BBT talks to Frantz Yvelin, CEO and founder of business-class airline La Compagnie.
The French airline launched its Luton-New York Newark service in April . It currently offers five flights a week flying a narrow-body B757-200 aircraft with 74 lie-flat seats in a 2x2 configuration. It currently offers five flights a week on its Luton route. La Compagnie started its Paris CDG-Newark service in July 2014.
How will you succeed where previous all-business transatlantic operations – Maxjet, Silverjet and Eos – have failed?
Look at this this way: there were four all-business carriers back in 2006-08. One succeeded – it was called L’Avion, and I founded it, ran it and sold it to British Airways. Of the three others, I think there were two cases of good business model but poor execution, and one case of brilliant execution but the wrong business model.
I think Eos was very good execution but not cost-conscious enough. And I’m not sure Stansted was the right airport for this.
Silverjet made a few smart choices, but the aeroplane was not good, [a wide-body B767-300], it burns around 40 per cent more fuel. [than the B757]. Plus there were other issues such as the IPO financing and the Dubai route.
Maxjet had old planes [B767-300s] and old seats, not good service, poor reliability and unclear strategy. Plus it was not on the GDSs at the very beginning, which is a big mistake.
So you’re not looking to move away from the GDSs towards direct selling, as some of the larger carriers appear to be?
Around 60 per cent of our bookings are through travel agents, so we are happy be working with our travel agent partners.
The GDSs were invented by the airlines back in the 1970s, so they are linked to the development of the airline industry. My feeling is that a lot of travel agents know their customers, better than we know them. That means it's good to be able to work together. On the other hand, everything comes at a cost. What makes airlines like Ryanair and Easyjet – and indeed La Compagnie – successful is that we tag prices significantly cheaper than other airlines’ comparable products.
The passenger gets smarter and smarter every day, and today is not necessarily willing to pay for some things, including the GDS
cost. So I understand Lufthansa on this point, but in the end my feeling is that, especially when providing premium product, you need to work hand in hand with agents.
However, with this big message coming from Lufthansa, perhaps its time for the GDSs to reconsider their pricing strategy.
With only a single daily service, is reliability a challenge? If there’s a problem with a flight, you can’t put passengers on to a slightly later flight, as the big carriers with high-frequencies can.
Irregularities do happen, though not often – we haven’t had any in the last three months on both routes. When irregularities do happen, we do exactly the same as other airlines. In fact, we’ve had passengers from Air France or British Airways when they’ve had an issue.
Reliability on London route has been close to 100 per cent. If we have a last-minute cancellation and can get seats, we will put passengers on other flights. It’s a core part of an airline’s business.
But is it more difficult at Luton, where you are the only airline flying to the US?
We have the ability to bus passengers to Heathrow. It’s also one of the reasons we probably won’t stick with just one flight a day to the US. Look what we’ve done in a year: in July last year we started up in Paris, today La Compagnie is the only scheduled European airline to operate the two largest long-haul routes in the world.
Is it difficult? Yes, it is a challenge. I’m proud of the team that took this challenge up. If you want flexibility, yes of course there are more flights a day with BA and and Air France. But long-haul travel is almost always arranged in advance. Today’s smart travellers are not necessarily choosing their flights because of the schedule – corporations are increasingly cost-conscious, and that’s where we make the difference. Flexibility is good when you have a hub strategy and need to connect with other flights. We are a point-to-point operator, and we do it well – that’s the feedback we get from passengers.
So what feedback have you had from passengers?
In a recent survey of 2,200 passengers, 90 per cent said they would recommend La Compagnie to friends and colleagues, and they expressed an average 8 out of 10 for overall satisfaction with the service.
We don’t intend to provide the best business class service in the world – my proposal is to offer the most affordable business class product, while making sure we don't compromise with the comfort of our passengers.
How are your load factors, and what proportion of your traffic is business travel?
Load factors are more than 80 per cent on the Paris route, and about 60 per cent for London – and London is ramping up, which is good. Bearing in mind we started the London route four months ago, 60 per cent is about 10 points higher than the Paris route was doing at that stage of maturity.
About 60 per cent of our passengers are on business, with 40 per cent leisure – there’s only one or two points difference between London and Paris.
You said you don’t want to stick to one London flight a day to the US – what’s your expansion strategy?
We want to grow and we are working at it. We are presently working on aeroplane number three, and have just started to work on number four. We are looking at consolidating our positions on the North Atlantic - either on existing routes or perhaps a few other ones from New York to Europe or Europe to north-eastern America, also of course looking at longer haul. I don’t think we can stay away from the Asian market too long; they are growing markets.
The Gulf carriers have no problem attracting the coach-class passengers: if you’re going, say, to Shanghai or Hong Kong, you don’t mind stopping in Abu Dhabi or Dubai or Qatar – all you want is a good seat and very good price. But when you’re a premium traveller - you don’t want stops, you want to fly direct. Often that’s a choice of couple of national carriers. I don’t think that’s enough competition – plus, today you don’t have a large number of airlines; you have three alliances.
Is it a challenge competing with Heathrow routes when you’re based at Luton?
Luton is easily accessible, and fast – bear in mind if you’re coming from the US you have to go through immigration – try it at Luton, and then at Heathrow and you’ll see the difference. Similarly departing from Luton, there is a new security hall and average time to go through security is four to five minutes. Also, door-to-door is important. Using public transport, it usually takes around 25 minute from St Pancras to Luton.
What’s your strategy for corporate customers?
We have a dedicated vice-president of sales based in the UK, Aiden Walsh. If you’re buying in volume we can do something with you – it’s different for each corporate account. I am a little bit less generous than some large carriers are. But then their fares are so much higher, and the savings made by all corporate accounts are so big that they are all very happy.
When we say to travel managers ‘do you prefer to pay £3k with BA or Virgin, or would you like to try La Compagnie at £1k?” – CFOs and travel managers are saying ‘let’s give the new guys at least a try’. We were convinced about the SMEs, but we didn’t think we’d attract large corporations so fast. But it has happened - we have several, including in the UK.
Frantz Yvelin gained his commercial pilot’s license at the age of 21. He founded all-premium airline L’Avion in 2006, which flew between Paris Orly and New York Newark. He sold the airline to British Airways in 2008. Yvelin founded La Compagnie in October 2013, with former Swissair and Jet Airways chief operating officer Peter Luethi.