Sunday, December 9, 2007

MAXjet Hit Turbulence

MAXJet Airways, the business-class only airline, which operates between Stansted and the USA, has asked for a suspension of its shares pending "clarification of its financial position". According to one stock market analysts, "The whole thing came as a total shock to the market and it does make you question whether or not they have got the right model. British Airways and some of the other big carries seem to doing fine with their transatlantic services, so you really must ask about MAXjet." You have to question what credentials he has for being an analyst with such a dumb question. The business model of these single class, up-market airlines is questionable at best. For them to survive they have to run a 100% service and they have to avoid incurring the business wrath of the established carriers. MAXjet's model seems the least well thought out of the up-market carriers in that they have offered business class rather than first class - although the same rules apply to them. To make it work you need high yield passengers, because the cost base is not markedly different.

Still it’s good news for Eos and Silverjet (more so as they offer a business class only product) in that it might well keep the BA, Virgin, American and Continental wolves at bay. However, with choppy economic waters ahead watch out for some tasty offers.

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