MAXjet suspends shares

“Boutique airline” MAXjet Airways today requested that its shares be suspended in advance of a statement from the airline about its rather precarious financial situation. MAXjet flies five Boeing 767-200s from London-Stanstead to three US cities (JFK, Las Vegas, and Los Angeles) with around 100 leather seats apiece and four-course meals (not to mention champagne cocktails and canapés). The airline went public in June, but has since flown into a rough patch (their stock has fallen 50% and new route from London to Washington was axed, in addition to planned service to Miami starting next February).

Not all the news is negative, though. MAXjet carried 47% more passengers last month than it did last November, while the airline’s load factor increased 11% to 69%. But although more seats are being filled, MAXjet is finding it harder to make money. Lots of factors – increased competition with carriers like Silverjet and EOS, high oil prices, and a weak US dollar (which particularly affects an airline with so much UK-based traffic) could be to blame. The airline’s loss increased to $49.5 million in the first half of 2007, up from $30.4 million in the same period a year ago.

According to MAXjet, everything is business as usual, for now. The airline’s announcement about its finances, according to a statement released by the airline, will “be made as soon as possible”. “The company wishes to confirm to its employees, customers and suppliers that business continues to function as normal.” Whether or not MAXjet will be able to get over this remains to be seen – the transatlantic business travel market is notoriously competitive, and with British Airways getting in on the game soon, things aren’t likely to ease up. If BA arch-rivals Air France or Lufthansa also consider entering the premium transatlantic market at a more competitive rate (and Lufthansa has already made moves towards doing this), they could seriously jeopardize the futures of all-business class airlines like MAXjet.

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US carriers look for more US-China routes

Several US airlines are pushing for more nonstop routes between the US and China, beginning in March 2009. And they're also going straight to the customer for help - most of them have designed separate websites highlighting their bids and are asking fliers to help out by signing petitions that will be presented to the Department of Transportation. Here are the airlines:

• American Airlines filed an application on Monday to start nonstop Chicago O'Hare - Beijing service, to start on March 25, 2009. (This isn't the first time American has tried to do this - a few months ago it filed a similar petition but failed because it couldn't agree with its pilots on work rules for the rather long flights.)
• Continental Airlines wants to fly between Newark and Shanghai starting on March 25, 2009.
• Delta Air Lines applied for Atlanta-Beijing and Atlanta-Shanghai service.
• MAXjet quietly filed for Seattle-Shanghai service, with a continuing flight from Seattle to Los Angeles.
  
• Northwest Airlines wants to fly Detroit-Beijing and Detroit-Shanghai.
  
• United Airlines is seeking San Francisco-Guangzhou service in 2008 and Los Angeles-Shanghai service in 2009.
• US Airways has proposed flying between Philadelphia and Beijing.

The Department of Transportation can only allow one new airline to enter the US-China nonstop market each year. Currently, all of the above airlines except Delta, MAXjet and US Airways serve China nonstop - a fact that might give them a bit of a competitive edge. My prediction: the Continental and Delta proposals will pass, mostly because there isn't any New York area-Shanghai service and Atlanta/the southeastern US are also underserved when it comes to nonstop US-China flights. United Airlines will also probably get at least one of their routes, too.

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Virgin eyes premium market

Speaking on the day of his airline's inaugural flight between London-Heathrow and Nairobi, Kenya, Virgin Atlantic chief Sir Richard Branson recently announced the launch of a business-only airline that would connect London and various European destinations with the US. Branson said that the airline "would provide choice and quality for the customer" and would hopefully be up and running in nine to 18 months.
The airline wouldn't be a fully separate entity; it would probably be an airline within an airline (Branson did say that the airline would be under the Virgin Atlantic name). The London airport was not yet mentioned - Heathrow, Gatwick, Luton, or Stanstead are all possibilities. Like arch-rival British Airways' newly announced service, Virgin's will connect London, Paris, Milan, Frankfurt and Zurich with the US (probably New York). "We've got to compete in this area," said Branson. "The service will be of the highest quality and will be competitive in terms of price." Virgin will also have to go up against airlines like Silverjet, Maxjet, Eos, and L'avion, all of which offer premium trans-Atlantic service.

Virgin is also reportedly in talks with aircraft manufacturers Boeing, Airbus, Bombardier and Embraer over a new aircraft order for up to 15 airplanes.

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BA joins premium transatlantic competition

Last year I wrote about so-called 'boutique airlines' - airlines which catered exclusively to the first- and business-class markets - and also looked at the expansion of these types of airlines across the Atlantic, where they have been most prolific. A handful of these 'boutique airlines' include Maxjet, Eos, and Silverjet, which fly between the New York area and London. There's also L'avion, which flies between Paris-Orly and Newark. All four fly specially configured Boeing 757s or 767s in a business or first-class configuration.

Now British Airways is foraying into this group of carriers, which target the upscale leisure traveler but mostly the business traveler. It announced that beginning in the summer of 2008 it would start flying all-premium class transatlantic services. However, the interesting part is that it wouldn't just be to and from the UK - BA is looking at service from a US city (probably New York) to various European cities like Paris, Madrid, Frankfurt, Milan, and Zurich. The chief executive of BA, Willie Walsh, said that the airline would probably - like the 'premium competition' - use Boeing 757s and/or 767s, which are smaller than the 747s and 777s that the airline currently uses on transatlantic routes.

This seems like a natural choice for BA, which has accomplished a lot with its first and business class products. But these have come under increasing pressure from the start-up 'boutiques', so BA is trying to hit back with a 'boutique' of its own. However, the fact that it wants to fly between the US and other European cities, not just the UK, is a bit more surprising, and also a gamble. Analysts have pointed out that BA has lost money before in such moves, so we'll have to see if they will be successful this time round. In any event, the move certainly will increase competition on the transatlantic routes and bring the battle for premium customers beyond the 'boutiques' - airlines like Air France and Lufthansa, BA's main competitors, will have to look out as well.

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