Wednesday, December 26, 2007

Farewell, MAXjet. We barely knew you.

Until December 24, MAXjet Airways was one of just four airlines that operated Business Class-only flights from the U.S. to Europe. By most regards, it did a good job of balancing reasonable prices with excellent service. But on Christmas Eve, high fuel prices, dwindling corporate travel budgets, and scarce credit in the wake of the subprime mortgage crisis came together to push MAXjet into bankruptcy.

Of course, many industry analysts have been saying for months that the industry is overcrowded. United and Delta have been in talks about a possible merger. German carrier Lufthansa just bought a 19% stake in JetBlue Airways. Even ultra-discount carrier Skybus--modeled on no-frills European carrier RyanAir--just posted a $16 million quarterly loss, and its business model could hardly be more different from MAXjet.

None of that helps MAXjet's passengers, some of whom had already started their trips when the bankruptcy was announced. But Continental has announced that it will honor MAXjet tickets, and the airline has also made arrangements with Eos to accommodate its passengers on its flights from London to New York. It's a Festivus miracle.

MAXjet may have been special, but it wasn't unique. There are three other carriers that provide Business Class service to Europe: Eos and Silverjet(1) to London, and L'Avion to Paris. Eos CEO Jack Williams, incidentally, says that the airline's "passenger numbers are at record highs and load factors are consistently strong." Maybe the collapse of MAXjet is nothing more than the logical outcome of too many airlines competing in a highly profitable but necessarily limited market--since even at $1500, most people going to Europe can't afford a seat on one of these premium-only carriers.

As for Skybus, the idea of pricing airline tickets to compete with Greyhound isn't new: Independence Air tried it a few years ago. But then, pricing is one thing, while actually providing service comparable to Greyhound is something else entirely. The Columbus-based carrier that lives up to its name may yet surprise us.

(1) Silverjet also flies to Dubai.

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