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Photos of the player on Silverjet!!?

posted on Jan 25, 2007 09:01AM

Silverjet Enters Business-Class Warfare

The latest entrant in the trans-Atlantic, business-class-only market is betting on design and service to stand apart from a crowded field

by Reena Jana

Lawrence Hunt pulls a worn drawing of an airplane seating chart from the pocket of his black overcoat. A serial entrepreneur from Britain, Hunt's latest venture is Silverjet, a start-up business-class-only airline offering flights between Newark and London beginning Jan. 25. Sitting in a café in midtown Manhattan, he explains how his new company will offer luxurious trans-Atlantic service for less than $2,000 round-trip. That's a significant savings compared to the $5,000-plus charged by carriers such as British Airways and AMR Corp.'s (AMR) American Airlines.

Hunt points to the airplane seating diagram as if it is a bar graph or a pie chart. The drawing depicts a Boeing (BA) 767 jet, but instead of the standard 300 passenger seats, there are only 100. Hunt's strategy is to "provide the concept of a sanctuary, equivalent to a private jet" aboard Silverjet's planes, he says, with plenty of legroom and stylish design elements such as sleek, pod-like seats and sophisticated color palettes featuring rich, brown, leather details and muted tans.

Of course, Hunt is far from the only savvy businessman to have this idea. Silverjet is the fourth intercontinental, business-class-only service to debut in about a year; the others being MAXjet, which offers 102 seats on a Boeing 767 at budget prices starting at $1,500, and Eos Airlines (see BusinessWeek.com, 11/5/05, "Anything But Another Plane Jane"), which promises private, suite-like seating on a smaller Boeing 757 with only 48 seats and fares as low as $3,150. A fourth, L'Avion, is beginning flights this week between Newark and Paris.

Hunt is a newcomer to the airline industry, although he's no stranger to fledgling enterprises, mainly in the tech industry. In the last 23 years, he has been involved with six start-up businesses, including Novell Europe (NOVL); BMS, a technology consulting partnership acquired by Cap Gemini in 1992; Database Management Sciences, bought by IBM (IBM) in 1993; Rapid Travel Solutions, which was sold to Telewest Communications in 2003; and lowcosttravelgroup.com.

Premium Seating

"You see, we need to spend £24,000 ($47,000) in fuel per round-trip flight—that's a big up-front cost. But once we sell the first 24 seats at £999 ($1,970) each, we've paid that," says Hunt, running his finger across the first 24 seats drawn on the seating diagram to discuss how the company will make money. "By the time you get to the end of the plane, we'll profit on the other seats." In May, 2006, the company raised nearly $50 million from institutional and other investors in a public offering on London's alternative investment stock exchange to fund the startup.

But are the skies big enough for yet another premium-only airline flying between the U.S. and Europe? Recent airline industry data indicate that the sector might be on somewhat of an upswing, making Silverjet's timing good. Premium airline travel is on the rise at British Airways (BAB); the main competitor of Silverjet, Eos Airlines; and MAXjet. Storied British Airways saw an 8% increase in sales of Club World seats (its business class) in the last fiscal year ending March, 2006.

New Markets

And airline trade associations are now offering optimistic profit-and-loss projections for 2007. In a news conference last month, the International Air Transportation Assn.'s chief economist, Brian Pearce, said projected net profits for the global airline industry are $2.5 billion in 2007.

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