26 December 2007

Maxjet RIP - Does this mean Premium Niche is dead?

Maxjet after struggling for the last month to find new sources of credit to keep the airline afloat succumbed on Christmas Eve and grounded all flights.

Our assessment...

Not enough capital, too much competition and not a good enough product. The official reasons were "Anemic Credit Market" and "Skyrocketing Fuel Costs". We believe that the management must also take some blame for not focusing on developing a core market fast enough and also misjudging the consumer in what they want.

Under capitalizing the airline meant that normal features that business folk want (eg InSeat power was not offered). For flights on the routes they flew - STN-JFK, LAS, LAX and IAD the business person was mostly king yet the product did not match up. I flew Maxjet LAX-STN and the service product was at best mediocre. The focus on inflight amenities such as video and food rather than the core product did not make the investor community feel good.

So what finally killed Maxjet?

AA's 2 nonstops a day JFK-STN and the credit crunch. Basically they ran out of money.

Let this be a lesson to Silverjet, L'avion and to EOS. You need to have a better product in order to compete. Business folk can accommodate a clunky old 767-200 if they get what they want to do business. With massive competition coming in March of 2008 from the US airlines coming into LHR - the survivors better start looking for making their product a little better.

Sadly the purple planes will grace the skies no more.

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