“Dream big,” they say. I don’t actually know who “they” are, but I think “they’re” wrong. “They’re” the reason there are so many actors/models/singers/servers in LA, right?
Last week I wrote a post about La Compagnie, the French all business class airline which launched flights last summer between Paris and Newark.
They add a ton of value to the market given their cheap fares, though I’d argue their business model is flawed. There’s a reason every all business class transatlantic startup has failed, and it’s not because they necessarily did it wrong. It’s because there’s simply not a big enough market for it, especially in a recession, and they don’t typically have the capital to weather downturns. And that doesn’t even account for the fact that these ventures typically aren’t even profitable when the economy is good!
Most interesting is that La Compagnie will soon launch service between London and Newark. This wasn’t originally their plan, as they were first going to add a second daily service between Paris and Newark. If they had intended to ramp up international service out of Newark as opposed to Paris, surely they wouldn’t have branded the airline entirely around how French it is.
So last week I shared links to articles in both the International Business Times and Skift about La Compagnie’s future, and about how they aspire to double their fleet size and are possibly even considering 787s.
However, I overlooked one important line in the Skift article, which I think says all you need to know:
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.
Let me make sure I understand this. La Compagnie, the French all business class airline, wants to capture 40% of the four million passengers traveling each year between London and New York? That means they want to transport 1.6 million passengers per year between New York and London. That’s 800,000 passengers in each direction. That’s 2,200 passengers per direction per day. With 74 business class seats per plane, that’s 30 flights per day in an all business class configuration, which is more flights than all other airlines in the market operate combined.
And that’s not even their core market!
Am I reading that wrong? Because I’ve long asked “what am I missing with these guys? Surely they know something that I don’t.”
But the craziest part isn’t even the aspirations of their management team, but the fact that there are investors funding this!
I'd think they'd mint cash if they decided to fly a plane from LAX. Due to the limited number of seats and high prices... RT coach costs $1500 in the summer.
I don't read Lucky for his financial analysis! Please stop trying to be an analyst. Focus on your trip report niche.
C'mon Lucky - didn't you dream big when you started this blog? Didn't you dream big when you became a travel consultant? Didn't you dream big when you started travelling the world & living out of hotels permanently?
You're sending a confusing message - you criticise a company for dreaming big, yet you're racing to get on their inaugural from LTN.
Why not let them do the dreaming while the rest of us, including you, take advantage of what they offer?
@ @mkcol -- I think "dreaming big" isn't doing anyone justice when you have investors and it's not your own money on the line. It's great to dream big, but there's a difference between that and totally unrealistic goals.
I think they mean 40% of the what an average airline serves on that route (like 40% of what british airways serves)
@ Flyingizcool -- How would you define an "average" airline? Some airlines have 1x daily service, some have 5x daily service.
If I traveled between these two cities I would move all my travel to them. Business tix for coach prices? What's not to like? Hopefully they hit sfo sometime
I love this post for so many reasons
if it was 40% and they missed a zero, would everything make more sense, they'd correct it and this wouldn't be a story?
Of course they have investors. A fool and his money are soon parted. Just like, I dunno, people funding some internet dude's trip in the Etihad Residence.
I read it as 40% of the revenue. And selling all business class would make that a much smaller passenger count.
@ Steve -- At the prices they're charging, not really. ;)
That's clearly another ridiculous sales pitch in order to part the seemingly endless stream of moronic aviation investors and their money.
For some unknown reason, start-up airlines attract investment capital like fecal matter attracts flies on a hot day (think SkyBus). I'm reminded of Warren Buffet's response to the question - "How do you become a millionaire?" His response - "Be a billionaire who buys an airline."
The problem is that most high value business class customers want to use their preferred airline where they gain miles, have status, and want business schedule / frequencies. Also, if work is paying for it, despite some price pressure, most people are not looking to save their company money at the expense of their convenience.
So La Compagnie is left trying to convert economy pax into business, and that's a tough task to do...
The problem is that most high value business class customers want to use their preferred airline where they gain miles, have status, and want business schedule / frequencies. Also, if work is paying for it, despite some price pressure, most people are not looking to save their company money at the expense of their convenience.
So La Compagnie is left trying to convert economy pax into business, and that's a tough task to do profitably. Best of luck to them, and maybe they will get a buyout, but I can't imagine any savvy investor putting money into these all business airlines.
Is this before or after they double their fleet size to 4?
And let's also add that the founder also created Air Liberte in the 90s, and guess what...
Sold it to British Airways.
Rinse, repeat. Why not if investors will back a track record.
"Every all business class startup has failed."
L'Avion was acquired for over $100 million.
And its founders are the same ones here.
There are lots of ways to make money in this world that don't involve creating a profitable business first. It's risky, but these are not virgins to this industry.
@ Ben,
There is plenty of market for business class only carriers between NYC-LON. The problem is La Compagnie flies into EWR which makes absolutely no sense for this business model. By the way, remember this is just an article and typically there is a lot of marketing and PR on article comments/answers - even they know their numbers are ridiculously unreachable.
they may be talking about the 40 percent of BUSINESS class seats...
Anyway, they are probably crazy :P
they may be talking about the 40 percent of BUSINESS class seats?
Anyway, they are probably crazy :P