MaxJet Shuts Down

On Christmas Eve, Maxjet chocked their wheels, and announced they were filing for bankruptcy and liquidating the airline.

I'm sure this was not the Christmas gift the airline's customers and employees were expecting, but I can't say it came as a shock aside from the day they chose to close down.

In fact, I'm surprised they made it this far. With all due respect to the planners & founders, what were they thinking? Premium-only service is something that many have tried, but few have succeeded at.

From memory, here's the list of carriers that have tried to market an all-premium class airline that I know of:

• McClain's. Based out of PHX, flying 727-100's, failed in mid 80's


• Midwest Express. Based out of MKE, flying DC9-30's. Still in business, but switched to a two class product after 9/11


• MGM Grand Air. Based out of LAX, flying DC8's and 727's, failed in early 90's


• Ultrair. Based out of IAH, flying 727-200's, failed in mid 90's


• Legend. Based out of DAL, flying DC9-30's, failed in late 90's


• Privatair. Based out of DUS, flying 737-BBJ


• MaxJet. Based out of JFK & IAD, flying 767-200's


• Eos. Based out of JFK, flying 757's


• Silverjet. Based out of LTN, flying 757's

Now... on that particular list, can you see anything that jumps out?... Anything?

Buhler?... Buhler?...Buhler?...

Yep, it's the equipment choice....

Personally, I think the 757 is too expensive of an aircraft to be flying in a luxury configuration (approx. 48-50 seats on Eos and Silverjet). But MaxJet took it to an even more absurd level with the 767. I don't know what the operating cost per hour difference is for the two types, but it's got to be pretty significant when you figure in the extra weight of the widebody airframe. Yet somehow, they believed they'd sell enough of the 100 or so seats on every flight to break even. Unfortunately, that didn't happen.

In my opinion, the all-premium concept has yet to work.

It's too soon to say regarding Eos & Silverjet, and while Midwest has been operating since 1984, they've also struggled. More on that in a moment. Privatair has the backing of Lufthansa, so even there, it's hard to say if they're a success, or if LH is having to subsidize losses on this in order to save face.

Midwest is clearly the odd man out -- their business plan worked. But you have to look at their history: Midwest Express was born out of the corporate aviation division of Kimberly-Clark, and was a wholly owned subsidiary of K-C for the first ten years of its existance. They didn't become publicly traded until 1995, and K-C divested of their ownership by late 1996. Just a few years later, Midwest was teetering on the edge of bankruptcy, and found itself abandoning the all-first-class service they'd become known for. This year, they survived a nasty proxy battle with Airtran, but only after selling themselves to TPG and NWA...

Why MaxJet thought they could make all-premium class work is still puzzling, especially post 9/11, and considering all of the failures that had come before them.

Perhaps they weren't counting on open skies coming to LHR in April 2008? Between that and the impact of rising fuel prices, it was just a matter of time before their luck and their money ran out.

Make no mistake: Eos and Silverjet will be facing that same challenge as well.

I'm sure there will be those who think Continental, American, British Airways, & Virgin Atlantic conspired to put them out of business, but the fact is that even without head to head competition, Maxjet had a very risky business plan, and it failed.

I do feel bad for the employees who now find themselves grounded, and hope they find new jobs quickly. My advice: stay out of the airlines. A wise man once said they can be hazardous to your wealth...