OpenSkies, a subsidiary airline of British Airways, began flying in June 2008, offering premium class transatlantic service priced to compete with the first and business class fares from its major competitors.
OpenSkies flies Boeing 757s configured in two cabins — business class with lie-flat beds, and premium economy with 52 inches of legroom — with a total of 64 seats. It launched with daily, nonstop service between New York John F. Kennedy and Paris Orly, and soon expanded with JFK-Amsterdam Schiphol flights. In July, OpenSkies agreed to buy France-based L’Avion, a premium class carrier that flies between Newark Liberty and Paris Orly.
OpenSkies isn’t the first carrier to pursue the premium transatlantic market. Maxjet, Eos and Silverjet all had similar business models, but eventually failed due to sluggish demand and high fuel prices.
In a recent interview OpenSkies CEO Dale Moss outlined his company’s strategy to avoid the fate of those other carriers. The 30-year industry veteran, who has worked for British Airways and India’s Jet Airways, also spoke about the challenges of launching and operating a new business at a time of great economic upheaval.
•The timing of OpenSkies’ launch couldn’t have been worse. How’s your business so far?
Heck, if I could have predicted that the world would have gotten as challenging as it did back in July, I could have made a lot of money. Even if the market is 20% down, there’s a lot of people still flying. Now they have an opportunity to choose a product that’s markedly different at cheaper prices.
There was just no way we could have seen the economic malaise coming. So our number is down, but not markedly. We’re pretty much tracking along.
•Q: Others have tried the premium-class-only airlines across the Atlantic. Why do you think you will be successful when they have failed?
There is a significant difference between us and others. There were two others that used 767s, Silverjet and Maxjet, and they were both flying to London. We chose not to fly to London. British Airways has its franchise and does a super job. No point in competing with ourselves. The 767 is very big, heavy and fuel inefficient (for) this mission.
The other one was Eos and they operated with 757s. But their configuration was very rich. Their product was pitched somewhere between first and business class. They had 48 seats and had distribution issues.
When the price of oil spiked, it had reached a level where it flushed out people who were working with 767s or a configuration that’s very rich. None of them had frequent flier programs, which we do. None of them had the support of British Airways, which we do.
(We set our) pricing points (for premium economy seats) same as full fare economy in other airlines. We want to position away from economy, but it’s priced as full fare economy.
•Q: Travel managers are tightening their belts. How do you get your product out there in these conditions?
We’re a business airline with two products (beds and seats). It may be the very precise product for this time. People still need to travel business class, and they can fly for thousands of dollars less on a product that’s markedly better. What does that mean for a company with (several) people traveling a week? That’s not an insignificant amount of money.
Our product lends itself now to the issues travelers are concerned about. When you’re a road warrior, it’s the little things that wear you down over time, long lines and small seats. We have 64 seats. (Our) departure process takes 10 to 20 minutes.
Last night, out of Newark, me and 71 others were on our (L’Avion) flight. And I think back to traveling on 777s to 747s and what that means. Whew! If you can avoid that…
But we have to grow and get in front of customers. The key challenge for us is to get our awareness up. It’s not just top corporations. It’s also about small and medium-size companies that have to stay out there, but are keen on saving money. Yeah, there’s a challenge for us in (distribution). But there are always distribution problems with new companies.
•Q: What changes can we expect in premium flying in 2009?
The industry will try to continue to consolidate. There will be some new understanding and sensitivities from different governments to enable trans-border consolidation.
In terms of pricing, there may be deals here and there. But for big carriers, it’ll stay around where it is. They’re saying that if they lower their fares, it’s not going to change the demand curve all that much.
•What changes can we expect from your airline in 2009?
We fly to Paris with three flights a day — two from Newark and one from Kennedy. We may go to two from Kennedy and one from Newark. That hasn’t been finalized. Our focus in the next 90 to 120 days is to integrate the two companies.
We’ll deliver a catering product. Once a month, we’ll have a new menu…and to test new wine and have customers be a part of that. We have no plans to announce another route in the next six months. We want to see how things stabilize.
•Q: What’s your biggest gripe when you travel for business?
(Clearing airport) security can be a pain in the rear end. I’d love to see that changed. Get it to where it’s easier and (not) feel like you’ve gone through an hour of gym. The long distance between (the airport entrance) and where you (board). It’ll wear you down after the 15th escalator. And airline customer service staff who can be sometimes very cold and (not) empathetic.