This ‘Business Class-Only’ Airline Proves The Model Can Work

The industry said this would never work. But La Compagnie CEO Christian Vernet just celebrated 10 years, and counting. Here’s his strategy.

On Monday evening, the French boutique airline La Compagnie fêted its 10-year anniversary with a stylish reception at the Amélie Maison D’art gallery in Soho, New York. A group of clients, investors, travel agents and reporters gathered in their best urban summer-chic attire to mix and mingle with CEO Christian Vernet and tuck into Dominique Ansel’s cronuts (the famed French baker’s donut-croissant hybrid), and fizzy flutes of champagne.

The mood was celebratory and a little self-righteous, in light of the ‘wall of skepticism’ that met this airline when it first launched in 2014 using a Boeing 757-200 to fly from Newark to Paris. The company now exclusively flies Airbus A321neos, with additional routes to Nice (2019) and Milan (2022).

When they started, the ‘business class-only’ market was already grounded. Remember MGM Grand Air? It went out of business in 1995. MaxJet Airways filed for Chapter 11 in 2007, with both EOS Airlines and Silverjet closing in 2008, each blaming the recession. More recently, PrivatAir, the Swiss airline that provided all-business-class flights for major airlines including Lufthansa folded in 2018.

They all struggled for the simple reason that commercial aviation requires eye-wateringly high operational costs, with revenues often falling short of the hurdle. And prices for new aircraft are higher than ever. Currently, a used Boeing 757-200 costs around $11 million, depending on its maintenance condition. A new, one-off purchase of an Airbus A321neo costs about $62 million, according to data from Cirium, an aviation analytics company. (Cirium confirmed that this price can be lowered, if multiple planes are secured at once).

Even then, you’ve got to worry about significant delivery delays. “Supply chain issues with aircraft manufacturers have been very tricky since the outset of Covid. If it took us 14 months back in late 2017 to get brand new A321 Neos, today it takes three years,” Vernet told reporters. “That’s a very strong impediment to this industry.”

In the transatlantic, long-haul category, La Compagnie remains a very small, niche player with a fleet consisting of two narrow-body Airbus A321neos. The third one – which will be an Airbus A321neo LR (long range) – is set to be delivered in 2026.

The Key to Profitability

When La Compagnie says ‘all business class,’ what they mean is the entire aircraft, built to seat 220 passengers, has been retrofitted with 76 fully lie-flat, business class-style seats, similar to what you’d find on Air France or Lufthansa. To be clear, there should be no comparison drawn to American domestic “business class” service, which is more like a Greyhound bus with a smidge more legroom. (Pro Travel Tip: Always check configuration stats before booking).

La Compagnie is profitable right now, in the middle of a leisure travel boom, because the truth is the carrier offers a very comfortable in-flight experience, at a significant discount. The carrier advertises rates that are 30 to 50% less expensive than the competition — a roundtrip La Compagnie flight departing in June is currently listed at $2,359 (approximately $2,087 less than a $4,446 Air France business class ticket on the same date).

New Routes & Private Charters

“We’ve turned 10 years old, a significant age for an airline. We’re no longer in our infancy, we’ve proven our model. We have two airplanes today, but we’ve got plans to go up to 10 airplanes in the future, opening new routes between New York and the rest of Europe, and potentially other destinations in the U.S.,” says Vernet. His goal for the fourth aircraft is to be an Airbus A321XLR (extra-long range) which has a range of 4,700 nautical miles. “It’s a leap forward. This is what we’re working on currently. 2026 is not today, but that’s the story of aviation.”

For now, La Compagnie will remain independent. But, Vernet is open to the idea if the deal fits. He says, “There are pros and cons against partnering. At some point in time, the question will be raised again. I’m not saying that it didn’t come to our mind. But it needs to be a very significant opportunity. Codesharing agreements are something of another nature, which will be considered.”

In the meantime, La Compagnie is offering private charter service to boost revenues and fill gaps in their flight schedules. So far, they’ve flown private clients (think entire soccer teams) to Las Vegas, Saint Martin in the Caribbean, and even to Australia. Private charters now make up 5% of the overall business.

Others are taking notice. An ambitious new entrant called Beond, based in the Maldives, just launched a somewhat similar product, in that it operates one used Airbus A321 with 68 all-lay flat seats, and offers its service at a discount to legacy carriers. They call themselves a “premium leisure airline,” positioning the product squarely toward leisure travelers, as opposed to the corporate set.

The logic is sound. Leisure travel has rebounded significantly faster than corporate travel in the wake of Covid, according to recent U.S. Travel Association and McKinsey reports. Even La Compagnie reports that, on average, 70% of its revenues currently come from leisure travelers. Corporate travel represents the remainder, but Vernet is confident that traffic will rebound: “During Covid, remote work technology changed the landscape. But the point is that we, being a bit cheaper than other airlines, open the way for corporate clients to consider us as a valuable option for moving their staff between cities. It will come, because growth is there.”

Beond launched November 2023 with a flight from Munich, Germany to Malé in the Maldives. Their main bread-and-caviar route is from Dubai to the Maldives, with additional stops authorized in Zurich, Riyadh, Munich and Milan. Flights from Milan to the Maldives launch next month.

They, too, will offer private charter service. According to CEO Tero Taskila, it’s a very small, but important part of Beond’s growth strategy. “In the next 5 years, we plan to operate 32 aircraft and service 52 destinations. That is the target from myself and our shareholders. We are also looking to open two new hubs in the next three years, in the Caribbean islands and the Middle East,” he said in a phone call from Dubai.

Securing financing for 32 aircraft in this market, without offering legacy-carrier loyalty points programs? Sounds highly improbable, unless a billionaire is involved. Then again, the launch of La Compagnie was met with similar skepticism.