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Why Eos failed

Published: 28/04/2008 - Filed under: News »

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All-business-class airline Eos ceased its daily London Stansted to New York JFK service this week after filing for Chapter 11 bankruptcy protection.

The grounding of Eos follows the collapse of Maxjet’s transatlantic scheduled service last December, but the news has come as a shock to many travellers because it had been thought Eos had a viable business model. It operated B757 narrow-bodied planes (which can accommodate up to 220 passengers) with just 48 fully-flat business class seats.

Eos also provided first class standards of onboard service. All this was offered for lower rates than you would pay to fly with British Airways, Virgin Atlantic or American Airlines out of Heathrow.

US carrier Eos also planned to launch additional flights next month from Stansted to New York Newark, followed by Dubai in July, and intended to introduce New York JFK flights out of Paris in the near future.

But it seems Eos has fallen victim to the credit crunch, the soaring cost of aviation fuel (a 48-seater B757 is not fuel-efficient) and fiercer competition from conventional airlines.

Last November, American Airlines launched a competitive service from Stansted to JFK with attractive corporate fares, and is planning to add an extra daily service starting in August.

The new UK-US “Open Skies” regime allowed Delta and Continental to enter the Heathrow to New York market and both have been offering keen business class fares to establish themselves.

Rivals Silverjet (which flies Luton-New York Newark) and British Airways, which operates between Heathrow, JFK and Newark, have both stepped in to accommodate stranded passengers at special rates.

Silverjet (another all-business-class carrier) says it will honour the price which Eos passengers paid for their tickets (subject to a minimum sum paid) while BA says it will make available Club World (business class) seats at a special rate. BA said: “Conditions such as advance purchase and minimum Saturday night stay will also be waived to enable Eos passengers to travel as per their original plans.”

Passengers who bought their tickets in the UK using a UK-issued credit card will be protected for any losses under section 75 of the 1974 consumer credit act. But note that holders of credit cards issued outside the UK may not enjoy similar protection.

Charge card firms like Amex and Diners aren’t legally obliged to make refunds in cases like this but, in practice, most do for the sake of customer goodwill.

For more details go to eosairlines.com.

Report by Alex McWhirter

COMMENTS » 

WGBilling - 01/05/2008 19:45

It would be interesting if we could accurately determine how many and and what discounted prices, companies such as Virgin, BA and the like made seata available on the routes flown by Maxjet and EOS (including to nearby destiantion airports) during he run-up to failures of the two low-cost operators, Remember Laker?

Tumiactually - 01/05/2008 20:12

You are dead right. I head the guy from Silverjet saying they would honour the prices of Eos. Not exactly generous when Eos prices are/ were twice what Silverjet charges !

LondonCity01 - 03/05/2008 21:36

It's not just the big carriers out of LHR who were selling cheaper business class fares. Don't forget AA was charging cut-price business class rates (mainly to corporate accounts) ever since it entered the Stansted-JFK route last November.

AA's other advantage was that, being a large airline and part of the Oneworld alliance, it could offer a powerful FFP scheme which could provide passengers with benefits worldwide.

IsabelBuehler - 04/05/2008 19:09

coming back to your title again...why did EOS fail?

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