The Flying Critic

Silverjet fails - stops flying

Today Silverjet flew its last flight - Dubai to London Luton Airport. 

Silverjet's failure follows EOS and MAXJet's recent shutdowns.  With business travel down and fuel costs up it doesn't seem to be a good time to be an all business class airline.  Especially when you are selling your tickets for 1/3 the price.

Silverjet tried to get funding to stay in the air but their Middle Eastern investors decided to not give more money.  The Guardian reports that Silverjet now goes into administration.

Aloha Airlines Cargo shuts down - Hawaii loses 85% of its interisland air cargo capacity

Yesterday, bankrupt Aloha Airlines abruptly shutdown its interisland air cargo business. The air cargo business was profitable but GMCA Commercial Finance cut off Aloha's financing which triggered the shutdown.  Aloha Airlines cargo business transported 85% of the air freight between the different airlines. The Honolulu Advertiser said:

The shutdown means the loss of 300 jobs and the end of a business that handled more than 100 million pounds of cargo each year — about 85 percent of all goods flown between O'ahu and the Neighbor Islands.

That is a huge loss in capacity.  Why would GMAC pull the financing if it was a profitable operation?  Take your pick: high fuel or the current credit environment.  Or both. 

Regardless of the reason, I think this is too much of a loss of capacity on a profitable business for someone to not step in and add a new cargo service between the islands.  Let's hope for our Hawaiian friends that this massive drop in capacity is replaced quickly and doesn't hurt local businesses too bad.

EOS ceases operations & files for bankruptcy

EOS is no more

EOS, an all-business class carrier that flew between London (STN) and New York (JFK) has ceased operations and filed for bankruptcy:

Eos has filed for bankruptcy in the U.S. Bankruptcy Court in the Southern District of New York. On April 26, 2008, we plan to operate Flight 6 (8:30pm) from JFK to STN. On April 27, 2008, we plan to operate Flights 3 (1:00pm) and 7 (6:30pm) from STN to JFK. Flight 5 from STN to JFK and all flights from JFK to STN on April 27, 2008 are canceled. We will cease operations entirely after April 27, 2008.

Apparently their $50 million dollar financing deal fell through.  They needed the money to continue operations and make it until next year when they predicted they would become profitable. 

What about EOS' frequent flyer program?

EOS' press release notes that their frequent flyers are screwed:

For our Club 48 members, unfortunately, in the face of this bankruptcy filing, you will no longer be able to redeem your points for rewards.

Rebooking Option for EOS Customers

Silverjet is reaching out to EOS' passengers by offering to match the price paid to EOS:

Following the cessation of EOS operations, Silverjet is offering EOS customers the opportunity to re-book on available Silverjet services

Book with Silverjet before midnight 10 May 2008 (BST) and we will honour the price you paid to EOS, subject to seat availability and a minimum price paid*.  To re-book, please call Silverjet on UK: 0844 855 0111 or USA: 877 359 7458 (FLYSILVERJET), 24 hours a day.

Electronic proof of the ticket price paid to EOS and your original EOS e-confirmation number will be required.

* Please note, if you have paid less than £600 / $1,200 plus taxes one-way or £1,200 / $2,400 plus taxes round trip, we will be unable to honour this offer.

How is Silverjet doing?

With MaxJet already gone and now EOS shutdown, you have to wonder how SilverJet is doing.  Joe Sharkey At Large interviewed Silverjet's CEO and posts on the issue:

Silverjet founder and CEO Lawrence Hunt tells me today that a “fundamental problem” Eos had was that it wasn’t able to offer a “price advantage,” once major-airline competitors like Delta, American and Continental brought transatlantic business class discounts down to Eos’s level in the $3,500 to $4,000 round-trip range. Silverjet’s roundtrip fares average around $2,000, he said.

The famously aggressively competitive American Airlines also hit Eos hard when it started a New York flight to and from Stansted last October, and added a second one last month, at negotiated fares that were undercutting Eos prices.

Silverjet says it is doing better than EOS because it priced itself cheaper.  That's good for getting customers to book Silverjet.  But with fuel costs up about 50% from last year you have to wonder if their low fares are sustainable. 

 

Daily Travel Tip: Use a credit card not a debit card when buying airline tickets

If you have the choice between using a credit card and a debit card for making your airline ticket purchase, use your credit card. 

The reason is that federal laws provide substantially more consumer rights and protections for purchases made with credit cards.  Also note that these consumer protection laws generally only apply to consumer credit cards, not business credit cards.

For example, if you buy airline tickets within 60 days of departure and the airline goes bankrupt and you used your personal credit card you are typically protected from the loss.  You don't have that same level of protection by using your debit card.

The rules and laws are quite complex, but the simple thing to remember is to use your personal credit card when buying your airline tickets to maximize your rights and protections against losses.

Five tips to consider when buying airline tickets

The latest round of bankruptcies caused many passengers to be left with invalid tickets and no way to get refunds.  Not a situation you want to find yourself in.  In response to these problems, TheStreet offers five good suggestions of things you should consider when buying your next ticket.

Are credit card surcharges or cash incentives coming soon for airline ticket purchases?

Upgrade: Travel Better has an interesting post about how he thinks the airlines may be changing the way they accept credit cards in light of the Frontier bankruptcy.  I've posted my thoughts on the issue in the comments section of Upgrade: Travel Better's post.

Frontier Airlines Files for Chapter 11 Bankruptcy But Will Continue Flying

Now Frontier Airlines has filed for Chapter 11 Bankruptcy.

Here is Frontier's Restructuring Information Page with details on their plans:

Frontier Airlines intends to continue normal business operations throughout its            reorganization process. Specifically, we expect to continue to:                    

- Operate our full schedule of flights;                    
- Honor tickets and reservations and provide refunds and exchanges per our standard policy;                    
- Maintain our EarlyReturns frequent flyer program and other award-winning customer service programs;                    
- Provide employee wages and benefits without interruption; and                    
- Pay suppliers for goods and services received during the reorganization process.        

According to the NYTimes:

The low-fare carrier said it was forced into bankruptcy after its principal credit card processor said it would begin withholding a greater share of proceeds from ticket sales.

The Chapter 11 filing in U.S. Bankruptcy Court in New York prevents the credit card processor from increasing its ''holdback,'' Frontier CEO Sean Menke said.