Key Pilot
What can be good about it?
Silverjet has an almost identical business model to MaxJet but costs are probably higher because of 'product differentiators' like the dedicated lounges or terminals (call them what you like!) Its evident the model requires substantial amounts of cash to keep it alive long enough to generate critical mass.......and generating the mass merely increases cash burn. Take a close look.....SJ demand extra financing everytime they introduce a new [old] aircraft and two more are pending in MAR 08.
I'm not sure the Reubens are in this for fun. The probable scenario is that they let it continue towards expending all the cash generated in the last round of financing, hope it survives long enough for the brand to develop some real value (goodwill on the books) and then and then pick it off cheap leaving investors with nothing and taking it private. If that doesn't happen then they have spent some pocket money and the business will go the same way as Maxjet (whatever that proves to be) and, no doubt, EOS will follow at some point. By the way, as a US corpration I believe MaxJet will have the benefit of Chapter 11 even if the last round of funding was raised in the UK; ironically, this gives them an advantage over UK airlines.
For the all business class model to work, theyneed to keep costs low. They (SJ and Max) are all spending fortunes on
PR (how many freebies are going to journos, award givers and 'influencers'?) and marketing (TV adverts, loads of internet advertising, magazines and airport and roadside hoardings etc.) to develop a brand in the vain hope of adding enough value to attract a buyer before the inevitable cash exhaustion.
LoCo Business Airlines need to embrace the tricks employed by proper LoCo airlines such as Ryan and Easy. LoCo airlines do not differentiate; they drive down cost and maximise revenue. At the moment costs are increasing rapidly for airlines, mainly due to fuel, but the fares at the all business class airlines don't seem to be keeping pace with those increases - in fact they are under pressure from the legacy carriers (BA have an offer for £1200 Club World return to NY at the moment).
LoCo models rely on LF (equivalent to volume sales in discount supermarkets).......but LF is not the panacea to success in an airline so don't read too much into the monthly figures from each of these airlines. Anyone can sell a £1 for 50p or in the case of the all business class model anyone call sell a £2000 seat for £999. If the product is as good at it is alleged by them it should warrant a premium, not a discount.
Maxjet and Silverjet are wholly comparable (EOS to a lesser degree because of their higher fares and top end target market) and therefore it does not bode well for SJ. Its a shame but the all business class model appears to be fundamentally flawed. I wish them all well..... but I fear for them.
That said, this should be a wake up call for SJ, EOS and L' Avion in France - hopefully their management teams will act upon it!