Thursday, July 3, 2008

Frequency vs Route Map

The arm-chair upside to this OpenSkies-L'Avion merger is that we will all quickly learn a great deal more about BA's strategy for its new baby business class airline. Based on all available information, it always seemed like OpenSkies would opt for Route Map vs Frequency. They'd launch Paris and then expand with single frequencies to other cities such as Brussels and Amsterdam.

With this strategy OpenSkies can assure they do not flood the market with too much capacity and it gives it more pricing power for the demand. However, as a business class carrier they'd be betting on that frequency would not severely impact its demand. That is, that if I am John Doe business class traveler, then I would love OpenSkies so much that I would fly on them at anytime, rather than a competitor that allows me to possibly get on an earlier flight or gives me comfort that there is a later flight if my original flight is cancelled.

But, with the L'Avion purchase they now have 3 daily flights from NYC-PAR. My bet is that they quickly shed one of these flights and settle on 2 flights and that will be the maximum they offer any market. Either way, after a month or two, we'll have a good idea on how they plan to expand OpenSkies.

2 comments:

BlackberryAddict said...

Don't forget that OpenSkies still has the backing of BA - if a flight is cancelled, they can always re-route passengers very easily on BA - not ideal, but better than most of the business class only carriers are (were...) able to offer.

tjlang said...

That's an entirely valid point. Of course, it is hard to know if a consumer will keep that in mind when booking, but it will certainly help when they need to do cancellations.