L’Avion says au revoir

Within a remarkable six months and eight days all four transatlantic all-premium carriers have bowed out, closing the chapter on a new niche which just a year ago seemed so promising.

 

Yesterday the last remaining transatlantic all-premium carrier, Paris-based L’Avion, was sold to British Airways for €68 million ($107 million). L’Avion follows Maxjet, Eos and Silverjet in being confined to the history book. L’Avion clearly was in better shape than the other three, which all ceased operations permanently after filing for bankruptcy, as it sill had €33 million in cash at hand. Given that it launched with only €20 million, L’Avion impressively had made a profit in its first year and a half of operations.

 

But in today’s environment of record high oil prices and intense competition across the North Atlantic, L’Avion’s future as an independent was far from certain. So L’Avion’s owners decided selling to BA, which will integrate L’Avion into its new transatlantic subsidiary OpenSkies, was in their best interest.

 

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L’Avion lasted exactly 18 months as an independent carrier, having launched in early January 2007. New York-based Eos lasted the longest of the four all-premium transatlantic start-ups, launching in October 2005 and ceasing services in April this year.

 

US-based Maxjet lasted just over two years, launching in November 2005 and ceasing operations on Christmas Eve last year. UK-based Silverjet had the shortest life of the four, launching in January 2007 and shutting down in May this year. Silverjet was hoping to resume services in June but threw in the towel after a deal with a potential new investor fell through.

 

At least for L’Avion’s 77 employees, they will still have jobs. L’Avion will help OpenSkies in particular with sales in France, where L’Avion succeeded at wooing small businesses away from Air France. BA is stronger with sales in New York, where it has a strong brand and its own terminal at JFK Airport.

 

Combined the two carriers will operate three flights per day in the Paris-New York market, with OpenSkies offering one daily frequency to JFK and L’Avion two daily frequencies to Newark. Both operate from Paris Orly while all of Air France‘s transatlantic flights operate from Charles de Gaulle. L’Avion and OpenSkies have already been codesharing since OpenSkies launched last month.

 

Once BA’s purchase of L’Avion secures approval from regulatory authorites, which are not expected to object to the deal as both carriers are so small, OpenSkies will have to decide whether to keep L’Avion’s configuration of 90 old style business class seats on its two Boeing 757s or reconfigure the aircraft to match the three-class (lie-flat business, premium economy and regular economy) 82-seat configuration that it has on its 757s. It will also have to decide whether to cut back to two frequencies in the New York-Paris market and move over one aircraft to launch a new route. OpenSkies was already planning to add services to New York from other European cities, likely Brussels, Frankfurt and Zurich, as it takes delivery of additional 757s. But with L’Avion’s strong brand in Paris, OpenSkies may instead decide to add new routes from Orly.

 

L’Avion’s decision to join Maxjet, Eos and Silverjet in the history book shows just how hard it is to survive as an independent carrier in a small niche, especially with sky high oil prices. But don’t be surprised if there is a revival of the all-premium transatlantic niche in a few years when new fuel efficient aircraft, in particular the Boeing 787 and Airbus A350, could make the economics attractive again.

 

To read my chief executive interview with L’Avion chief executive Marc Rochet from one year ago, click here. To ready my feature on the all-premium sector from one year ago, when it seemed to be the hottest trend, click here.

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