ON THE SOAPBOX: The All-Business-Class Model - Six Months On

ON THE SOAPBOX: The All-Business-Class Model - Six Months On

On the six-month anniversary of MAXjet”s all-business class flights
from Stansted to New York, and with the additional service between
Stansted and Washington, DC, now well established, MAXjet chief
executive Gary Rogliano comments on an era of innovation in airline
travel.  Gogliano, an accountant, is based at Washington Dulles.  He is
 a former partner of Ernst & Young and previously chief executive
officer of TransPacific Capital LLC, a boutique investment and
operating firm with a focus on transportation companies.

”We are at the cusp of an important time in the airline industry.  We
launched our Stansted to New York service just before Christmas and
have already expanded with the launch of a new service from Stansted
to Washington Dulles at the start of April.  EOS continues with its
premium service to New York from Stansted and newcomer Silverjet has
also announced its plans to operate an all-business class service
between Luton and New York Newark Airport.  Whilst Silverjet has some
way to go before it takes off, it demonstrates the growing belief that
there is a market for transatlantic low fare business class travel.

COMPETITION: With increasingly high expectations from the travel
consumer, there has never been a greater need for more differentiation
in the business-class airline world.

With the death of Concorde and the size of the premium market in
Europe having halved in the last four years, the launch of an
all-business-class airline (albeit a transatlantic one) was clearly a
brave choice.  Yet rather than being a dying breed, the competition in
the long haul business class market could not be fiercer, alongside
the recent BA announcement to invest at least ”100m to upgrade its
long haul business class service, and the growing popularity of Virgin
Atlantic”s Upper Class Suite.

We strongly believe that in a market where customers are happy to pay
a premium for quality service, there is sufficient demand for the
all-business-class model to work ” this is clearly contingent on the
right price being charged for business class customers, in opposition
to the fees being charged by other major transatlantic carriers whose
seats sell for multiple thousands of pounds.

ALL-BUSINESS-CLASS BOOKINGS: The MAXjet model of a one-configuration
airline has been met with huge applause, with our booking loads to New
York regularly exceeding 50%.  We have managed to build up our loads
as quickly, if not quicker, than any airline that has developed a new
international route and recently for the first time ever, our New York
flight was 100% full.  Forward bookings indicate that the New York
route will average at 70% load factors for the month, with bookings
for June also looking strong.  The Stansted to Washington route is
gaining ground and we are confident in its success with forward
bookings for some flights already indicating 50% load factors.

Business class travellers value time, efficiency and a high degree of
comfort when flying, so the all-business-class model serves their needs
 very well.  An interesting pattern that has emerged from our
competitive fares is that leisure travellers are as likely as business
travellers to fly onboard our aircraft.  Given that the transatlantic
prices are often less than the cost of a premium economy return trip,
this has opened up a world of opportunity for the traveller, who would
previously have found this option out of reach.

Not only do our forward bookings illustrate the growing success, but
the quality of our product is also endorsed by the results from the
first ever passenger survey.  Some 87% of our customers found the
experience to be ”very good” or ”excellent” and 95% of passengers said
they would be likely to fly with us again.  We are now negotiating for
our third and fourth aircraft to expand the MAXjet fleet.
 
FUEL COSTS: Fuel costs are of course a major issue, with the
indication being that charges to airlines will remain high.  With
projected higher fuel prices, it will become increasingly difficult for
 airlines to make profit margins on their product.  Yet the
combination of our competitive pricing structure and high-quality
product has meant that our load factors are full to the point where we
are profitable in spite of high fuel charges.

The all-business-class era is very much here to stay, with MAXjet
planning new routes to the States, thereby increasing the range of
destinations open to the discerning traveller.”

Gary Rogliano ” May 2006 top

http://www.maxjet.com