Silverjet is casting its net in a final search for a white knight, but niche market airlines like it have always had a tough time surviving - especially when pressures like the global credit crunch and soaring fuel prices add to their financial woes.
The stories of specialist business-class only airlines like Silverjet, Eos and Maxjet, however, are not symptomatic of a general air travel malaise. The International Air Transport Association (IATA) has recently issued its April figures and announced that growth has slowed down and load factors are slightly reduced compared with the same month last year. But growth continues, even if more slowly.
Fuel prices are the biggest bugbear for the airlines right now. The results, from the consumer viewpoint, are different according to the industry sector: the low cost carriers are having to put their ticket prices up, but no one really notices because they are still extremely good value; and the traditional or full-service carriers are unashamedly putting up the size of their fuel surcharges - painfully so in the case of their long-haul routes.
The advent of the low-cost airlines forced traditional carriers into more efficient operating practices so their fares would not look insultingly expensive compared with the good value the public was rapidly coming to expect. So the airlines, in all sectors, are being squeezed from all directions: increased competition, increased passenger value expectations, and increased fuel costs.
They have no choice but to pass on increases in fuel costs. Fuel surcharges are perceived as a blunt and highly discretionary weapon, however, and perceptions matter. Customers can easily suspect they are being ripped off because it is so easy for the airlines to add to the price of a journey. Despite this, airlines choose surcharges on the theory that the price of fuel can go down as well as up, and constantly changing fares is more complex for both the airlines and the passengers than reacting directly to volatile fuel prices by surcharging. They actually reduced surcharges once recently when fuel prices moderated slightly - but that did not last.
There seems to be no desire by the public globally to curb their air travel habits, whether they are choosing to fly for business or pleasure. Despite the threat of a recession or economic slowdown, most people are still more prosperous than they ever been, at the same time as air travel has become better value than it has ever been. In the emerging economies like India and China this truth is even more dramatically evident than in the mature western economies.
Ironically, as we watch the business-class-only market sinking into the quicksand, aviation's highest-performing sector seems to be defying economic gravity. Private business aviation has been expanding at a rate of 17% a year for the past two years, and before that nearly as fast. The new factor in this rarified world of privately owned jets is the emergence of large numbers of mega-rich individuals outside of the traditional home of such people, America. The countries featuring most prominently right now are Russia and the oil-rich Middle East states, but watch this space for China and India. The growth of massive multi-national companies that effectively run their own airlines is a major part of this, as is the increasing popularity of high net worth individuals buying a share in business jets via "fractional ownership" companies that operate your aircraft for you.
But two weeks ago, at the European Business Aviation Conference and Exhibition in Geneva, the assessment of the "heavy iron" end of the industry was that it is driven by the world's mega-rich who want personally to own massive airliners. Airbus announced at Geneva that it had received orders for five A350s, kitted out in luxury style. Each of these new jumbos, the first of which will not even roll off the production line until 2011, would normally carry about 350 people in a three-class airline layout. Maybe Silverjet's mistake was not to go further upmarket.
