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Confidence the key for Silverjet
Comment by Jeremy Skidmore (www.jeremyskidmore.com)
As I write, shares in all-business class carrier Silverjet have been suspended, but the carrier is continuing services as normal.
Some analysts are gloating, saying the business plan never stacked up. But I completely disagree with that. Silverjet is currently struggling because of a big change in the economic conditions, not because it is a bad idea.
Anyone who has flown Silverjet would admit that it is an excellent service. I have spoken to numerous people who have been on the airline and no-one has anything but praise for it.
And with return flights to New York from £999, the fares are very competitive without being so cheap that the carrier could never predict when it would be profitable.
Silverjet’s problem is that the market has changed so dramatically. It launched towards the end of a boom period and now people are worried about their mortgages and disposable income. They may still want to go to New York, but are having to consider economy class instead.
Crucially, when Silverjet started flying 18 months ago, oil was trading at $55 a barrel. This week it peaked at $130 a barrel. No-one predicted that meteoric rise.
The main issue now for Silverjet is one of confidence. Agents may become reluctant to book their clients on an airline when they hear stories about shares being suspended.
I sincerely hope that it can pull through this difficult time and it gets a fresh injection of cash, because it is offering customers something they want – good quality business class at an affordable price.
Elsewhere, the halcyon days of flying for next to nothing on no-frills airlines seem to be coming to an end.
Consumers are reigning in their spending and taking fewer short breaks, at a time of record fuel prices.
The ‘pile-them-high-sell-them-cheap’ formula will no longer work and those that do survive will have to put up prices.
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