By Kendra Marr
Monday, August 27, 2007
Maxjet Airways set itself a challenge when its all-business-class flights started in late 2005: provide swanky service at civilized prices.
Since its launch with one transatlantic route between New York and Stansted, a suburban London airport, the Dulles-based carrier has delivered on that promise in increasing measure. It now offers weekly flights between Stansted and Dulles International Airport and between Stansted and Las Vegas, and is set to start service on Thursday to and from Los Angeles.
On spacious, reconfigured Boeing 767s, Maxjet offers gourmet meals, deep-reclining leather seats and on-demand entertainment -- all for about $2,000 for a business-class ticket to London, compared with $4,000 or more on traditional carriers.
"It's for everybody who has some disposable income but don't necessarily want to use it," said Joshua Marks, Maxjet's executive vice president of planning and development.
Maxjet is one of a handful of entrants in the evolving all-business niche. Though the company is full of growth plans, plenty of obstacles lie ahead, and there's no indication that it's profitable.
After a rocky start, Maxjet's flights have started to fill up. In June, its planes were 83 percent full, up from 64 percent a year earlier. In July, occupancy was 75.5 percent. Analysts said the figures mirror occupancy rates for most major airlines.
Maxjet's expansion will stay focused overseas, spokesman Michael Miller said. In May, the airline received permission from the Department of Transportation to fly to 89 countries.
As it seeks to grow, Maxjet has hired 100 workers over the past year, most of them in the Washington area, bringing its payroll to 300. This spring, it moved into a larger headquarters on the Dulles airport campus.
To position itself financially, the airline in June raised about $95 million in its initial public offering on the Alternative Investment Market, a unit of the London Stock Exchange that lets smaller companies list shares under a looser regulatory framework.
Last month, the airline filed papers with the Department of Transportation proposing all-business round-trip service from Seattle to Shanghai for $4,000 per ticket, starting in 2009.
Maxjet's China bid remains a long shot, according to aviation consultant Michael Boyd. There are only four new routes available in 2009 and just one is open to airlines that do not already fly to China.
"With carriers like Continental Airlines and Delta all fighting for China authorities, Maxjet would get lost in the paperwork," Boyd said.
Maxjet also faces other head winds, most notably high fuel prices, which have caused pain across the industry. To save on fuel and other costs, Maxjet selects its departure dates and times to maximize the number of passengers, company officials said.
That approach can pose a problem to passengers, Boyd said. "If Maxjet cancels a flight, there's nothing until tomorrow," he said. "But if you're flying British Airways, there's two more this afternoon."
Anytime it cancels a flight, Maxjet said it puts displaced travelers in hotels or finds alternative flights. "We'll buy tickets on other airlines if needed to get passengers where they need to be," Miller said. Maxjet has the potential to be the JetBlue of the international sector, said Ray Neidl, an airline analyst at Calyon Securities. He said the airline's low-cost structure will help keep the company flying.
"They have a model that can work and fly under the radar screen of big carriers," Neidl said.
Whether Maxjet can sustain a profit remains to be seen. The airline is scheduled to file its first quarterly results in September. Since its IPO, Maxjet's shares have slipped about 17 percent.
Specialty carriers like Maxjet may soon face competition from traditional airlines. Virgin Atlantic and British Airways each have discussed plans to offer all-business service in the next 12 to 18 months.
The all-business model has won praise from some passengers, and Maxjet was ranked the second-best international airline in a poll of subscribers of Travel and Leisure magazine.
Martin Foskett, 33, has flown on Maxjet three times from his home in Britain.
"There's nothing in comparison in the standard of service," he said. "You're pampered left and right."
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