Are La Compagnie’s Days Numbered?

La Compagnie is the all business class transatlantic airline that started flying in mid-2014. Their first route was between Paris and Newark, and I was able to review that flight within days of when they launched operations. Last summer La Compagnie launched flights between Newark and London as well.

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In March La Compagnie claimed they were breaking even on their Paris route, and were still “ramping up” on their London route (in other words, they weren’t yet breaking even).

Well, earlier this month La Compagnie announced that they’d be discontinuing their flight between New York and London because of Brexit. That seemed like a convenient excuse, especially since we haven’t seen demand shift very much in the short term. If anything, you’d think La Compagnie would thrive under those conditions, given that the route was largely targeted at New Yorkers looking to go to London.

When the airline announced that they’d be discontinuing the route, they said they’d be using that plane to now launch a second daily flight between New York and Paris. Well, I just received an email from La Compagnie about this second daily flight, and they have $1,400 roundtrip all-in fares to celebrate it. As I’ve long said, La Compagnie has an incredible proposition, though their operational reliability leaves a bit to be desired.

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The catch is that they’re not actually offering twice daily flights. Best I can tell, sometimes they’re operating 7x flights per week, sometimes they’re operating 9x flights per week, and sometimes they’re operating 11x flights per week. Fair enough, they sometimes need some leeway in their schedule for maintenance, etc.

For example, starting next February they’re operating their normal once daily flight, and then an additional frequency on Fridays, Saturdays, Sundays, and Mondays, with the following schedule:

B0102 Paris to Newark departing 12:55PM arriving 3:30PM
B0103 Newark to Paris departing 9:30PM arriving 10:20AM (+1 day)

But those are their absolute peak frequencies. Other weeks they’re just doing one flight a day.

I’ll admit that La Compagnie has made it longer than I was expecting. When the concept was first unveiled, I gave them six months. However, they’ve had very favorable conditions in terms of oil prices, so in retrospect I’m not surprised they’ve made it this long.

However, at this point I have to wonder what their strategy is:

  • They claim they’re breaking even on one daily flight between New York and Paris
  • Adding a second daily frequency will unarguably lower their yields, given that demand for their service isn’t doubling overnight
  • On top of that, some weeks the second plane is just sitting around, other weeks it’s operating two roundtrip flights, and other weeks it’s operating four roundtrip flights; while I know they have favorable lease terms and occasionally planes need maintenance, parking a plane is expensive, both in terms of the actual parking costs, and also in terms of paying for the lease without generating any revenue

La-Compagnie-757

The airline has lofty expansion goals, and earlier in the year claimed they were working on acquiring an additional Boeing aircraft, which was set to join the fleet in 2017. However, I have a hard time imagining that will actually happen.

While they’ve talked a lot about their expansion plans, you’d think that they would use their second plane to make that happen, rather than putting it on a route where it will significantly reduce their yields.

Keep in mind that recently La Compagnie sold an “all you can jet” pass, where you could buy a pass for $35,000 that gets you unlimited flying for a year. Many thought this was a desperate attempt for a cash strapped airline. I thought it was actually creative, and assumed they were doing it to generate some publicity, and that it would be mutually beneficial given that they have empty seats. Then weeks later they cut their London flight, so maybe it was in fact a desperate measure.

Given the above, it sure looks to me like La Compagnie’s days may be numbered…

What do you think of the future of La Compagnie?

Comments

  1. No all business class airline has EVER succeeded in the long term. People all say that they would pay for more room and services, but of course in the end all they care about is price. That’s why we have the air transportation system that we have. It’s amazing to me that airline start ups like this can still find enough gullible people to lend them money to fund their start up dreams.

  2. Why not open another station (say BOS, YYZ, YUL) that’s within range of 752 operations? Don’t put all your eggs in one basket.

    It seems these days if you don’t have an “alliance” partnership, you’re not going to make it. (Not saying they’re closing shop – just mentioning that).

    Couldn’t they (la compagnie) codeshare with AF to compete with an all C/J aircraft like BA runs their baby bus from LCY to JFK?

  3. I don’t see the less-than-daily schedule on the second trip to be a red flag; rather, it’s network and schedule planning saavy. Lots of airlines do this. If they have a reasonable feel on demand trends, this is a smart strategy to avoid flying an empty plane…which is even worse than parking a leased aircraft.

    Agree that La Compagnie has an uphill battle however given the low-fare environment in the transatlantic and lots of new LCCs growing in this market.

  4. Each eight (8) hour period the plane is parked at EWR, they are charged the 70.00$ fee for public aircraft parking weighing between 100’000 to 200’000 pounds of max take-off weight. Considering the Boeing 757-200 is 255’000 pounds for max take-off weight, they are charged the 25.00$ per 25’000 pounds over the limit and the fraction cost of that. So around 122$ per 8 hours. Meaning if atleast one plane is sitting there for en entire 24 hour period they are paying 488$ every day.

    That’s ~14’640$ per month for parking one aircraft. Not bad, but consider the airline industry is a place of razor thin profit margins, if they’re breaking even on just one route for fuel, airport fees, catering, etc, they must be losing money on that plane too. Not to mention other costs associated such as maintenance, management, IT structure, employees, etc, then they’re looking quite thin in terms of being able to expand.

    Let’s add their new planes to the fleet! Cost of all those involved with lower yields and the economic downturn, you’ll be damned if they survive through the next summer! I can go into more specific costs, but overall you get my point. Razor thin margins for a start-up airline and false front claims to assure people. Plus how is it they aren’t in some sort of IPO? Baltia has one and they haven’t even flown a commercial flight. I’d expect the IPO to raise capital for their expansion.

  5. I’ve tried La Compagnie and the former Openskies IAD-CDG. They are fine since I mainly care about the seat, but I think that the limited number of people only going between those two cities and not connecting on and (2) that fares are frequently low in the major carriers hurts them. Plus I do mileage upgrades when available, which is possible UA, BA and AF but not them.

  6. Part of the issue with transatlantic premium cabin travel is that East Coast US – Europe simply isn’t all that long of a flight. I like my business class seats as much as the next guy, but in reality, sitting in an exit row or bulkhead for an extra $200 or so over discount economy is the right value point for a lot of people. I mean, maybe I’d pay $1500 for business class? But 7 hours just isn’t long enough of a flight to warrant much extra spend, particularly if I’m on a non-stop flight.

    The trappings of business class become most useful when I’m on really long itineraries heading into Asia, When flight time + layover time gets into the 20 hour range, flat beds on all segments and nice lounges become worth some money.

  7. What they need to know now is send the first plane in for a serious over haul. I flew them quite a bit over the last couple of years — most recently on the original aircraft between Paris and New York. The interior was starting to look very shabby. There were only 65 passengers on the flight that day and they had to jam us all together because so many of the seats were broken. In was an elevated flight experience at all.

  8. I think their main target is to be bought by a foreign airlines. The same way BA bought Openskies and could concentrate its Paris operations in ORY ( Vueling, Iberia, BA and Openskies).Hence BA has a real fleet in Paris and is a minor competitor to AF on profitable segment.
    Since its the same owner, I believe the exit strategy on the long run is to be bought by Lufthansa, LaCompagnie lands in StarAlliance’s terminals at both departure (Terminal 1 in CDG) and arrival airports (United’s Newark).

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