The end of business class-only airlines?

Posted by: Kerry Capell on May 23, 2008

Is British business class-only airline Silverjet set to be the latest casualty of soaring oil prices? On May 23, the Luton-based carrier suspended its shares from trading after reporting it was unable to access the first $5 million tranche of a desperately needed $25 million funding deal from United Arab Emirates-based investors Viceroy Holdings.

Silverjet, which flies from London Luton to New York and Dubai, is just the latest airline facing tough times. With oil trading at a record $135 a barrel, analysts and airline CEOs such as British Airways Willie Walsh and low-cost Irish carrier Ryanair are predicting many of their smaller more vulnerable competitors will soon be out of business.

The business class-only market is among the hardest hit. Three years ago, the transatlantic business class only market seemed ripe with promise as two new carriers, Maxjet and Eos, launched in quick succession. Two years later, Silverjet joined the fray.

But deteriorating economic conditions and the rapid rise of the price of oil have changed things. Over the last five months, Eos and Maxjet have both gone under. Now Silverjet appears in danger of going the same way. Its share price has plummeted by 90% since it listed 18 months ago.

Reader Comments

Khoa Huynh

May 23, 2008 05:03 PM

It's very hard for airlines to survive nowadays without hedging. SilverJet has arguably done admirably to get this far.

What one should point out is that the US$135 per barrel figure is irrelevant. Jet fuel, which is what airlines put into their aircraft, is around US$172 per barrel today -- which is disastrous.

However, some airlines can make it. Singapore Airlines recently launched all Business Class flights to Newark from Singapore. Have you checked the loads on those flights recently? It goes to show that an airline that offers an industry-leading product can stimulate its own demand even during these tough times and survive (together with sound management).

Dev Loman

June 2, 2008 03:36 AM

The airlines on this planet downright suck. The technology sucks, the service sucks, the propulsion systems suck. The pilots have no integrity, the flight staff could care less about their jobs, airports are handled by a bunch of halfwits who trained at a technical school next door to "The ForkLift Academy." The entire industry is comprised of people I wouldn't trust with salad shooter. And these jets are all built by the lowest bidder.

Higher jet fuel prices are teching us one valuable thing: It's time to find an alternative to the technology of the airline industry.

Asia Flights

October 30, 2008 04:45 PM

Singapore Airlines offers business class-only flights too and they are flourishing...I think the idea that the business class-only flights are struggling is a stretch, especially when examining Asia service.

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