La Compagnie joins NYC-Paris luxury travel race

There's a new contender in the race for the transatlantic business traveler.

La Compagnie launched all-business-class service between Paris' Charles de Gaulle and Newark International airports in July.

But rather than trying to go head to head with bigger airlines like United, which attract some passengers willing to pay top dollar, the new carrier offers that start at about $1,800 round trip to entice travelers who want to fly in premium style, but not necessarily pay premium prices.

"The proposition we have now ... is not to be the best business class, but the best in price point,'' says Peter Luethi, La Compagnie's deputy CEO. "That obviously is very attractive to independent business travelers that don't have the benefit of a large corporation's discounts. ... It's this kind of customer we try to attract (with) comfort at a reasonable price.''

Pricing currently ranges from the cheapest, "best buy'' category, which has round-trip tickets that cost between $1,856 and $2,298 to the top "full-flex'' tier, where tickets are priced from $4,144 to $7,098 and which allows a reservation change or cancellation at no extra charge.

Round-trip business-class fares on bigger network carriers flying between Paris and New York's JFK generally start at $7,000 if not booked far in advance and don't include a weekend stay (they can cost an additional $5,000 or more if a weekend stay is added in).

All-business-class service has been tried before. Frantz Yvelin, La Compagnie's CEO, previously launched L'Avion which also ferried passengers between Paris and New York, and which was sold to British Airways in 2008 for 78 million euros.

But other recent attempts to create a single-cabin, premium airline have failed. Silverjet, which flew between London's Luton Airport and Newark, stopped operating in 2008, and EOS and MAXjet launched flights between New York and London in 2006, but were out of business within two years.

Some industry watchers say that La Compagnie's luxe-for-less niche — with features including 74 seats that recline to an almost completely lie-flat position — may not ultimately be enough to keep it afloat.

"There are people who want comfort (who) are not willing to pay for a flatbed (seat), but they absolutely want something better than economy,,'' says Craig Jenks, president of Airline/Aircraft Projects, a New York-based consultancy."So, there is a niche ... I just don't think it's really big.''

La Compagnie currently has a single Boeing 757-200 that flies six times a week between Paris and Newark. Since September, the airline has been flying between 55% and 65% full, a higher load factor than the carrier's officials had initially expected, and the airline expects to offer daily flights after Jan. 1.

"We have already seen quite a number of people who have returned,'' Luethi says. "In other words, they do seem to like the product, and the pricing, and what we stand for.''

In case the airline's lone plane cannot fly, IcelandAir, which is maintaining the jet, will accommodate affected passengers.

Luethi says that the new airline's founders have learned from L'Avion, as well as the other business -lass carriers that faltered, and they note that La Compagnie is taking flight in a vastly different environment.

"Capacity by major carriers is down, prices have gone up and that was not the case in the years when the other airlines started,'' Luethi says. "That is one big advantage.''

La Compagnie's flights are also now available through the same information pipelines that are used by the major U.S. carriers, making it easier for online and brick-and-mortar travel agents to sell La Compagnie's service.

"The travel agents are still a very important distribution channel,'' Luethi says, "and if they can't reach you, then they will not recommend or sell you.''

With travel demand strong and fares inching higher, Jenks says it's not surprising that a new carrier would emerge to try and carve out a sliver of the market.

"Demand starts to get higher than supply and entrepreneurs get optimistic and see gaps in the market,'' he says. "Then of course when we get a downturn ... the opposite happens.''

Targeting a narrow slice of the market can make an airline particularly vulnerable during certain times of the week or year, Jenks says, forcing it to either heavily discount seats or fly with some empty, which threatens a carrier's bottom line. And a corporate executive, with frequent flier status and other negotiated perks, might prefer a discounted seat on United to a perch on La Compagnie.

"They're not going to go to La Compagnie for $2,500, and if they're a junior executive, they might end up in economy plus,'' he says.

Still La Compagnie's officials are already considering adding another route. The airline has plans for a second plane in December and expects it to start flying in February. By then "we will be able to announce what the next step will be in our network,'' Luethi says.

Some industry experts say that if the economy continues to rebound, La Compagnie has a chance to succeed.

"It's going to be timing,'' says Blaise Waguespack, a marketing professor at Embry-Riddle Aeronautical University's Daytona Beach campus. "(If) you've got a good economy (and) controlled costs, the market's there.''