The demise of Eos leaves only two dedicated all-premium carriers - L'Avion and Silverjet
The viability of the all-premium business model is again being questioned after Eos filed for bankruptcy and ceased operations at the end of April.
The exit of Eos leaves only two all-premium carriers: UK-based Silverjet and France's L'Avion. In May, Silverjet achieved something that Eos and before that Maxjet failed to do - secure a new investor. UAE-based Viceroy Holdings injected $25 million into Silverjet in exchange for a 28% stake and may inject another $100 million.
Eos ran out of cash after a planned $50 million transaction that was due to close at the beginning of May fell through. Eos only operated one route, connecting New York JFK with London Stansted, but had been planning to add service to Newark and Dubai from Stansted over the coming months.
Maxjet dropped out in late December after it failed to close on a new round of financing. It had expanded much more rapidly than Eos, serving up to four US cities from Stansted. Maxjet's air operators' certificate is being acquired by NCA Sports Group, which plans to turn the carrier into a luxury charter operator.
The demise of both Eos and Maxjet provides much needed relief in the fiercely competitive New York-London market which has already seen an increase in capacity due to the implementation of the EU-US Open Skies agreement. Carriers in this market have reported significant drops in premium demand in recent months due to the credit crunch, which in particular has affected travel in the banking sector.
In only two years Eos, Maxjet and Silverjet had built up a 28% share of the New York-London business class market. All five of the network carriers operating in the market have been claiming the launch of three all-premium carriers was not having a significant impact but clearly it was. American, for example, retaliated last year by launching a service to Stansted from New York JFK, putting it in direct competition with Eos and Maxjet. BA retaliated by unveiling early this year plans to launch a new Airbus A318 service in 2009 from London City Airport to New York.
BA's announcement was clearly aimed at Eos and Silverjet and their attempts to secure new investors. Eos had also been looking at acquiring Airbus A318s to support services to London City, located only 10 minutes from Canary Wharf, where many of its clients were based.
London-based Citi analyst Andrew Light calls the shutdown of Eos a "mild positive" for BA and says "its demise helps offset the recent 11% increase in business class capacity due to Open Skies". Since EU-US Open Skies went into effect at the end of March, Delta has launched double daily flights from JFK to Heathrow and Continental has launched double daily flights from Newark to Heathrow.
ABN Amro analyst Andrew Lobbenberg also calls the demise of Eos "a modest positive for BA since Eos, with its very high service levels and up to four frequencies a day from Stansted to JFK was the most relevant of the start-up all-premium airlines to corporate passengers".
He adds: "Eos' failure may make life easier for Silverjet as it will pick up some passengers. On the other hand Eos' failure will also further raise consumer concerns about the viability of the all premium start-ups."
The demise of Eos and Maxjet means there are now only eight aircraft in all-premium configuration operating across the Atlantic, compared to 17 last year. This includes two for Silverjet, two for L'Avion, two for Lufthansa, one for KLM and one for Swiss.
But the all-premium market is growing elsewhere. Silverjet launched service from London Luton to Dubai late last year to complement its Luton-Newark service. Lufthansa has also shifted some of its all-premium capacity from the North Atlantic to India and Dubai. Japan's All Nippon Airways now has two Boeing 737s operating in all-premium configuration to China and India and Saudi Arabia's NAS Air has two Airbus A319s in all business configuration operating within the Middle East.
Meanwhile, Singapore Airlines in May began operating all-premium Airbus A340s on the Singapore-Newark route. All five of its A340s will be reconfigured by September and all-business service will be introduced between Singapore and Los Angeles.
For more on the all-premium model check out our special landing page at flightglobal.com/premium