Yesterday was the deadline for airlines to get their applications in for seven new flights coming available between the US and China over the next three years. Conventional wisdom says Delta will get this year’s award with Atlanta-Shanghai flights. Next year, United is expected to get San Francisco-Guangzhou while the other spot, which can only be used to second tier airports in China, will likely remain unfilled.
But in 2009, the big competition heats up when four additional daily flights between the US and China come available. All the usual competitors are there (see below), but one that really stands out is . . . MAXjet?!?
I was surprised myself when I got a hold of the filing (PDF) that was quietly slipped in to the DOT yesterday before the deadline. Quick refresher – MAXjet flies an all-business class operation between several points in the US and London. While the business class seats aren’t the newest lie-flat technology, they are sold at the cost of last minute coach seats, so the value proposition is strong. The service appears to be doing well so far, and clearly they’re looking for new opportunities to expand.
This application proposes a LAX-Seattle-Shanghai flight on their ~100 seat 767s. I’m guessing they would have done LAX-Shanghai nonstop if they had the range, but Seattle will do for now. (787s anyone?)
How do I like their chances? Not so great. As long as demand for flights to China continues to outpace the number of flights permitted, the DOT is going to hesitate to add a flight with only 100 seats onboard when the alternative could be a 200-300 seat option on someone else. So I have to think that this isn’t going to happen this time, though when things start to open up further, it could happen.
What it comes down to, ultimately, is that the DOT is allowed to introduce one new carrier to the China market in 2009. Assuming Delta gets a flight this year, that would leave US Airways and MAXjet as the two new options for 2009, and US Airways will probably have the edge with their larger planes, even though the Philly-Beijing route is hardly inspiring.
From a business perspective, it would be interesting to see if MAXjet could pull this flight off. The value proposition isn’t nearly the same as flying to London because market business class fares are lower in Asia. That means the potential cost savings are less, and it may be harder to woo travelers. But there are no flights between Seattle and China right now, so it could fill a nice niche.
If I had to put money down, I’d say Continental (Newark-Shanghai), United (LAX-Shanghai), and US Airways (Philadelphia-Beijing) pick up three slots for 2009 with Delta (Atlanta-Beijing) and American (Chicago/O’Hare-Beijing) fighting for the last one.
9 comments on “MAXjet Wants China”
I was a frequent flier on UA’s Chicago-Beijing route for a couple of years (I feel like an ad for United lately), which isn’t a bad service since it’s all Economy Plus and is available for $800 roundtrip if you buy at the right time.
I think your argument about the Seattle-China niche is a potentially good one, but a lot of the people who travel that route frequently are going to China to visit family, not to conduct business, and therefore will probably opt for a cheaper fare instead of a more comfortable seat (especially since the Chinese as a rule aren’t particularly concerned about personal space).
Actually, no UA flight is all Economy Plus in back except for p.s. flights between JFK and LAX/SFO. You must just have been flying so much you never had to see the coach dungeon in the waaaaaay back.
Wow, no kidding? I had always just assumed that their ultra-long haul segments were all Economy Plus, but I must have not been looking closely enough. There was one flight where I got the absolute middle (like seat 34 G or something along those lines) on the 777 next to a kid who kicked me in the head repeatedly. That certainly didn’t feel like Economy Plus.
Umm yeah… I can vouch for the no all Economy Plus flights on UA. I sat in the back. The problem is where you board you have to walk by all the Economy Plus seats with their reclining seats, little reading lamps, and leg room before you get to your plastic folding chair in the back o’ the plane. It like when you’re driving in a nice neighborhood and take a wrong turn into a bad neighborhood and instinctively check to make sure your doors are locked. I don’t think those chairs in the back recline. They just go from straight up to forward! 15 hours crammed next to your closest new Chinese friend does not make for a Happy China Day.
That’s another problem UA has. If you saw little reading lamps, you were looking at their very dated business class. That’s a bigger problem for them. The Economy Plus seats are the same as regular Economy. The only difference is that Economy Plus has up to 5 inches more legroom.
Is this discussion about UA or MaxJet?
I cannot wait for the form 41 data for 1H/2007 for MaxJet and see if they have a chance of SURVIVING let alone expanding to China. If you looked at 2006, financial performance was extremely dismal, but one could not tell if they were bleeding money operationally or due to start up costs. However, in 2007 the growth continued so we are probably going to see more large losses.
I actually think that a smaller aircraft Seattle-China is an excellent marketplace proposition–there’s enough business both ways. But in the absence of open skies, I am as pessimistic as Cranky.
PS United has announced that they will refurbish their international premium cabins–both F and C class. I hope that they will improve on AA “wedgie” C-class seat.
I think you’re right about MaxJet’s chances being slim, but not because its planes only have 100 seats. The DOT is charged with picking a carrier for the route that will bring the most value (not the exact “mandate” but it is going to be something like that). Maxjet essentially operates point to point service where each of the network carriers competing for the route allocations will provide far greater access to China through the various connections they can offer.