Competitors undeterred by Maxjet bankruptcy filing

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Maxjet ceased operations and filed for bankruptcy on Dec. 24 after two years of service, citing escalating fuel prices, increased competition and economic uncertainty as factors in its failure.

But other transatlantic, premium class-only carriers said Maxjet's demise should not raise doubts about the viability of their business models.

Eos, Silverjet and L'Avion insisted that they were doing much better than Maxjet, which they said tried to expand too quickly without firmly establishing itself in its core markets. They said Maxjet did not develop a strong enough product or niche to fend off its competition.

Maxjet had expanded from its London Stansted-New York market to Washington Dulles, Las Vegas and Los Angeles, although it had recently ended the Washington service. It also faced new Kennedy-Stansted competition from American Airlines, which began two-class service on the route on Oct. 28.

From the start, Eos, which began its Kennedy-Stansted service at the same time, has aimed for a higher-level, higher-paying market than Maxjet.

For example, Maxjet flew 767 aircraft configured for 102 seats that did not recline to flat, which is becoming the business class standard. Eos provides 21 square feet of space per passenger on 757s configured for just 48 seats that recline to a fully horizontal lie-flat bed; its fares are substantially higher than Maxjet's but still lower than a traditional carrier's business class.

Eos focused its early growth on adding Kennedy-Stansted frequencies. It also said its GDS participation, a dedicated sales team and strategic corporate partnerships had helped make it a "significant player" in the corporate travel market. The airline says it now carries one out of every nine business-class passengers between New York and London.

Eos recently secured an additional $50 million and expects to add as many as three new routes this year as the airline expands its fleet to eight aircraft. But Eos is not revealing much about its financial results other than to say it is "flight-level profitable."

Silverjet started its Newark-London Luton service in late January 2007, taking a middle ground between the Maxjet and Eos products. Silverjet, which flies 767 aircraft configured for 100 seats and operates a private terminal at Luton, has seats that recline to angled, lie-flat beds. The airline says it serves "gourmet food" onboard.

"We've been able to create a better service at a better price point [than Maxjet]," said Greg Maliczyszyn, Silverjet's director of communications for the U.S.

Maliczyszyn said Silverjet had been "much smarter with growing organically and saving costs. We're not trying to overextend ourselves."

Silverjet added London-Dubai service in November, and said its strategy was to build frequency on a smaller number of routes with high utilization of its aircraft.

Silverjet said its revenue per flown passenger was $1,821 per roundtrip flight for its first six months of operation, compared with $1,641 for Maxjet in its first six months, and that its average fare paid was 50% higher. Silverjet also noted that it just raised an additional $45 million from existing and new investors.

"We'll be profitable within two to three months," said Silverjet CEO Lawrence Hunt. "We're in a completely different place than [Maxjet] financially."

Perhaps the premium-class carrier most like Maxjet is Paris-based L'Avion, which began flying from Orly Airport to Newark in January. It uses 757s configured with 90 seats that recline to 140 degrees.

L'Avion is adding a second aircraft to increase the frequency on its Paris-Newark route on Jan. 20. To start, L'Avion will add a second daily flight on Fridays and Sundays.

L'Avion reported a 79% load factor in December, and spokesman Ira Weinstein insisted the airline was "doing fine."

Competition is always a concern, he said, and he said he expected British Airways to enter the market with its new business-focused product from European countries to the U.S. But he said L'Avion would continue to hold an advantage, in part because it flies from Orly Airport, which is less crowded and closer to downtown Paris than Charles de Gaulle.   

To contact reporter Andrew Compart, send e-mail to [email protected].

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