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Turbulent economy hits business class

  • Story Highlights
  • Eos and Maxjet file for bankruptcy as business-class-only carriers suffer
  • Competitor Silverjet received financial support from Middle Eastern investor
  • Many small operators are struggling to survive current economic strife
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By Peter Sorel-Cameron
For CNN
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LONDON, England (CNN) -- In 2005 there was a major shift in the transatlantic airline market, with the launch of Maxjet and Eos, two business-class-only carriers, vying to carve their own niches into high-end air-travel.

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After little more than two years, Maxjet went into Chapter 11, but is a business-class-only service redundant?

Both aimed to lure executive customers from companies such as Virgin Atlantic and BA, which had dominated U.S. to Europe routes until then, and diversify a highly lucrative air travel market.

At the time there were doubts as to whether they could make a dent in the existing operators' margin, especially while not offering much in the way of choice, with just one flight each way per day and flying mainly from Stansted, a less popular London airport, with a reputation that pales in comparison to the ever-expanding Heathrow.

It would seem that those doubts were well-founded: This week, Eos filed for bankruptcy, joining Maxjet, which went into Chapter 11 at the end of 2007.

Is this the end of business-class-only travel? Was it simply a bad idea from the outset?

Major operators such as BA and Virgin have stayed profitable thanks to the depth of the organization: they can offer a range of different seats, from the very basic to the height of luxury.

Not only can they cater to air travelers of all types and in a variety of economic situations, an operator can fit more budget seats into an aircraft than they can with the added comfort of higher-end leg room.

Where the budget operators have succeeded -- slashing the quality and comfort of travel and removing any of the frills that are a standard in the bottom-end seats in big airlines -- the business-only fliers have their work cut out to care for the few passengers aboard.

The carriers always struggled against the odds, operating on such a small scale, especially in the current economic climate. As oil prices continue to soar and the global economy is shaken by the credit crunch, air travel becomes less attainable for the majority of people, as well as coming under increasing criticism from environmentalists.

Can business class alone support an airline? On this evidence, it would seem not. Maxjet and Eos simply couldn't maintain a profitable structure based on this single operating strand.

But what about Silverjet? The last remaining major name in the business-class-only sector, it has managed to survive the recent cull of operators and secure financial backing from an, as yet, unnamed Middle Eastern investor. So, someone clearly has faith in the system.

Silverjet has managed to achieve an almost legendary status in the business class market, making a name for itself in little more than 18 months.

So, why have we seen its competitors crumble? The answer may boil down to an issue as simple as size.

Maxjet and Eos were two young startup carriers, running single routes at great cost. In many instances in the past this has led to huge success -- Virgin Atlantic spent its first year operating with a single DC10 -- but with the present economic unease, any fragile company is left painfully vulnerable.

It isn't only the business-class-only operators that are feeling the pinch. Many small, independent carriers are having to take drastic measures to survive an impending recession.

Silverjet, which is running an extra route over its competitors, into Dubai, has had to cozy up to a financial backer to continue operations, and in the United States, domestic airlines are making moves to merge and so consolidate fleets in an effort to insulate against the frosty economic climate.

So the business-class-only system itself may not be at fault. It might just be that the timing of Maxjet's and Eos's arrival in the market was unfortunate. It will be hard to divine the workability of a carrier that offers solely high-end seats until the world economy settles.

It seems likely that, if the concept is to continue, though, it will be in the hands of Silverjet, who stand now as the only big operator of their kind. Their new backer clearly has faith in the service they offer and if the pair remains partnered for the coming months, they may be the name to beat in this unique market. E-mail to a friend E-mail to a friend

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