MAXjet Airways’ failure proves that a business model and strong marketing, in addition to a good idea, is needed to succeed when thinking about transatlantic business.
Capital intensive businesses such as airlines are prone to failure as their fixed costs are so high. When the price of fuel or the number of people flying fluctuate dramatically, there is little management can do to adjust. Throw in a much better capitalized competitor which decides that your nipping at its heels has gone far enough, and you’ve got a recipe for disaster. When Swelled Head first spoke with Henry H. Harteveldt, airline expert at Forrester Research, he said pretty much the same (essentially predicting that American Airlines or British Airways could easily add Stansted flights and crush MAXjet). His view was guarded to pessimistic as to the viability of MAXjet without something compelling to differentiate its business model, and he was spot on.
The failure of MAXjet casts a long shadow on business class airlines Eos and Silverjet. They need to demonstrate a point of departure (sorry) that goes beyond a better seat, or they will follow MAXjet into the history books. The biggest weaknesses these airlines face are narrow loyalty programs (useful only on their own routes), limited feeder networks, capital constraints that limit flights per day and number of destinations.
Advertising in this category has generally been pretty uninspired given such innovation in the air. Perhaps the failure at MAXjet will cause CMO's at Eos and Silverjet to rethink their efforts, and become more aggressive in pointing out their advantages and creative in presentation and positioning. Public relations at these companies has also been notably weak.
A little go-to-market savvy might be useful, too, in making airlines such as Eos and Silverjet more compelling. Unlike MAXJet, from which I never had a sales call, Eos is active in direct marketing and telemarketing. Could be that Eos’ sales prospecting is differentiating enough – with only 48 seats to fill a few times a day, it wouldn’t take much of a sales effort, especially at prices that are lower than BA’s for a better service, to do the job.
None of this is to say that MAXjet was a total loss to the business traveler; seating on many airlines’ transatlantic flights has been upgraded and the cost for business class travel has gone down dramatically even in the face of skyrocketing fuel costs. So I hope you will join Swelled Head in saying a fond farewell and thanks to MAXjet for its short but important service to transatlantic business.
With this post, Swelled Head returns after a six-month hiatus. Sorry for the discontinuity, but we've been working on business strategy and development for our agency, Austin Lawrence Group, and can now return to Swelled Head with some regularity. See you here again soon - and Happy New Year!
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