I’ve written a lot lately about La Compagnie, the French airline which operates one daily flight between Paris and Newark.
La Compagnie business class cabin
La Compagnie recently announced that they would launch service between London and Newark. That service commences April 24, 2015, and the fares are crazy good — they’re charging ~$1,000 roundtrip for business class.
I’ve said for a long time that I think the airline brings a ton of value to the market. They’re literally offering a sub-par business class product for economy class prices. For a very specific niche that’s hugely valuable, and something that hasn’t been available in the market before.
La Compagnie business class seat reclined
While La Compagnie adds a ton of value to the market, their business model is perplexing. I’d argue it’s the second most interesting business model in the airline industry after that of Baltia Air Lines (though I’m not sure you could call them an airline as much as a means of generating capital without the intent to ever fly).
A couple of days ago the International Business Times wrote an article about the future of La Compagnie, which I was quoted in:
“Unfortunately, they have no chance in hell of surviving,” Ben Schlappig, founder of industry blog One Mile at a Time, said. “La Compagnie will do fine while oil prices are as low as they are. But once they go up again, or the economy worsens, they won’t make it. And it’s even tougher to turn a profit on London flights, where $215 goes to the U.K. government — and that’s before other taxes. The numbers just don’t work.”
La Compagnie seems to be focused on load factors, which I don’t think is a good way to gauge success.
For example, between Newark and Paris they’re charging anywhere between $1,500 roundtrip and $4,000+ roundtrip:
So a 100% load factor at $1,500 fares is the same as a sub-40% load factor at full fare ticket prices. Now admittedly all airlines have huge discrepancies in fares and still use load factors as one indicator of performance, though when you’re running an all business class airline I think yields are even more important than load factor. That’s especially true since I would bet La Comapgnie is selling a disproportionate percentage of their tickets at the discounted prices given the lack of corporate contracts, frequencies, etc.
Anyway, it seems La Compagnie is quite confident about their future, as they apparently want to double the size of their fleet by the end of next year and are “examining” 787s. Per Skift:
LaCompagnie, the French business-class-only airline that began serving New York last July, said it aims to double the fleet to four jetliners by the end of next year.
The Paris-based carrier is examining the Boeing Co. 757 and Airbus Group NV A321 narrow-bodies, and could even seek to add Boeing’s newest 787 Dreamliner, Chief Executive Officer Frantz Yvelin said today at a briefing in London.
As of now they claim to be achieving 60% load factors, with an aim of an average load factor of 75%:
The carrier, whose existing route connects Paris Charles de Gaulle with Newark, is targeting an average load factor of 75 percent, versus about 60 percent today, with operations “ramping up nicely,” he said. In the London-New York market, its ambitions extend to capturing a 40 percent share of the 4 million people who travel between the cities each year.
Oh man, oh man, oh man…
I really want them to make it because they do bring something unique to the table.
But once fuel prices go up or the economy tanks…
La Compagnie business class lunch
What do you think? Do you see La Comapgnie doubling their fleet size by next year, and maybe even taking delivery of some widebody aircraft?
(Tip of the hat to KahunnaTravel)