Next month a passenger aircraft like no other will land at Ben Gurion airport, when the French boutique airline La Compagnie inaugurates its Tel Aviv - Paris - New York route. All the seats on the narrow-body Airbus A321neoLR are business class. The ticket for a Tel Aviv - Paris (Orly) flight costs $1,100 and for Tel Aviv - New York $2,000.
La Compagnie CEO Christian Vernet told "Globes," "The passengers in regular business class may sit at the front of the plane but ultimately they meet 250 passengers, when getting on and off of the plane. We identified a need for a product that is like a private plane but with an affordable price."
"We came with a product that is 30% cheaper than business class in legacy airlines. In those companies, it is known that the passengers who pay for business class in fact subsidize economy class, and that's why they have such expensive fares."
A business passenger told me, "It's not worth flying business class if I am an equal among equals and don't sit separated by a curtain. What is your opinion on that comment?
"In a regular airbus there are 240 seats and we have 76. So there is no curtain and no economy class but there is a feeling that you belong to an elite club. And during the current time, with the desire not to be crammed in with hundreds of passengers on the plane, we have advantages related to coronavirus. For many this is an important factor."
Like a luxury car
La Compagnie was founded in 2013 after 11 businesses joined together to open a route that would also serve them on journeys to the US.
You work in the opposite way to most airlines in the industry: they are looking for ways to put more seats on the plane in order to maximize profitability and you fly with 76 passengers at full occupancy.
"We are not a low cost company. We are like a luxury car, which by the way, is not only for business passengers. During the holidays we have many leisure tourists and children are very welcome. In fact, the plane is so spacious that the children can play during the flight and leave their parents to rest. On our planes passengers don't get kicked on the back of their seats. These are seats that open up into beds and include a large screen, entertainment system etc." "At the current time we have a stronger presence from passengers on vacation including American senior citizens who come for a trip to Paris and would otherwise probably travel in premium economy class. In 2019, La Compagnie flew with 23% of its seats as business class on the Paris - New York route."
You are starting on a very competitive route. United Airlines, Delta, American Airlines, and El Al offer direct flights, and the competition aroused by American Airlines has pushed fares down. On top of that, there are other airlines offering connection flights on the route. What is the target that you have set for yourselves?
"We'll begin with two flights a week in August. And in September we will increase it to three. It's too early for us to be specific about market share but I can say that there is demand. We are offering morning flights to Paris, 90 minutes wait in the business lobby to freshen up and stretch your legs and from there the flight to New York, landing in the early afternoon (each flight's duration is about 12-13 hours).
"Our timetable is an important factor. I'm sure that we have something refreshing and new to offer passengers from Tel Aviv. All the airlines that you mentioned are good and they have been serving the market for years but we did our homework and we learned that the Israeli customer wants service, and he wants to be treated well. Our plane and crew will do that. After the first passengers take the flights, demand will strengthen. In all the airports, the passengers will stay in the business lobby before the flight as part of the service."
"Even from the environmental point of view we win - our plane consumes 30% less fuel and it takes into account the environment much more than a wide-body plane with hundreds of passengers, and today that is something that interests people."
Many Israeli passengers flying on the New York route only eat kosher food - are you organized for that?
"On our flights from Paris we have many Orthodox passengers and we are already prepared with a special menu."
From a random checks on fare for August, "Globes" found that La Compagnie's fares are indeed competitive. But it is not alone. Air Europe, for example, offers business class from Tel Aviv via Madrid to New York for $1,945 and Virgin Atlantic offers flights via London for $2,500. United and Delta both offer direct flights for $2,500.
Waiting for the rebound
La Compagnie is a very small company with just two aircraft, which it operates on the Paris and Nice to New York routes. Now Tel Aviv is being added and from the end of November the company is adding Milan to the mix.
In 2019, La Compagnie flew 80,000 passengers with an average occupancy of 80%. The positive momentum was halted when coronavirus struck. "On March 19, we stopped flying and din't know when we could resume. At first, when the US closed its borders to flights from Europe, former US President Donald Trump said it would last for three weeks. We thought it was like flu and that it would pass. At Christmas we operated some flights to New York because there was demand, and only in June did we resume operations on the US route for American and European passengers with special approvals.
"The thing is that there hasn't been symmetry - Europe has allowed vaccinated Americans to travel to it and the same with Israelis but has still not opened its borders to tourists from Europe - not to the US and not Israel. We are waiting for this to happen.
The business segment in tourism is far from recovering, and for you occupancy is critical in terms of profitability
"During routine times occupancy is 80%. We know that we won't reach that. We won't see business passengers back until 2022. The tourism business for large organizations is a long way off but we have customers who are small and medium sized companies whose operations require travel abroad. The moment that the US will allow Europeans to enter so the businesses will return. We expect a rebound after the pandemic."
Frequent traveler programs are very important for the business passenger and you don't belong to the large alliances like Star Alliance, Sky Team and One World.
"We have our loyalty program and you can gain credit for future use and not on a model of miles. We are in talks with potential partners and in the future we will offer more."
Two planes is a tiny fleet and worldwide there are many planes for sell. After airlines have reduced the size of their fleets. This is a good opportunity to grow.
"There are a lot of planes for sale but it takes 15-18 months to prepare a plane for our configuration. It is both our advantage and disadvantage."
Have you considered merging with an airline group and operating under a raft of brands?
"That is not our first priority and I don't see that happening in the next 18 months. Meanwhile, we will form agreements with other airlines in order to enhance our frequent traveler program and options for connection flights from New York. Today we have cooperation with EasyJet, even though we are different airlines in essence."
The Israeli advantage
La Compagnie is represented in Israel by Maman Group's Maman Aviation, managed by Ofer Reinhardt. Former Arkia CEO Nir Dagan serves as a consultant to the airline on operations to Europe and the US.
Vernet became La Compagnie's CEO in 2017 and he admits that the pandemic brought about the airline's entry into Israel. "We had hoped that the US would open its borders in June to Europeans and our traffic would increase over the summer but it didn't happen, so we asked ourselves how we could increase passenger traffic."
"Tel Aviv came into the calculation because of the level of vaccinations and infection, and we know that there is lively traffic from Tel Aviv to Paris and to the US. I assume that we would have come to Tel Aviv regardless but not before 2023. From the moment that we made the decision, the process was very fast."
At the moment Europeans cannot enter the US and Israelis cannot enter the US on connection flights via Europe.
Published by Globes, Israel business news - en.globes.co.il - on July 15, 2021
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