NBTA: OpenSkies’ Earth-Shaking Announcement in Los Angeles

OpenSkies has been full of news this week. First it was the announcement of Amsterdam – New York flights and then yesterday it was the decision to ditch coach and go with all premium economy and business class. The news was quite literally earth-shaking. In the middle of the press conference, the 5.4 earthquake you probably heard about started to roll through downtown LA.

I was sitting next to my friend Johnny Jet, and we looked at each other and instinctively headed for the doorway. Once it was over, a lot of the people didn’t seem too comfortable with the idea of hanging around and hovered by the door (anyone want to bet how many of them were from the east coast?), but as an LA native, I headed back to my seat without pause. OpenSkies MD Dale Moss seemed a bit rattled, but he picked up where he left off.

Enough about that. So what was it that was so rattling? The Amsterdam news was interesting. Dale said, “I always love to go into a market in which we can make a refreshing change and stir it up a bit.” Uh oh. For those keeping score, that means OpenSkies will now serve the two largest Air France/KLM hub cities from New York effective October 15. How long before AF/KL strikes back with a vengeance? This might be fun to watch.

But I think the bigger news is that only a couple months in, the airline has decided to reconfigure its airplanes. Instead of having 24 seats in business (called Biz), 28 seats in premium economy (called Prem+), and 30 seats in coach, they will now replace those 30 coach seats with 12 more in Prem+.

So now they’ve got a mere 64 seats onboard to cover the costs of an entire 757 flying across the Atlantic. Dale seemed confident that having the backing of BA, codesharing, access to their frequent flier program, fuel hedging, etc is going to make a big difference. I agree, but I wonder if it’s enough. They have what looks like a fantastic product, but their fares don’t seem very high right now.

I asked Dale if this was simply a strategic move or if early demand for the Prem+ seats was driving the change. Dale responded that it was a strategic decision. They’ve always wanted to focus on the premium passenger and even though it was “almost always oversold,” coach was “a distraction.” So now they don’t have to worry about that anymore, I guess. He also noted that the reduction in capacity will help give them longer legs on a full tank of fuel.

He also said that Prem+ demand has been strong, but more interestingly he said, “The closer we got with our friends at L’Avion, it validated that.” So, is it possible that L’Avion gave them such incredible information that paying the costs of reconfiguring only a couple months after the planes were first configured makes sense? I’m skeptical. It sounds like they’re ready to make that jump strategically, something they’ve probably wanted to do since the beginning but for some reason did not.

They’ve got what appears to be a very nice product and low fares for what’s being offered. I’d certainly keep them in mind if you’re in New York. Dale also mentioned that Boston and Washington are possibilities for future service in the US with cities like Brussels, Milan, and Barcelona in the EU. They’re going to be expanding, and that’s good for travelers.


16 Responses to NBTA: OpenSkies’ Earth-Shaking Announcement in Los Angeles

  1. Zach says:

    I know that BRU and BCN are within the range of a 757 from JFK, but are they fairly confident that they’ll be able to get that equipment nonstop to MXP (4,000 miles, according to Great Circle Mapper)?

  2. CF says:

    Zach – We talked about that as well. He said from New York, they can do Milan. I guess the thing to remember is that Continental flies from Newark with more than twice as many seats as OpenSkies. So, the overall weight of the aircraft should be lower. They say Milan is in range.

  3. Oliver says:

    I wonder if OpenSkies will stick now that all the previous premium carriers are all out of business/bought out. It seems like they will since British Airways is such a huge carrier…right?

  4. Daren S says:

    In light of the likely merger with Iberia, will they enter the Spanish market? But then Iberia are very Madrid focused so perhaps it would be complimentary.

  5. Zach says:

    Thanks, CF. I didn’t realize that Continental flies that route with a 757. I’m interested in the issue of long-haul service on narrow-body aircraft, so the Open Skies posts are always particularly intriguing to me.

  6. CF says:

    Oliver – I think it’s probably up to BA. If there’s a strategic shift, they could be gone in a second. But, if they start showing some ability to stick, then BA will gladly nurture it, I would think.

    Daren – Funny, that’s another thing that came up. When Dale said Barcelona, he said something along the lines of, “Well, considering all this talk about Iberia, who knows how Barcelona would come out.” So they might not if the IB deal goes through.

    Zach – Sorry, but I don’t think I was clear. Continental doesn’t fly that route, but they do fly similar ones. JFK-Milan is 3,995 miles while EWR-Berlin is 3,980 miles. And CO flies to Berlin, but they do have stops on the way back. With the lighter load onboard, I’d think OpenSkies could make it work.

  7. Those East Coast to Europe flights are so short – the real market for upscale seating is on the long flights I have to take from the West Coast to Europe. Come on, people!

  8. Zach says:

    Bryan,

    Ha–fair enough. I’m not in the income bracket for the upscale seating, but my benchmark for “long” flight is anything over 3,000 miles (there was a period of time when I was flying semi-regularly nonstop between Chicago and Asia, so I’m not saying that NYC-Western Europe is anything to write home about in terms of duration, but I digress). Eastbound to Europe is a cakewalk, but even westbound LHR-JFK warrants one or two walking laps around coach (which, incidentally, you can’t really do in a 757).

  9. DRG says:

    Aren’t Lufthansa and Swiss still operating their all business-class service on PrivatAir to New York? Seems like a similar comparison (of course, they were operating them from network hubs)

  10. CF says:

    DRG – Yes they are, though the routes have shifted around a bit over time. That’s a very different product in that it’s not a competitive business class seat. I really should do a post on them sometime.

  11. Ari says:

    I have a feeling that BA will bleed AF/KL out of its premium customers and I’m afraid the later has no good way to retaliate without hurting itself further. I’m not sure how much money BA will make initially out of this considering the ticket prices but this is battle on the major scale between 2 of Europe’s last big three standing.

  12. L1011 says:

    Also, US flies some 757 across the pond, PHLARN is close to 4,000 and PHLLIS is about 3600. Granted this is with 176 seats.

  13. rl says:

    Didn’t AF fire the first salvo with LHR-LAX. I can’t imagine they’ll stop at that.

  14. Zach says:

    Wow, Does US really fly a 757 from PHL-ARN? That would surprise me (well…maybe not). I flew a US 757 roundtrip on PHL-DUB, but that’s only 3200. I saw a Continental 757 at BCN, which is 3,800 and change from EWR (DL was flying a 767 from JFK).

  15. CF says:

    rl – Yep, they did. They also have played around with narrowbodies in all-biz configurations to oil cities, so they could potentially give that a shot if they wanted to.

  16. Seth says:

    The 757 could make it from NYC-MXP with fewer seats and/or weight restrictions, but not with a full load. In the winter CO operates EWR-TXL and EWR-BCN, which are a hair shorter, with heavy restrictions on days where the jet stream is particularly bad. Or it is a stop in Gander, which sucks. And I cannot imagine that the premium passengers that OpenSkies is going after are going to keep booking if there are stops en route.

    Plus, going in to MXP would pretty much be the final nail in the Alitalia coffin.

    I would be surprised by Barcelona coming online. I don’t think that the demand is there year-round for the premium seats.

    It is interesting that they have mostly been attacking AF/KL and then AZ, basically going after SkyTeam. Nothing about BRU any more or FRA or DUS or MUC, all of which would seem to have a lot of potential. But they would also require going against LH. And if LH converts on the bmi buy-out then they’d have a lot of slots at Heathrow to fight back with. That would be fun to watch…

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