Latest Shock: SilverJet stops flying

Oil prices reached $135 per barrel last week and have just claimed the latest victim: SilverJet. The all-business airline stopped operations today (Friday, May 30) since it failed to secure a $5 million loan to carry on operations. This now makes it three-in-three for all-business airlines operating between New York and London. MaxJet and EOS have shut down operations in the last year as well. Interestingly, SilverJet helped carry EOS’ passengers when the latter ceased operations. I wonder who will come to rescue SilverJet’s stranded passengers. (Update @ 30 May, 11.49pm: Virgin Atlantic is offering special fares to stranded SilverJet passengers)


(Image courtesy http://www.airflights.to)

The irony is that even as full-business class carriers go out of business, legacy airlines have been starting up all-business class routes recently. Singapore Airlines’ route between the city-state and Newark seems to be off to a good start. British Airways’ OpenSkies looks all set for launching operations too, and L’Avion still flies between Paris and New York. May be the difference is the deep pockets of the parent airlines, who sustain an unprofitable route much longer than greenhorns like SilverJet and Maxjet could.

The bottom line is that an all-business route must make business sense in the long term. Airlines must cater specifically to the needs of the business class traveler, like having a USB port or iPod connectivity in-flight. Singapore Airlines already does that (see link below). They need to be attract more customers, have them pay more per flight (need not be just ticket price) and get them to take the flight more often. Three very simple business principles to keep in mind, in addition to the lessons in economics for airlines I wrote about previously.

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Links:

  1. SilverJet stops operations, IHT
  2. SilverJet’s official press release
  3. Singapore Airlines launches all-business class flight to Newark
  4. Singapore Airlines offers iPod connectivity
  5. OpenSkies gets ready to fly

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