Late April's demise of all-premium New York-London carrier Eos Airlines represents the second business-class carrier to cease operations on the route—following Maxjet's cessation of service in December—and leaves Silverjet as the sole carrier filling the niche.
Though two competitors on the route have fallen to the wayside in the past five months, the U.S.-EU Open Skies treaty—which took hold at the end of March—has helped to ratchet up service from New York to London, primarily by U.S.-based legacy carriers. Even with Eos and Maxjet gone, there is now more capacity connecting the two financial capitals than there was a year ago.
JP Morgan European Equity Research airline analyst Chris Avery in a research note last summer said the all-business class carriers held nearly one-quarter of all premium seats on the New York-London route
(BTNonline, July 9, 2007).Despite the fall of Eos and Maxjet, more than 500 new monthly transatlantic services from Heathrow to the United States came into service in April—the first full month of the Open Skies treaty
(BTNonline, March 25). The number of monthly services connecting New York to London—including all flights between Newark Liberty International Airport and New York's John F. Kennedy International Airport on one side of the Atlantic, and Heathrow, Gatwick, Stansted and Luton airports on the other—grew from 1,950 in May 2007 to 1,993 this month, according to OAG capacity data.
Among the additions to capacity, Delta Air Lines launched twice daily service from JFK and Continental launched twice-daily service from Newark. In addition to Delta and Continental adding much of that capacity, Silverjet grew the number of flights between Newark and Luton from 58 in May 2007 to 96 for May this year.
"Four new New York dailies into London Heathrow for Delta and Continental—with their frequent flyer programs and corporate contracts—should more than compensate for the departure of Eos and Maxjet," JP Morgan's Avery told BTN this month. British Airways next year also plans to launch a double-daily business class-only service between JFK and London City Airport.
Silverjet said it remains well capitalized to weather the current aviation environment. Days after Eos fell, the carrier secured a $25 million injection of cash from United Arab Emirates-based Viceroy Holdings, which said it could invest up to an additional $75 million to aid in "the ongoing development of Silverjet and in the international rollout of the Silverjet brand and concept into new markets within the Middle East, the Far East and Africa, using the Middle East as a regional hub," Silverjet said in a statement.
Silverjet CEO Lawrence Hunt said, "This investment means that Silverjet is now well placed, both financially and strategically, to exploit opportunities in the airline and all-business-class market—a market which we now dominate."
Though Silverjet said it finished April with a 67 percent load factor, growing yields and strong forward bookings, some aviation analysts, including Daniel Stewart analyst Mike Stoddart, have questioned the carrier's viability. Avery, however, said Silverjet's solace in the deep pockets of Arab investors should leave the carrier viable for some time.
Eos officials in a statement last month blamed its shutdown not on skyrocketing jet fuel prices, but instead on a failure to close a planned investment, saying that it had executed its business plan and investors believed in its business model.