All-business class carrier La Compagnie founder & CEO
Frantz Yvelin discusses:
- Brexit's role in the carrier's decision
to cancel London service
- Doubling daily Newark-Paris
- Fleet plans
How the carrier contracts with travel buyers
Defying its early critics, all-business class carrier La
Compagnie celebrated two years of service this summer, surpassing the lifespan
of two other all-premium transatlantic carriers that failed in the past decade:
Designed to provide business class-level service at a price between legacy
carriers' economy and business classes, La Compagnie began
daily service between Newark and Paris on July 21, 2014, and later added
service between Newark and London. It ended the London route this month but in
October will double its service to Paris and still plans expansion, founder and
CEO Frantz Yvelin told BTN transportation
editor Michael B. Baker.
BTN: How have
your first few years of operations fared, and why did you cancel the London
Yvelin: We have
been flying more than two years on the Paris-New York route, where a lot of
potential competitors and other players were all saying that within a few
weeks, they won't be there [anymore]. More than two years after, La Compagnie
is doing very strong on the Paris-New York axis. We have a more than 85 percent
load factor average. When you consider the fact that we only do business class,
achieving 85 percent load factor is a great success because that beats a lot of
other business class with legacy carriers. Last year, we launched London, which
was not in the business plan. We decided to suspend all London operations a few
weeks ago, and [Sept. 25] was the last day of operation between New York and
London—for now. We suspended it for an easy reason: Brexit.
Initially, we were thinking about reducing it to three or four times a week,
but we thought that was not in line with what we proposed, which was daily service
at least on the routes we are operating.
We decided to focus on the Paris service, which has been very
successful. We are adding a second daily frequency on the Paris-New York route
starting Oct. 22.
BTN: Might that
route be restored at some point?
Yvelin: We do
believe in the London market. A lot of other significant, much bigger players
than us have been doing the same thing since this happened. British Airways had
two daily all-business class services between London and New York and dropped
one immediately. We couldn't do that. It was either one or zero, so we decided
to suspend the London service. We were achieving 77 percent load factor on the
London-New York route, so it was OK in terms of load. We were not at the same
revenue levels we were on the Parisian route, but this route was much younger,
launched in May 2015. Considering all that, in the end, what we realized was
that it was making more sense to focus on Parisian service now to avoid
potential risk of keeping investing on a potential market where no one knows
what will happen in two years. Europe and the U.K. are going to find some kind
of agreement, but the big question is when and what kind of agreement? If those
answers are favorable, we will be more than delighted to go back to London, but
we certainly don't want to keep investing into a market where we don't have
visibility beyond two years. The first words of [U.K. Prime Minister] Theresa
May when she made it to 10 Downing Street were, "Brexit means
Brexit." We do respect the voice of the British people, but we need to
make sure of what happens next in terms of economy and market development.
BTN: Will you
expand the fleet and routes beyond that?
Yvelin: It is no
secret we have been talking and working with Airbus and Boeing for the A321neo
on the Airbus side and the 737 Max 9 on the Boeing side. We are very interested
by the 737 Max 10, which may come on the market but is not confirmed yet, and
we welcome, as well, the few recent announcements from Boeing that it may
reconsider [making a] next-generation 757, a middle-market single-aisle
airplane. Of course, that's something we'd like to move as fast as we can into,
and that should happen in 2019.
BTN: How much of
your business comes from business travel?
about 60 percent of all passengers are corporate travelers. We have plenty of
corporations, big ones, and we also have smaller mid-cap companies traveling with
us—and the professionals category, independent workers. Since September 2008,
every single company in the world became much more cost conscious than ever before.
What you want first of all is a good value for [your] money. Second, they want
to have their staff, their managers travel comfortably, to travel business class.
You want to fly United, Delta or Air France, keep doing so and pay $6,000 to
$8,000 round-trip—or pay $2,000 with us.
BTN: Are you
contracting with corporate clients?
Yvelin: We have
agreements in place. Usually, we never discount fares. Instead, it's an
agreement related to what you in the end use. We have the most affordable
business class fares in the industry, so in the end, corporate clients are
quite happy with all the large [savings] we are providing, and we are only able
to keep doing that because of them, so for us, it's very important to listen to
them. We have not reinvented the wheel. If you have a certain volume that was
agreed upon, at the end of the year you may have a good surprise. Every
corporate deal is not the other one. We have teams in New York and in Paris to
entertain face-to-face and regular meetings with all the corporate clients to
make sure we address them.
BTN: What's your
distribution strategy? Are you in all the global distribution systems at this
Yvelin: We are on Sabre and Worldspan. We use
Travelport as a GDS. There is still, as always, a margin of improvement. The
travel agents we are working with—they know their corporate clients better, and
we need years to learn to reach the same kind of knowledge.