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The high-end transatlantic aviation market begins 2008 by losing one competitor and gaining another: Maxjet Airways in late December declared bankruptcy and ceased all operations, while British Airways today announced details of its new "premium" operation, dubbed OpenSkies.
Set to launch in June, BA's newest venture will focus on business travelers and fly nonstop between New York and Continental Europe, bypassing its hub operations in London. Such first-time service for the airline is made possible by the new aviation agreement between the United States and the European Union, set to take effect in March.
Other existing players in the high-touch, transatlantic segment, including Eos Airlines, Silverjet and L'Avion, have made moves to expand or enhance their offerings. Like Maxjet, they face soaring fuel costs, the potential for further economic softening and intense competition from major network carriers.
Despite economic uncertainty, demand for premium international services has held up. Though many corporations may refine policies dictating the class of service travelers are allowed to book for long flights, business class still is widely used on transoceanic routes.
In its latest industry report issued last month, Carlson Wagonlit Travel said, "For corporate travel in the last 12 months, business-class usage has accounted for 78 percent of all U.S.-to-Europe traffic and 81 percent of all U.S.-to-Asia traffic." CWT also found that the average business class segment price between the United States and Europe during the past year increased 6 percent. U.S.-Asia business class segments increased 10 percent.
Unlike the smaller, newer players, British Airways is a well-entrenched supplier for many multinational corporations. A BA spokesperson said OpenSkies would use the same sales force and distribution channels as its parent, but that no selling can occur until the subsidiary receives final government approvals.
BA plans to operate OpenSkies initially between New York and either Brussels or Paris. Service to the other destination from New York would begin later this year. BA by 2009 plans to allocate six of its Boeing 757 aircraft to the newly branded product and serve additional routes between New York (either JFK or Newark airport) and Continental Europe. A spokesperson said the company is considering Amsterdam, Frankfurt, Madrid and Milan.
The B757s will have 82 seats configured in three classes of service, with an emphasis on the premium side of the spectrum. Twenty-four business-class seats will convert to "completely horizontal" beds, and 28 "premium economy" seats will have a 52-inch pitch (compared with a 38-inch pitch in BA's World Traveller Plus cabin). That will leave only 30 seats for an economy cabin, a far smaller share of total seats compared with most traditional commercial aircraft.
OpenSkies will have its own two-letter designator. It will share codes with BA, but, at least for now, no other Oneworld partners. The carrier will be led by managing director Dale Moss, a long-time BA sales executive who most recently served as COO for India's Jet Airways.
BA rival Virgin Atlantic Airways last year hinted at plans to launch an all-premium operation but has made no announcements.
Another British airline competing in the premium transatlantic market, Silverjet recently raised another £22 million (US$43 million) to fund growth. The company said December traffic jumped more than 10 percent from the previous month, and bookings from corporate customers are increasing.
Silverjet's initial focus was on the leisure market and smaller companies, but now it will fashion corporate deals for those customers expecting to fly more than 100 trips in one year. "It is a two- or three-month process to get into a corporate program," said Tim Buckman, head of sales in the United States. "But after we started double-daily service in September [between Newark and London Luton], we really started talking with the corporates." He said HSBC is one company with a multinational agreement, including both U.S. and U.K. points of sale.
"Corporate deals are fully flexible and have last-seat availability, and we have a number of corporate fares depending on volume," Buckman explained.
Silverjet also has "a number of agency partnerships" with some midsize travel management companies, Buckman added, but there are "quite big barriers to entry [with the largest global TMCs] because of the upfront fees you have to pay."
The airline seeks to add sales resources in Los Angeles and San Francisco--two cities Buckman described as "good markets for direct [service] or indirect feed [via Newark]." Though Silverjet has not announced any routes beyond Newark-Luton and Luton-Dubai, Buckman said the carrier also is considering Chicago, Mumbai, Shanghai and South Africa.
Like Silverjet, but unlike Maxjet--which had tried to serve London from Las Vegas, Los Angeles, New York and Washington--Eos Airlines has not rapidly expanded its route network. The airline, which offers only first class service, currently operates 44 flights per week between New York JFK and London Stansted. Eos has approval to operate on other U.S.-Europe routes but has not announced new markets. In December, the carrier asked the U.S. Department of Transportation for permission to fly domestic U.S. routes. The company's request suggested Eos would offer the "same level of service" on domestic routes from JFK.
Eos also partnered with US Helicopter to provide eight-minute helicopter flights between Manhattan heliports and JFK airport.
As Eos and Silverjet continue focusing on the New York-London market, French all-business class carrier L'Avion begins its second year of service between Paris Orly and Newark. In its first year, the airline carried 34,000 passengers. With a second 90-seat Boeing 757 entering service on 20 January, L'Avion will increase frequency to twice daily. It expects to announce additional flights in the summer.
Like British Airways, Lufthansa and Swiss International Air Lines have offered dedicated, all-premium services on transatlantic routes. For now, other major carriers--including American Airlines, Delta Air Lines and United Airlines--are focusing on improving first and business-class cabins on existing mainline services by adding sleeper seats and other amenities.
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