La Compagnie Wants To Double Fleet Size And Is Considering 787s

I’ve written a lot lately about La Compagnie, the French airline which operates one daily flight between Paris and Newark.

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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.

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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:

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La-Compagnie-Fares-2

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…

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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)

Comments

  1. Given how many of these all-biz class airlines have failed it’s hard to see how they can survive. They want 40% of all traffic or 40% of business class traffic? Either way, they’ll have to add a lot more flights, no?

  2. @Lucky, which airline’s miles is most useful for traveling on premium class from major U.S. hubs to most major European cities? Personally, I’m looking to fly from Miami to London and US Airways Dividend Miles is on sale now, buy 75,000 miles, get 30,000 bonus miles + 10% off, in your opinion, how good is this deal?

  3. If they are going to be competitive long term they will have to grow and add more frequency if they are going lure away travelers from the large players.

    While the oil price will probably stay low 2-4 years longer term they will have get something with better fuel economy than a 757 long term. Problem is where will they get the B787 or A350 from? Did not think there was many aircraft like that available on so short notice? And will they be able to fill up a widebody with J or will they add a E/E+ product?

    Regarding their Luton route, I wonder why they did not setup a private check in and bag drop centrally in London with a private bus service to Luton?

  4. @ raksiam — OMFG, totally missed that. They’re CRAZY!!! Who cares, whether it’s 40% of business or total traffic. EasyJet has a better chance of capturing 40% of business traffic in the market than La Compagnie.

  5. @ Silver — If you’re just looking to go from the US to Europe, you can often do better by looking for a fare sale. It’s not unusual to see sub-$2,000 paid business class fares if you’re patient, so I’d argue that’s the best value often.

  6. Lucky, thanks. Just to clarify, even if miles on sale at 40% off, still can’t beat a good fare sale?

  7. I’m pretty sure their business model is to hype their airline as much as possible, make the numbers look as good as possible and then sell the airline to someone else. This is why they throw out big unrealistic numbers in the press “40% of the market”, “we are going to buy a 787”. It sounds like this guy did it once before with L’Avion and is trying to do it again. It is not about the passengers or the fares at all.

  8. They say they are looking at A321s and 757s in addition to 787s. First, it seems that those are three very different planes. Second, even with the A321neo, they would probably be looking at a fuel stop in Shannon or Nova Scotia on the westbound leg.

  9. And third, even if they could get their hands on an A321neo, it wouldn’t be until years from now — practically forever in “airline start-up years.” Longer than forever, really.

    @Silver: If you read this blog, you already know that buying airline miles these days is NEVER a good deal unless (a) you need just a few more for top-up purposes with respect to an existing mileage account or (b) you’ve run an apples-to-apples cost comparison analysis on a specific ticket you’re looking to buy (either directly with cash or indirectly with cash-bought miles) now, today, immediately.

  10. i looked yesterday for random dates from london and the best deal I found was £2000. For £200 more I will fly BA from LHR and get my wonderful tier points and avios, lounge and not have to go to Luton.

    For £1000 it is a deal (I’m not even considering the 2 for 1 you mentioned yesterday)

  11. Well sure they want to double their fleet size and achieve 40% market share. I want a medieval castle, a night with Tom Daley, and a fair and straightforward tax code. #notgonnahappen

  12. Well, maybe they’ll “double their fleet” at some point – adding two aircraft isn’t exactly a game changer. I don’t see the rest of it happening, though.

  13. They sure as hell won’t get what they’re looking for. All business class just does NOT work, and if they think they’re gonna get 40%, I think I’m going to disocver the cure for cancer.

    And the 787s dont work either. New ones probably wont be available until late thosndecade and unless they’re filling them with SQ business class seats, that’s just too many business class seats.

  14. They should add Miami as one of their destinations. The Business Class prices of other airlines are much higher than New York and demand is growing constantly. I live in Miami and at their promotional prices I see myself going to either London or Paris for a long weekend at least 4 times a year.

  15. I booked them today for the inaugural flight £648.86 rtn. I’m expecting a premier economy type experience but its worth a punt; albeit paying by credit card and having a cancellable room in NYC.

    Silverjet was a lousy experience and Maxjet was basic but fun. EOS was near F with terrific customer service; so I miss that one.

    The worst part of Luton is that bus link from the rail station to the airport.

  16. @ @Orlijr — You can be a fan of the product they offer and still think they’re going out of business. I’d be a huge fan of a car dealership that sells Mercedes cars for $10 (okay, in this case a fairer parallel would be Hyundais), but that doesn’t mean I think they’d stay in business.

  17. Lucky, I have to agree with you, when you said ‘I wonder what routes Iceland air will be launching’, I did not have much hope in that airline. But now, it seems to be working out.

  18. Re. A321; running the numbers on the CEO from CDG -> EWR:
    – Manufacturer’s Empty Weight: 47,000 kgs;
    – 4 x ACTs (Additional Centre Tanks, which 321 can take according to Airbus tech newsletter): 2,400 kgs
    – 64 biz seats (Thompson Vantage @ 120kgs per seat): 7,320 kgs
    – 64 pax (130kgs per pax with baggage): 8,320 kgs
    – Sector fuel: 23,944 kgs
    = 88,984 kgs

    This is several tons under the 321 CEO’s MTOW of 93,500 kgs…

    Gotta remember that with ~100 less passengers than a 2 class configured plane, they are carrying ~6 – 7 tons less, even accounting for additional weight of the ACT’s & biz class seats…

    Given you can secure a 12 year old 321 for around $20 mil, with prices about to drop further with the introduction of the 321 NEO, the A321 CEO configured as described above could well be a viable trans Atlantic aircraft…

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