If you’ve been following the airline industry over the past few months, you may have noticed that things aren’t going so hot. Several airlines serving niche industries have gone under including Skybus (budget), Oasis Hong Kong (long haul budget) and Eos and Maxjet (business class only).
When the market is tight, niche carriers like above are particularly affected because passengers tend to revert back to the old trustables, legacy carriers that have a lower probability of going out of business and that can provide a sure thing. Effectively, the downturn in the industry creates a secondary problem for the company: in addition to now having to pay high fuel and operating costs, fewer passengers are now generating revenue with which carriers can operate.
Thus defines the problems faced by the half dozen or so carriers that have gone belly up in the last few months, and what is continuing to plague carriers that are still afloat.
Like other carriers, the last remaining business class only airline in operation, Silverjet, has been struggling in the recent market. It was only by a recent injection of $25m by a private United Arab Emirates investor that they’ve been able to stay afloat.
How long will Silverjet be able to last on this crutch? Will they be able to turn business around and operate with a profit in the current market? Is business-class-only a viable model? Your guess is as good as mine. Stay tuned to find out.