Is the boutique airline model dead?

Porter Airlines operates a fleet of Q400 aircraft - a rare boutique airline success. (Photo: Porter Airlines)

Last year was a particularly bloody one for the airline industry, with many carriers, new and old, throwing in the towel. Particularly susceptible it seems, were the so-called “boutique airlines” that had popularly cropped up in the middle 2000’s. Offering travelers who would normally fly business class a stylish alternative to the network carriers premium cabins, many of these airlines have faded away – the victim of high fuel costs, aggressive competition by the established airlines, and a fall-off in demand for premium seats.

Three airlines – Eos, Silverjet, and MaxJet, were notable for operating all Business Class configured aircraft on transatlantic services, albeit with varying degrees of service. All three had ceased operations by 2008. A fourth airline, French carrier L’Avion, operated similar services before being absorbed by the British Airways boutique airline spawn OpenSkies. That airline had been rolled out by British Airways partly in answer to the transatlantic boutique airline craze, and partly to take advantage of liberalization of the air agreements between the US and Europe – an agreement from which the airline takes its name. British Airways has announced expansion plans for OpenSkies are currently on hold, and continuation of the airline itself is also in doubt. Originally operating only between New York, Newark, and Paris Orly, services to Amsterdam were briefly added before being dropped due to soft demand.

The boutique airline model presents a challenge to network airlines already fighting to keep premium cabins full. In addition to offering a more innovative on board product, the boutique carriers were normally offering fares much lower than the norm. While many airlines have for years offered boutique like services (many European carriers contract all business class flights on narrow bodied aircraft on certain routes with a steady but small stream of business travelers paying a premium for a nonstop) for years, the model hasn’t yet proven sustainable for an entire airline.

There are, however, always new entrants. JetBlue’s naissance was marketed as a “boutique” concept, albeit an all-Economy one. Although vast swaths of the country remain untouched by the airline’s route network, JetBlue has since grown to join the ranks of the major airlines and may not still fit the boutique moniker - yet the carrier’s service profile has not drastically changed since the first flight. Virgin America may have inherited the domestic boutique crown, and the airline’s slowed expansion plans may ensure it fits the boutique description for some time. VA’s Virgin Group stable mate and codeshare partner V Australia is also a boutique type carrier off to a successful start between the US and Australia, and recently announced expansion plans to include Thailand and South Africa.

North of the border, Canada’s Porter Airlines has brought a new concept: the boutique regional. The airline operates Q400 equipment from Toronto’s City Centre Airport to business destinations in Eastern Canada and the United States – offering a downtown alternative to carriers serving distant Pearson International. Porter is also unique in having thrived outside the realm of the traditional regional feeder network – a sort of halo operation for Toronto, similar to those operated in the Northeast Corridor. Onboard services, upscale for a regional with substantial snacks, and complimentary beer and wine, certainly fit the boutique model.

Yet another business class entrant is eyeing the Anchorage to Seattle market; a high-density one dominated by Alaska Airlines with 20 flights per day in a mixed First and Economy configuration. Dubbed XAIR, the company is exploring a First Class public charter between the two historically linked cities; proof that while the boutique airline model may have faltered, the idea hasn't died completely.

While failure in the airline industry is certainly a constant, especially for new entrants of any color, creed, or operating philosophy, the mortality rate seems particularly high among those entering with the “boutique” name tag attached. However, as long as there are gaps to be filled in underserved markets, or those with potential for something a little different to find success, boutique airlines may continue to “give it the ‘ole Eos try.”