Silverjet shares suspended

It has been announced that Silverjet have been unable to drawdown on their $5m finance deal. Shares suspended.
This may mark a sad day for this service although there is a ray of hope:

Silverjet is continuing discussions with other parties, which have confirmed an interest in investing in the Company and in the meantime, Silverjet's services continue as scheduled.

It isn't looking too good up at LTN! I know of some people that have been there since they came up with the idea of Silverjet and were fully behind it who are jumping ship.

Will have to wait and see now!

And the advice on one professional forum does not look good:

Book with an established carrier such as bmi or BA. 'I hesitate to mention Virgin' due to 'noises coming out of that company that are not good.'

I can't see how VS aren't an 'established carrier' - they've been around for 20+ years and whilst much smaller than the likes of BA/bmi, are surely no more or less exposed to the fuel problems than they are given the fact that the Virgin Group is there to prop them up if needed?!

Saw this here and was about to post.

I can only presume BA could do better as they have an established brand behind the venture. Still not looking good for the future of business only airlines at the moment.

Ironically, I was speaking to someone in NY this week who had flown over there on Silverjet and she thought the service, especially for the price, was excellent.

Cheers!

Dean

Originally posted by Wolves27
she thought the service, especially for the price, was excellent.

Isn't that the key at the moment? Where once Business could be sold on convienience/quality/speed, it's now coming down to price. Where is the profit for an airline like Silverjet in that scenario?

I've heard positive comments with regard to some of the service on Silverjet, but it's a dodgy time for start up airlines, especially on the VERY competitive LON-NYC routes.

I would say that we are now an established carrier, heading for 25 years soon. Although the next couple of years are going to be 'tight' for us according to some people at the top, we are in a strong position, which is shown by the fact that our pax numbers are up (think it's 8%), although revenue is slightly down.

As for the noises, that will probably be someone who is hearing that there are a few redundancies coming in the office and the IFBT situation, something we at VS already know.

[Darren Wheeler]

Originally posted by Bill S
'I hesitate to mention Virgin' due to 'noises coming out of that company that are not good.'

What 'noises' are these?

Originally posted by Boeingcat
which is shown by the fact that our pax numbers are up (think it's 8%), although revenue is slightly down.

Which adds to the pressure - prices are going to rise and passenger numbers are under threat. The days of the £40 Y ticket to New York are absolutely numbered now, they're crazy in the first place anyway but just show how silly airline pricing has got ... look at the US where the only response is to charge for anything that moves but keep the basic ticket price low!

Sad to hear this from Silverjet - I haven't flown them but friends have and really liked the experience, I hope they survive. But as Willie Walsh, the CEO of Air France, SRB and others have said - some airlines are going to go under soon because of the pressure on cost and the unwillingness to price fares realistically.

This is a very sad day indeed. I had been hoping that this airline would last, if nothing more than to prove all the doubters wrong. The sad thing for Silverjet is that there is nothing wrong with what they are offering and there clearly is the demand, the problem is the major banks won't lend to them.

Starting an airline at any time is a risky business, SRB was rejected by every major bank in the City when he started out purely because he need to fly his first a/c at 98% occupancy every day in the first year to make any sort of return and the banks believed that London-NYC was to competitive to do that.

In todays climate with banks and other funding sources being even more conservative with their investments it is no wonder newer airlines are struggling. I do hope that someone comes in for Silverjet but I believe it is doubtful. Launching this type of airline 6 years ago may have worked.


As for VS. I believe they are an established carrier and as Clarkey said SRB has been known to use other Virgin companies to prop up struggling ones in the price (hence SQ's stake in VS). VS will not go under, what is more than likely to happen, if anything, is that they are acquired or they merge. VS is doing the right thing, it is cutting back on the unneeded luxuries. We may all complain about no IFBT or the lack of pillows in UC or the lack of menus in Y but it is these luxuries things that will keep the airline safe. BA has only posted profits as it has announced it will shrink its operation. DL today has announced it is cutting two international services including JFK-LGW. EK and SQ are pretty much the exception to the rule of industry cut backs.

I personally believe it will be the smaller airlines that will struggle this year in the UK.

Having said that someone like BD will have to be careful. They have made a very good market out of the Weekend break and businessmen demographic. In bad times companies will cut back on international work/expensive business trips and of course members of hte public will be less extravagant with their spending hence less weekends away. Prices will also increase due to fuel costs etc. As Slinky says the days of cheap £40 flights to New York are gone.

I just wonder if the travel industry will return to being a luxury rather than a necessity in the next two years.

Originally posted by Darren Wheeler
What 'noises' are these?

I believe this may be your answer, Darren FletcherWheeler.

GJ

Personally I would like my little luxuries back and would be prepared to pay for them in Upper and most Virgin loyals would do the same.

I bought a travel pillow myself because the Virgin ones dissapeared.

Amenity kits aside I think J D and some Z pax would hapily pay a little more to retain the VA pizazz

This credit crunch lark is stupid all it is about is some bankers with there thumbs up their asses watching and waiting who takes the fall for their own bad speculations.

Originally posted by easygoingeezer
Personally I would like my little luxuries back and would be prepared to pay for them in Upper and most Virgin loyals would do the same.

I bought a travel pillow myself because the Virgin ones dissapeared.

Amenity kits aside I think J D and some Z pax would hapily pay a little more to retain the VA pizazz

Well thats the deabte that VS have had. Would pax be prepared to say have an increase in costs by £200 in a ticket in order to keep those luxuries. Clearly their market research said no and that if they did they would loose passengers.

This credit crunch lark is stupid all it is about is some bankers with there thumbs up their asses watching and waiting who takes the fall for their own bad speculations.

I would disagree but thats a whole different debate.

The one thing that is clear is that it is now effecting the aviation industry particularly harshly.

Originally posted by GrinningJackanapes

Originally posted by Darren Wheeler
What 'noises' are these?

I believe this may be your answer, Darren FletcherWheeler.

GJ

GJ

you do make me smile![:D]

Lynne

Originally posted by billybob


GJ

you do make me smile![:D]

Lynne

Thanks, lurv [y]

GJ

Originally posted by willd

Originally posted by easygoingeezer
Personally I would like my little luxuries back and would be prepared to pay for them in Upper and most Virgin loyals would do the same.

I bought a travel pillow myself because the Virgin ones dissapeared.

Amenity kits aside I think J D and some Z pax would hapily pay a little more to retain the VA pizazz

Well thats the deabte that VS have had. Would pax be prepared to say have an increase in costs by £200 in a ticket in order to keep those luxuries. Clearly their market research said no and that if they did they would loose passengers.

This credit crunch lark is stupid all it is about is some bankers with there thumbs up their asses watching and waiting who takes the fall for their own bad speculations.

I would disagree but thats a whole different debate.

The one thing that is clear is that it is now effecting the aviation industry particularly harshly.

Firstly the credit crunch has nowt to do with fuel costs and its affecting airlines because 'bankers' arn't lending or are wanting their money back because they have been stupid.

Also whoever does the VA market research makes their mind up what the results are before the research is carried out. I get an email on a Friday telling me that some research will be done regarding IFBT's and by the next Wednesday another saying they have gone, given that an email sent to customer services can take months to be answered I doubt the research was actually done in the 'market' but on a spreadsheet.

Yes I would pay £200 extra for luxury or perhaps it could be more easily provided if J pax fares wern't used to subsidise silly money discounted fares in Y.

Originally posted by easygoingeezer
Yes I would pay £200 extra for luxury or perhaps it could be more easily provided if J pax fares wern't used to subsidise silly money discounted fares in Y.

Yes Egg, you and me both. However we are in a small minority and alone we cannot bring back the cushions, the petit fours on the bar, decent wine, IFBT, champagne and crisps that last more than two hours into the flight, and so on.

Secondly, absolutely; silly £40 fares for economy trips are insane ... but there's this inverse lemming-like mentality among the airlines - they know they need to raise them to levels that work, but they fear that if they jump first no one will follow. So, we PE and UC passengers are effectively subsidising the economy folk ... perhaps it's time we rebelled?

Originally posted by easygoingeezer

Firstly the credit crunch has nowt to do with fuel costs and its affecting airlines because 'bankers' arn't lending or are wanting their money back because they have been stupid.

Also whoever does the VA market research makes their mind up what the results are before the research is carried out. I get an email on a Friday telling me that some research will be done regarding IFBT's and by the next Wednesday another saying they have gone, given that an email sent to customer services can take months to be answered I doubt the research was actually done in the 'market' but on a spreadsheet.

Yes I would pay £200 extra for luxury or perhaps it could be more easily provided if J pax fares wern't used to subsidise silly money discounted fares in Y.

I dont believe I equated the CC to the fuel costs. Of course the fuel costs don't have anything do with the CC, they are an added factor in the airline industry. And I wont be drawn into the CC debate as I feel its rather off topic given the original post was about Silverjet and way too complicated, heck half the banks don't even understand what they have gotten into.

Yes all very true and I can't comment as Im not part of VS market research. What is clear though is that VS are correct in their assumptions that they can cut the service without you jumping ship. Its a fine line between what a newbie to the airline expects/what loyal flyers expect and what VS can get away with whilst remaining healthy. And as was raised on a.net the other day, FF Programmes are not exactly the best way to make money either.

[RichardMannion]

Originally posted by slinky09

Originally posted by easygoingeezer
Yes I would pay £200 extra for luxury or perhaps it could be more easily provided if J pax fares wern't used to subsidise silly money discounted fares in Y.

Yes Egg, you and me both. However we are in a small minority and alone we cannot bring back the cushions, the petit fours on the bar, decent wine, IFBT, champagne and crisps that last more than two hours into the flight, and so on.

Secondly, absolutely; silly £40 fares for economy trips are insane ... but there's this inverse lemming-like mentality among the airlines - they know they need to raise them to levels that work, but they fear that if they jump first no one will follow. So, we PE and UC passengers are effectively subsidising the economy folk ... perhaps it's time we rebelled?

Absolutely cracking statement there by EGG, and complimented by Slinky's reply. Cannot disagree at all.

Interesting debate, but who is offering £40 Y fares on long haul routes?
It does make business sense to sell seats at just above cost price (which includes the cost of extra fuel to carry the passengers and luggage)if those seats would otherwise fly empty: A small amount of revenue is better than no revenue! Even seats sold at cost (some may argue below cost) can in some situations have a PR value. Whether this pricing policy benefits the airline industrial as a whole I am not so sure.

Originally posted by pkatmk
Interesting debate, but who is offering £40 Y fares on long haul routes?
It does make business sense to sell seats at just above cost price (which includes the cost of extra fuel to carry the passengers and luggage)if those seats would otherwise fly empty: A small amount of revenue is better than no revenue! Even seats sold at cost (some may argue below cost) can in some situations have a PR value. Whether this pricing policy benefits the airline industrial as a whole I am not so sure.

As slinky09 says, selling seats at cost price (or just above it) is something that nobody is willing to do in case they're the only ones to do it. It's times like this you need someone with the same balls as Michael O'Leary (despite his unpopularity among some quarters, there's no denying his successes at bringing costs down and flogging seats for just 1p) to do something about it.

It's easy saying that a full plane means profit as it is simply not the case, it all boils down to how much money the airline has made per passenger and whether it has covered for the airline's expenses plus leftovers for profit. And I am not necessarily referring to Y fares/passengers.

Originally posted by VS075

As slinky09 says, selling seats at cost price (or just above it) is something that nobody is willing to do in case they're the only ones to do it

.

Unless I'm confused (which does happen) isn't slinky09 saying something akin to the opposite of this: ie airlines reluctant to raise prices well above cost .

It's easy saying that a full plane means profit

Who said that?


I would still be interested to know who is selling £40 returns to New York as I have personally never seen anything less than £200. Anybody?

[mitchja]

The £40 refers to the basic fare cost only, not including the ~£196 tax/fees you pay.

Regards

Originally posted by mitchja
The £40 refers to the basic fare cost only, not including the ~£196 tax/fees you pay.

Regards

Thank you Mitchja for restoring my sanity!

Originally posted by pkatmk

Originally posted by mitchja
The £40 refers to the basic fare cost only, not including the ~£196 tax/fees you pay.

Regards

Thank you Mitchja for restoring my sanity!

Look sometimes at special fares, and you see the breakdown of cost - one recent one I saw had BA at £236 to New York, £212 of fees, £24 for the actual flight ... which is what I meant referring to the insane situation airlines have allowed themselves or created a situation for themselves to be in.