Frantz Yvelin achieved a rare success with his first venture and is ready to repeat it
There is a watery graveyard between Europe and North America that harbours the carcasses of carriers that thought they could run transatlantic business class-only airlines. Silverjet, Maxjet and Eos are merely three among those that thought they could crack the market, only to fall into a tailspin.
A decade ago, these three airlines had taken off. All too rapidly, they came down in a firestorm of soaring fuel prices and an impending global financial crisis, apparently proving that such a business model does not work.
Yet there was a fourth all-business-class operator flying the North Atlantic, not from London but shuttling between Paris and New York. This airline, L’Avion, did not fail. It was acquired by British Airways for £54 million, doubling the money of its investors. The all-business service was retired, although its spirit continues in BA’s little London City-Shannon-JFK hopper.
This year, the entrepreneur behind that fourth operator, Frantz Yvelin, still aged only 38, is trying to show that the model — exclusively business-class 74 seat/bed aircraft — can fly and is operating a new carrier, La Compagnie, from both Paris and London to New York.
His proposition is that La Compagnie can succeed with or without the halved oil price; and he is forensic on why Silverjet, Maxjet and Eos all failed: “People want to fly business class. The main matter is the price. If you fly coach [economy] on long haul, it is painful, physically painful. None of it is good.
“There was a revolution 25 years ago with Southwest Airlines in the US and then easyJet and Ryanair allowing people to travel on lower fares. The result has been insane. Travel exploded. All the large airlines had to cut their prices and now the only place they make money is on the long haul.
“We are doing on long haul what Southwest, easyjet and Ryanair have been doing on short haul. On the North Atlantic, 15 per cent of passengers are business by volume and represent 55 per cent of the airlines’ revenues. [It explains] why business class is expensive. We can do better than that.”
Mr Yvelin says that he can attract business-class passengers from other airlines and leisure passengers who have the spare cash to spend on a service offering seats that angle down to a nearly flat bed at a return fare that starts at £1,100.
“La Compagnie is not for everyone, but it is for leisure travellers who want to pay, say, £400 more to travel much more comfortably and for business passengers who can spend £1,000 or £2,000 less to travel in what is still business class.”
The legacy carriers sneer that an exclusively business-class model does not work because business travellers need frequency and flexibility, not one flight a day from a secondary airport. “It does not happen like that,” Mr Yvelin counters. “Long-haul passengers organise their trips at least 24 or 48 hours before and more usually several days or weeks, taking advantage of the [cheaper] advanced booking window.
“We will have more than one flight a day in time, but it is not important to have eight flights a day. It is important to cover the departure times passengers want. Since 2008, everyone has become cost-conscious. What is true for the individual is true for large corporations and even more true for small and medium-sized business. We see entrepreneurs from tech companies who when they stay in a hotel, they stay in a boutique hotel, not at a Hilton. When they fly, they fly with a boutique airline.
“There are also a lot of people both sides of the Atlantic who are retired but are young enough to want to want to travel. They have the buying power to say: ‘You know what, I don’t want to fly with my knees touching the seat in front.’ ”
La Compagnie started flying Paris Charles de Gaulle to Newark 15 months ago and has been flying to the same New York hub from Luton since the spring. Mr Yvelin’s strategy is to learn from the failed pioneers.
Eos was a swaggering American start-up airline — it even had a chief lifestyle officer — offering a first-class experience at business-class prices. “Their problem was not execution, it was a good product, reliable, on time. But the business model was wrong. The price difference with the legacy carriers was not big enough. The legacy carriers took aim, shot and killed.”
Of Maxjet and Silverjet, he says: “They had better business models, but both had bad execution. They both had the wrong aircraft.” Maxjet and Silverjet flew fuel-guzzling wide-body Boeing 767s, rather than the narrow-body 757s that Eos used and that La Compagnie is flying. “It was the wrong tool.”
Airline bosses come in all shapes and sizes. A suburban east Parisian whose father worked for Peugeot and mother for the government, Mr Yvelin’s life was transformed on a family holiday when he was allowed into an aircraft cockpit. From then on he was always going to be a pilot. He got his licence, flew in the United States but headed for the technology industry when he found he could not pick up enough pilot work. His inspiration for first L’Avion and now La Compagnie was a flight back to Europe in which he was, he recalls, given the middle seat of three in economy between a man who was built for two seats and another who was a stranger to the shower. He asked for an upgrade and was offered a business seat for $4,000, one way. He stayed in economy, but wondered: “There has to be a different way.”
Mr Yvelin says that La Compagnie can break even with its aircraft at 70 per cent full. He claims load factors on the Paris route of 80 per cent, nearly 60 of the 74 seats taken. On London, it is averaging 60 per cent. That means 30 of the seats are empty.
Unlike the pre-recession failures, though, La Compagnie is getting a freer run, with low fuel prices. “It is helping, of course, but it helps everyone. But [if the crude price rises] it does not wreck the business model because our fixed cost is lower than any other long-haul airline.”
There has long been talk — not least from Michael O’Leary himself — that Ryanair will launch a transatlantic carrier that might hurt the likes of La Compagnie. To which Mr Yvelin responds: “Ask yourself why he is not doing it? He is sitting on the most spare cash in the industry. The reason is it is not easy to do. You have to have the right concept.
“The aviation industry is old and needs to be freshened. The industry had a revolution 25 years ago and we want to bring another one.”
Q&A
Who is your mentor? I am lucky enough to have a few I can always talk to: Michel Cicurel (ex-Rothchild banker), Charles Beigbeder (Parisian financier), Christophe Bejach (private equity investor) and Michel Scheller (former French civil aviation chief). I wouldn’t be doing what I am without their support
Does money motivate you? It does, but it’s not the primary motivation
What was the most important event in your working life?La Compagnie’s first flight taking off from Paris to New York on July 21, 2014
Which person do you most admire? Charles de Gaulle would clearly rank first. Also Herb Kelleher, (founder of Southwest Airlines), Xavier Niel, (French internet entrepreneur) and Mark Zuckerberg (Facebook chief executive)
What does leadership mean to you? Assemble a team of talented people and deliver as a team something which makes everybody happy
How do you relax? Travelling; going on a road trip; flying solo a small single-engine aeroplane; watching movies — I am an all-time fan of James Bond and Star Wars movies
CV
Age: 38
Education: 1996-98: Flight school, Anglo-American Aviation International and École Nationale de l’Aviation Civile
Career: 1999-2001: sales executive, Idealx; 2001-02: business engineer, CSSI;
2003-09: co-founder, chief strategy officer, L’Avion Airlines;
2007-12: lecturer, École Nationale de l’Aviation Civile;2010-12: president, International Airline Corporation Services;
2013-present: chief executive, La Compagnie