French all-business class airline La Compagnie is no longer an independent operation. The company merged with XL Airways, a French LCC catering to leisure travelers and operating predominantly economy class configurations on its A330s. The mix is a strange one, with spectacularly different products and target markets. Still, the two companies see potential for benefits from the merger, “The combination of XL Airways, celebrated for its accessible economy class, and La Compagnie, known for its competitive business-class-only fares, offers targeted and complementary services to provide the best guest experience possible.”
Most notable of the goals for the newly combined operation is to benefit from some economies of scale and to control costs. The implication here is that La Compagnie costs were simply too high, even after cutting the London route. But getting to true economies of scale typically requires, well, scale. Joining the pair of La Compagnie planes up with the handful of XL Airways aircraft is unlikely to truly change the numbers for the new operation. Moreover, the lack of fleet commonality – A330s for XL and 757-200s for La Compagnie – will further reduce the efficiencies the two groups can realize.
Beyond the questionable financial benefits of the deal comes the question of service delivery. XL Airways offers one of the most cramped economy class products flying today. The 3-3-3 layout on its A330s is very rare among operators of the type given the tight squeeze it creates for passengers. And while the 74-seat business class cabin on La Compagnie’s 757s is not luxurious it is a significantly different product from what XL is familiar with delivering. Getting to a common offering is where cost savings come from but that’s not going to happen so long as the two operations remain in their existing tracks.
The move sees Frantz Yvelin, founder of La Compagnie, depart the operation. This is essentially his buy-out from the company though financial terms were not disclosed so it is unclear what the real value proposition is, other than allowing him a relatively graceful exit.
As for passengers, well, there’s plenty of uncertainty yet to be addressed. If you’re a La Compagnie passenger I’d be thinking about contingency plans, though that’s probably been the case for a while now.
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