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Merry Christmas! Buy a Lottery Ticket!   The Economics of Wine Prices
Dec 26 2007 8:56AM EST

Luxury Air Travel: Still Not Proven

MaxJet is dead, and it's blaming high oil prices for its demise, as well as "the resulting impact on the credit climate for airlines".

It might, on the other hand, have simply blamed the fact that three different all-business-class airlines (Maxjet, Silverjet, Eos) started up more or less simultaneously, each one trying to serve a very small universe of potential customers.

On the one hand, the fact that there's competition in the space would seem to ratify the business model. But it is a bit weird that three hugely expensive businesses were founded at the same time in a sector which had previously never existed.

Interestingly, all three of the airlines concentrate on international travel, where business-class service is already generally high-quality, rather than US domestic travel, where business-class service is often atrocious. Within the US, the equivalent start-ups would be the fractional-ownership companies, like NetJets, which don't force you to fly from major city to major city but rather can fly you anywhere you like.

But so far there's little indication that any of these companies has found a truly profitable and sustainable niche.

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