MAXjet Airline Declares Bankruptcy
The All Business Class Airline Filed Chapter 11 on Christmas Eve
Dec 26, 2007
One of the world’s smaller all business class airlines has filed for bankruptcy. MAXjet was promoted as something like a discount all-business airline with relatively cheap tickets; apparently, this wasn’t enough of a gimmick to raise the capital needed to keep running (or, more appropriately, flying).
NPR’s Marketplace reported (Dec 24 2007) that MAXjet filed for bankruptcy Chapter 11, leaving transatlantic passengers stranded. The airline company did pay for affected passengers’ hotel rooms in Las Vegas, Los Angeles, New York and London . According to NPR, MAXjet executives are stating that high fuel costs and heightened competition led to this Chapter 11 bankruptcy protection filing. How bad was this sudden declaration? Well, MAXjet filed just in time to strand passengers on Christmas Eve – that’s how bad. Seriously, the airline couldn’t have waited a couple of days? It’s always so considerate of CEOs to drag their client base into their own stew of misery.
Airline Competition
- The competition referred to by MAXjet execs likely refers to American Airlines, which has stepped up its own luxury flight and airport accommodations. It’s not simply American Airlines’ slicking back its hair and shining its shoes, however – there truly has been an aggressive move on its part to cause monetary problems for the upstart all-business class airline. MAXjet saved money by flying out of Stansted Airport, rather than Heathrow. Just two months ago, American Airlines started flying to Stansted as well as the more-centrally located Heathrow.
MAXjet, a US-based company, started flying in November 2005, with a fleet of all-business class Boeng 767s. Upscale business travelers are getting more and more accustomed to luxury travel, with their employers often coughing up the cash for business fare tickets. These all-business class airlines – those that are left – create a sense of egalitarianism along with the feeling of being pampered en route to one’s destination. Being stranded on Christmas Eve? Not so pampering. Interestingly, the now bankrupt airline carrier bought seats for these passengers from Eos, a superior luxury all-business class airline with similar points of departure.
From the MAXjet website
- A note on the main web page of MAXjet’s website reads in part, “it is with deep regret that I must inform you that MAXjet filed Chapter 11 bankruptcy on 24 December 2007. With today’s fuel prices and the resulting impact on the credit climate for airlines, we are forced to take this drastic measure. Our top priority is to assist our customers, particularly those who already have begun their travel with us, in securing alternative flight accommodations.
- MAXjet has contracted with Eos Airlines for seats on Eos’ scheduled all-Premium service to accommodate passengers awaiting a return flight between New York and London. Passengers needing return travel between London, Los Angeles and Las Vegas will be contacted regarding their flight re-accommodations. Any customers who choose to make flight accommodations directly should seek a refund from their point of purchase (credit card or travel agency) for the unused leg of their journey.”
Is this a sign of things to come? In perhaps a bad omen for all small all-business airliners, MAXjet rival Silverjet reported severe losses after one year of operation, and in November 2007 was given around 44 million dollars for refinancing (The Scotsman, Dec. 25 2007). But in fact, Silverjet, Eos, and other luxury all-business class airlines, should benefit from MAXjet’s filing for bankruptcy protection. Silverjet has already seen a 20 percent increase in reservations in just the couple days since Maxjet’s announcement. So, rather than a bad omen, this may be simply a thinning of the herd. Travelers that appreciate the amenities of business class seats still have plenty of all-business class airline choices. And Luxury Travel thinks this is just great; after all, anything that can help boost airline passenger satisfaction can't be bad!
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