In the Hot Seat: Frantz Yvelin
Johanna Jainchill spoke to La Compagnie's CEO about the airline's success against the odds as well as the current challenges of doing business in Europe. Read More
When La Compagnie debuted in summer 2014 as an
all-business-class airline offering service between Paris and Newark, industry
observers didn’t give the one-plane start-up much chance for success.
This month, on its two-year anniversary, the airline has two
planes, has added service between Newark and London’s Luton Airport and has
plans to add a third aircraft in 2017.
La Compagnie’s survival is due to a combination of several
factors. The first might be timing.
All of its predecessors — the independent, all-business,
transatlantic airlines Silverjet, Maxjet, and Eos — went out of business at the
end of the last decade, except for L’Avion (launched by La Compagnie’s
founder), which was purchased by British Airways (BA) and turned into its
premium-economy OpenSkies service.
In 2007, when the world economy began its nosedive, there
were four all-business-class transatlantic airlines operating in
addition to all-business-class service offered by mainstream carriers such as
Lufthansa and BA, leading to heated competition.
U.S.-based travel analyst Henry Harteveldt of Atmosphere
Research Group, said that Delta, British, Virgin Atlantic and American, afraid
of losing the lucrative transatlantic, business-class market share, pounced on
the all-business carriers before the recession did them in, matching fares and
offering bonus loyalty program points.
Now, he said, he thinks La Compagnie is succeeding, in part,
by not competing too directly with any major carriers and offering a product
that is better than premium economy but not up to most business-class
standards.
“They are really going after the independent traveler,
whether it’s a leisure traveler or business traveler, and they haven’t started
drawing the wrath of the larger carriers,” Harteveldt said.
La Compagnie launched with a unique premise: to not be the
best, but the most affordable business class in the sky, promising fares as
much as 50% lower than its premium competition.
Currently, roundtrip tickets to Paris start at around
$1,500. The airline offers daily service from Newark to Paris and back, and to
London six days a week, on single-aisle, 74-seat Boeing 757-200s.
Frantz Yvelin, La Compagnie’s founder and CEO, said in New
York last month that the airline continues to offer low fares despite its
success.
“I made a commitment to offer more affordable business class
in the skies,” he said. “I could have increased fares, but keeping them is a
question of honor.”
Yvelin said there are many reasons for La Compagnie’s
success, including its affordable fares, the quality of its product and what
passengers don’t see: a lean operation and marketing strategy that has always
focused on the travel trade.
The airline’s offices are in Jersey City, N.J., and a Paris
suburb, keeping its rent low. And Yvelin, himself a pilot, said his salary is
equal to his captains’ wages.
La Compagnie has sold its flights in the GDS and paid
commission since its launch, in addition to selling direct through its website
and call center.
According to Yvelin, travel agents account for about half of
its sales, which are 60% corporate and 40% leisure, and he said the airline has
always promoted itself by inviting trade representatives aboard.
“We know we can’t be 100% web-based,” Yvelin said. “We have
to go through travel agent partners. They got the concept very fast. They are
selling to a lot of people that used to fly coach class.”
Duff Pacifico, with the Tzell Travel Group, is one of those
agents. Newly converted to La Compagnie after flying the airline in April, she
said she’s “sold quite a bit since then.”
Pacifico said she both upsells people who normally fly coach
and targets corporate clients with lower budgets for business.
“For somebody who is used to flying on [BA] or Emirates in
business, maybe it’s a slight step down, but for the amount of money you save,
it’s worth it,” she said. “And for somebody who would normally be flying coach,
it’s a huge bonus.”
Aside from the price, Pacifico said passengers get the
superior experience of being on a smaller plane, with no crowds during boarding
and check-in.
“Being onboard is really pleasant,” she said, citing clean
bathrooms and lie-flat beds, although her companions who were at least 6 feet
tall said their feet hung off the bed.
Yvelin said La Compagnie plans to expand and is taking
delivery of a new plane in 2017, which will support its current routes from
Newark to Paris and London.
He said he sees La Compagnie eventually expanding to the
West Coast of the U.S. and flying between Europe and Asia.
“We know there is a demand,” he said.
Harteveldt agreed that La Compagnie could certainly do well
enough to spread to markets beyond London, Paris and New York. As long as it
doesn’t draw too much competition.
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Robert Silk contributed to this report.