounts of 40 percent or even more based on the amount of business they can guarantee an airline.
And right now, in a slow period for business travel, airlines are busily discounting. British Air, for example, is offering a business-class fare of about $2,400 between Kennedy or Newark and Heathrow, subject to a 21-day advance purchase and other restrictions. Eos has a winter fare of about $2,900 with similar restrictions.
American Airlines, meanwhile, has a similarly restricted advance-purchase business-class fare of about $2,300 between Kennedy and Stansted — a route it began flying in October in direct competition with Maxjet.
Like British Air, United Airlines and Virgin Atlantic, American is a powerhouse on the popular business-travel route from Kennedy to Heathrow. American also has an industry reputation for aggressive fare pricing against emerging competitors.
That helped bring about Maxjet’s fall, said Lawrence Hunt, the chief executive of Silverjet, another discount all-business-class start-up, which began flying early last year between Newark and London Luton airport. Without a clearly superior product and without American’s international networks and its popular loyalty program, Mr. Hunt said, Maxjet was simply unable to compete once American barreled into Stansted with super-low prices.
“They really didn’t have enough of a product differentiator when American came into Stansted with $1,000 round-trip fares, compared with Maxjet’s $1,200,” Mr. Hunt said.
Based at London Luton airport, Silverjet has tried to avoid fallout from the Stansted fray.
So has l’Avion, a French carrier that began flying between Newark and Paris Orly airport early in 2007. L’Avion recently added flights on that route and said it would acquire a second 757 aircraft this month.
All of the start-up all-business-class carriers are planning expansions and adding planes. Eos, which now has 44 flights weekly between New York and Stansted, recently took delivery of its fifth and sixth 757s, with two more expected to join the fleet early this year. Eos also said it planned to start routes this year between New York and Paris and between Newark and Stansted, with a third new route planned but not yet announced.
British Airways is considering expanding its new discount premium-class airline once the initial route is established, and Virgin Atlantic’s founder, Richard Branson, is expected to announce plans soon for that carrier’s new boutique service.
Lured by new route opportunities between Europe and the United States that will be available under Open Skies, other established airlines are looking at routes that might support a new all-premium discount product. But all of them are moving gingerly, hoping to avoid competing against their established, highly profitable business-class cabins. That leaves an opening for the new airlines.
People involved with Project Lauren said the name of the new airline is likely to be Open Skies, a nod to a new agreement that takes effect in late March and greatly expands the ability of international airlines to choose new routes between Europe and the United States.
But plenty is still up in the air. “The plane hasn’t even been painted yet,” said a person involved in the planning. “Everything is still in flux.”
However British Air’s initiative evolves, and whatever the effect of an anticipated entry by Virgin Atlantic in 2008 or early 2009 in the boutique premium market, the remaining players insist they are on solid financial footing, despite surging oil prices and the prospect of an economic downturn this year.
Part of the reason for optimism at Eos, which like Maxjet began operations in late 2005, is that its average fare — about $4,000 round trip between New York and London when corporate and advance-purchase discounts are calculated — generates more revenues than Maxjet did but is still considerably less expensive than its major competitors.
Given that some corporations will never fly their most valuable business travelers in coach seats on long-haul routes, Eos stands to gain even if travel budgets shrink, said Adam J. Komack, whose title at Eos is “chief lifestyle officer,” and whose job it is to market the airline.
“We know of at least one large bank that’s starting to cut down on air travel,” he said. “They’ve mandated necessary travel only. But they’ve also mandated that if you have to fly to London, you have to fly on Eos because our fares are better than the network carriers.”
In contrast to Maxjet, which flew long-range 767s and expanded its trans-Atlantic nonstop routes rapidly beyond New York to Los Angeles and Las Vegas, Eos has limited itself so far to flying between Kennedy and London’s Stansted Airport, which is more convenient to the City, London’s financial district, than Heathrow.
Eos also went more squarely after the corporate customer than Maxjet, which offered some of the lowest fares but whose cabins were outfitted with 102 business-class seats that only partially reclined. Eos flies smaller 757s, but they are configured with just 48 seats that fold into flat beds, which are now the business-class quality standard.
In general, the walk-up fares for a round trip from New York to London on major airlines are $9,000 to $10,000. Some people actually pay that, but big corporations can negotiate discounts of 40 percent or even more based on the amount of business they can guarantee an airline.
And right now, in a slow period for business travel, airlines are busily discounting. British Air, for example, is offering a business-class fare of about $2,400 between Kennedy or Newark and Heathrow, subject to a 21-day advance purchase and other restrictions. Eos has a winter fare of about $2,900 with similar restrictions.
American Airlines, meanwhile, has a similarly restricted advance-purchase business-class fare of about $2,300 between Kennedy and Stansted — a route it began flying in October in direct competition with Maxjet.
Like British Air, United Airlines and Virgin Atlantic, American is a powerhouse on the popular business-travel route from Kennedy to Heathrow. American also has an industry reputation for aggressive fare pricing against emerging competitors.
That helped bring about Maxjet’s fall, said Lawrence Hunt, the chief executive of Silverjet, another discount all-business-class start-up, which began flying early last year between Newark and London Luton airport. Without a clearly superior product and without American’s international networks and its popular loyalty program, Mr. Hunt said, Maxjet was simply unable to compete once American barreled into Stansted with super-low prices.
“They really didn’t have enough of a product differentiator when American came into Stansted with $1,000 round-trip fares, compared with Maxjet’s $1,200,” Mr. Hunt said.
Based at London Luton airport, Silverjet has tried to avoid fallout from the Stansted fray.
So has l’Avion, a French carrier that began flying between Newark and Paris Orly airport early in 2007. L’Avion recently added flights on that route and said it would acquire a second 757 aircraft this month.
All of the start-up all-business-class carriers are planning expansions and adding planes. Eos, which now has 44 flights weekly between New York and Stansted, recently took delivery of its fifth and sixth 757s, with two more expected to join the fleet early this year. Eos also said it planned to start routes this year between New York and Paris and between Newark and Stansted, with a third new route planned but not yet announced.
British Airways is considering expanding its new discount premium-class airline once the initial route is established, and Virgin Atlantic’s founder, Richard Branson, is expected to announce plans soon for that carrier’s new boutique service.
Lured by new route opportunities between Europe and the United States that will be available under Open Skies, other established airlines are looking at routes that might support a new all-premium discount product. But all of them are moving gingerly, hoping to avoid competing against their established, highly profitable business-class cabins. That leaves an opening for the new airlines.
Vocabulary:
meanwhile: meantime, at the same time, during the intervening time
Everything is still in flux: (idiomatics) everything still in the planning stage, nothing concrete
yet
evolves: unrolls, develops, achieves gradually, works out
solid financial footing: (idiomatics) on solid ground, with basis
boutique premium market: (marketing jargon) a special premium "niche" of the market
boutique premium market: (marketing jargon) a special premium "niche" of the market
despite: in spite of,
downturn: a reduction of businesses
average fare: medium price of an airline ticket
coach seats: economy class (for airlines)
long-haul routes: long distance routes
stands to: takes up positions for action
travel budgets: funds allocated for travel expenses
shrinks: becomes smaller
to cut down: to reduce
carriers: organizations engaged in transporting passngers or goods for hire
long-range 767s: aircrafts (model 767s) for long routes
routes: traveled ways, course
beyond: farther, besides
squarely: with precision or absolute conformity
outfitted: equipped
walk-up fares: price paid over the counter (without previously reservations)
powerhouse: a source of influence or inspiration
to avoid fallout: to avoid losing its ranks, n incidental result or side effect
fray: a fight
lured: enticed, tempted, seduced
gingerly: cautious; careful
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