La Compagnie is giving up on London, announcing this week that it will halt service between Luton and Newark on 24 September 2016, some 16 months after starting the route. The company cites weak demand, Brexit and “long term uncertainty for the airline industry and hence has required a detailed analysis of this new environment,” in its decision.
Suspension of London-New York route. Second daily flight to be introduced from Paris-New York. More info : https://t.co/kCQJW2oVrk
— La Compagnie (@_LaCompagnie) September 5, 2016
Passengers booked on La Compagnie’s London flights after 24 September 2016 have the option of a full refund or a trip via Paris. Ever the optimists, the company indicated that it will use the aircraft currently flying the London service to double up in Paris:
The operation of the London – New York route will be suspended as La Compagnie looks to intensify its presence on the Paris – New York route, focusing on the tremendous success of its original route. The second daily flight from Paris to New York will be introduced in October 2016… Consequentially La Compagnie will focus on the Paris – New York route for the foreseeable future, with a view to reassessing the London landscape in the future.
While the company speaks to the strength of the route, citing a 77% load factor for the 2016 summer season, that is a rather weak showing, especially in the peak demand window. Yes, fuel costs are down meaning the company’s 757s are reasonably affordable to operate, but an inability to truly make a dent in the market is forcing this pull-back. It doesn’t help that Norwegian Airlines has built up a hub at Gatwick, serving New York City and several other US destinations. British Airways added a 777 on the JFK-Gatwick route to further competitive pressure. Even in perhaps the strongest long-haul, premium class travel market in the world the all-business class carrier could not secure a stable position.
Arguably the entry of La Compagnie in this market parallels JetBlue’s launch of the Mint premium cabin on transcontinental US routes. The market was large but dominated by a small number of legacy carriers who didn’t compete particularly aggressively on price nor on product. Mint changed that, bringing a top-notch product in to fly at a much lower price than existed before. La Compagnie’s play was a marginal product at a competitive but not especially low price. It did not attract corporate contracts and the price point made it tough for many leisure travelers to justify, especially during the peak tourist season when the legacy airlines had sale prices available. It is not surprising that the net effect was low market penetration and, eventually, folding the route.
The Paris route might have sufficient demand to stay alive, though doubling capacity is an aggressive move. Norwegian recently launched 4x weekly service from Paris to JFK which will skew the space, even with just the Premium Economy cabin available. La Compagnie’s product is more premium than that but not by a ton, and at a higher price point.
The carrier has lasted longer than many (self included) expected; the 2+ year run, along with a loyalty program and even a 2nd anniversary “all you can fly” pass priced at $35k give some hope of continued operations. But weakness in the TATL market plus increased competition, failure to deliver on early product promises like WiFi on board and cost challenges leave the company in a precarious position.
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