MaxJet, one of four*, all-business class international carriers flying over the Atlantic Ocean died yesterday. It was two years old. The cause of death was attributed to the continued rise in fuel costs, excessive competition by larger airlines,(including lucrative frequent flier plans) and excessive discounting.
I never flew MaxJet. I have a few friends who did. They generally liked the airline. One of the primary reasons was the cost factor. It was less expensive than British Airways, Virgin Atlantic Airways and American Airlines, the three carriers that continue to fly from New York to London Heathrow; Continental Airlines and Delta Air Lines, who fly from Newark or JFK to London Gatwick.
United Airlines gave up its slots to London (from NYC) due to competition. Delta took its slots from JFK, but, on March 30, 2008, when the “Open Skies” agreement begins between Europe and the U.S., that may change. That’s when carriers such as Lufthansa, BA, Virgin and other European carriers can fly directly to the U.S. from any airport in Europe. That means more competition, and lower prices in Economy class. Perhaps in the upper classes, as well. (For more on “Open Skies”, please click on the header, “MaxJet R.I.P and Open Skies”.)
One of the problems businesses have with excessive discounting, while great for the consumer, is that businesses rarely make a profit. Unless there are other businesses that can make up the shortfall, companies that discount as a matter of routine, generally fail.
Discount airlines are not new. There are only a handful that appear to be successful. The Dallas-based Southwest has been around for 36 years covering the U.S. domestic market and giving most of the older airlines heartburn. There have been some copycats, but, SW continues to thrive. The reasons are simple. They don’t promise anything more than they give the passenger. A seat. Peanuts and drinks. It’s not pretty, nor is it roomy, but the larger airlines, charge passengers more, and give out nothing, but aggravation.
It’s a shame that MaxJet had failed. That means higher prices for consumers with less competition on the most lucrative route — New York – London.
When “Open Skies” begins, hopefully that will change. The larger, “legacy” airlines are reportedly nervous about the agreement. They should be.
* Eos and Silverjet fly from New York/Newark and London. l’Avion flies from Newark to Paris Orly.