At the start of the 21st century, the only all-business class service was Concorde. Now – after a short-lived flurry of all-premium transatlantic start-ups in the mid-2000s – a second wave is having mixed success. Those who appear to be making the model work – albeit in a modest way – are British Airways, with its Airbus A318 service from London City to New York, and a French “boutique airline”, La Compagnie, which serves the US city from London and Paris with a pair of Boeing 757-200s.
La Compagnie has defied many sceptics by celebrating in April the anniversary of its London to Newark route. Its service to Newark from the French capital is approaching the two-year mark. It claims its policy of flying from unfashionable Luton and aligning fares with what its full-service competitors charge for premium economy is attracting a clientele of entrepreneurs and self-employed who would not otherwise pay to fly business.
La Compagnie’s business model is straightforward and an extension of the low-cost philosophy. Its leased, secondhand 757s are configured with 74 seats. It flies daily from Paris and five times a week from Luton, although this will rise to six in June and daily from September. Passengers are served meals, and in-flight entertainment is provided via a tablet connected to an on-board server. They earn points towards free flights and use fast-track security lanes and generic lounges at each airport.
Although La Compagnie’s offering is similar to those of the three transatlantic start-ups in the 2000s – Eos, Maxjet and Silverjet – including making a plus of the rapid check-in to gate times at a London secondary airport – there are key differences, argues Aiden Walsh, the company’s vice-president sales and UK country manager. “For a start, they were all competing against each other,” he says. “Social media has also moved on and that has been a key part of our marketing, along with PR.”
The company plans to introduce a third 757 around the end of the year, which will give it the option of introducing a second service from Paris on certain days, as well as providing back-up. Walsh says La Compagnie is also in negotiations to add a fourth, new Airbus or Boeing “towards the end of next year”, which will give it the option of increasing its service from Luton. “We are working that through with the finance companies at the moment,” he says.
British Airways, meanwhile, began its double-daily business class-only service in September 2009 using a pair of Airbus A318s configured with 32 flatbed seats. The airline taps a market of time-poor City financiers tempted by the 20min check-in at the tiny Docklands airport, and makes a virtue of its fuel stop in Shannon, allowing passengers to complete US immigration formalities before arriving in New York.
While the carrier will not reveal load factors, head of global sales Stephen Humphreys says the service “continues to be immensely popular”. He adds: “Fares are affordable, the service is highly-exclusive, and onboard connectivity means that travel time can be put to good use. The brief stopover in Shannon also allows our customers to clear US customs and immigration and land at JFK as a domestic US passenger, avoiding any queues.”
While BA and La Compagnie have been successful in tapping very distinct markets with what would appear to be limited growth potential, other all-premium services from established airlines launched in the past few years have proved unviable. SAS and Qatar Airways have quietly withdrawn all-business services in the past 12 months pairing the Houston and Stavanger and Doha-London, respectively, albeit for different reasons.
The Scandinavian airline launched its service between the two oil hubs in August 2014, using a 737-700 with 44 seats, and operated by Swiss business-charter specialist PrivatAir but with SAS branding. At the time SAS chief executive Rickard Gustafson said the operation was aimed at “a defined market with particular travel needs”. But with the falling oil price decimating that market, the service ended in October last year.
Qatar Airways terminated its all-business experiment on 15 November, replacing a` 40-seat A319 on one of six daily frequencies between Doha and London with a 787. When it launched in May 2014, chief executive Akbar Al Baker suggested he had a “secret plan” for making a model work that had failed on other occasions. He noted at the time: “You know that everybody who did this business-jet concept in a commercial way failed. So if I’m doing it and planning to fail, I must be stupid.”
Peter Morris, chief economist with Flightglobal’s Ascend consultancy has doubts about the viability of all-business services. “The basic question is what has changed since 2014 [when Qatar Airways and SAS launched] in terms of the arguments for making such a proposition work,” he says. While long-haul traffic has increased by up to 15%, opening up potential new city pairs, sub-markets such as the oil services sector have affected routes such as Houston-Stavanger, he maintains.
“On the supply side, oil is now cheaper, and in the light of airline profitability, new entrants might be encouraged to try for a niche market such as long-haul low cost. However, I still think the challenge of achieving enduring corporate take-up are considerable for any new entrant. Most existing airlines clearly would prefer the flexibility they have in a mixed cabin, and with network and alliance connections,” he says.
One potential gap in the market could be for players in the large jet corporate aviation segment to “look to develop the charter model in a more targeted way, perhaps using smartphone and internet technology (such as that typified by Uber) to collect trip requests”, Morris believes. “By using alternative big city airports and benefiting from fewer congestion issues, they could potentially create a genuinely premium service.”
The success of BA’s London City service may be the exception that proves the rule that all-business class services from established or start-up carriers are hard to maintain, he says. “It is just about the highest value long-haul market in the world, operated by a dominant airline player. Add to that the fact that travel between the City and Heathrow can be a nightmare, and you could say that if you couldn’t make it work at London City to New York JFK, you couldn’t make it work anywhere.”
Morris notes the contrast between the reaction of the US airline establishment to the entry of Norwegian’s long-haul low-cost service from London Gatwick to New York and other east coast cities, and the muted response to La Compagnie’s albeit much more modest assault on the transatlantic market. “If you look at the ire Norwegian has inspired among US carriers, it is clear which model they fear more,” he says.
But perhaps low-key is the way La Compagnie likes it. Walsh says the airline’s strategy is to target a different demographic to the established airlines’ premium travellers, usually flying on corporate expenses. “We have a lot of customers from entertainment, fashion and advertising. Our early adapters have really grasped the product and the price point,” he says. “That’s not to say we don’t approach the traditional corporates too. We are finding they are becoming more cost-conscious.”
As it touches down at Luton – a terminal more frequented by budget holidaymakers and migrant workers than the financial world’s movers and shakers (although the airport is the UK’s second biggest gateway for corporate jets) – La Compagnie’s 757 may not have the glamour of Concorde. However, flush with a host of positive reviews in the consumer press, the company believes its transatlantic service can continue to lure a significant number of business travellers from the majors.
Source: Cirium Dashboard
