A business deal finalized in France today may have major ramifications on affordable transatlantic air travel. French low-cost carrier XL Airways has merged with the all-business-class start-up La Compagnie, according to a statement shared with Condé Nast Traveler. The XL Airways-La Compagnie Group will be helmed by XL Airways CEO Laurent Magnin. La Compagnie's founder, Frantz Yvelin, has resigned.
XL Airways, which operates a small fleet of Airbus A330s, specializes in "XL" low-cost flights between Paris and the United States without resorting to the pay-for-everything model of budget competitors. A hot meal, blanket, and in-flight entertainment still comes with your ticket. The airline also flies to Israel and a smattering of popular French tourist destinations, including a number of French holdings in the Caribbean and the Indian Ocean. Meanwhile, La Compagnie owns a fleet of two Boeing 757-200s, outfitted with 74 business class seats, with fares that often compete with economy class in larger airlines. (In November, La Compagnie offered round-trip flights between New York and Paris for $1,000.) It currently operates a single route between Newark-EWR and Paris-Charles de Gaulle after a previous Newark-London Luton route was discontinued in September. The airline blamed post-Brexit "financial instability", but the lack of daily flights and routing through Luton airport likely played a role as well.
While each airline will maintain its own brand identity, the consolidated group would have a combined revenue of 400 million euros ($427 million) and more than 800 employees. The financial terms of the agreement have not been disclosed.
According to the people at the top, both airlines are feeling pretty good about the decision. "It was inspiring to see how favorably the two airlines’ employees received the news and underscores the shared spirit and mission," said Magnin. Outgoing La Compagnie boss Frantz Yvelin seems equally enthusiastic: "I am very proud and grateful to have created and run La Compagnie and to have successfully contributed to this new group," he said in a statement. It's worth pointing out that this isn't the first time Yvelin has built a business-class-only airline from the ground-up—he sold L'Avion to British Airways in 2008 for $68 million.
Both airlines appear to be looking to scale up, a much easier task now that they fall under the same umbrella group. The new XL Airways-La Compagnie Group, self-described as the "first French long-haul, low-fare group servicing both business and economy class on the New York to Paris route," will not only be in a more advantageous position to compete with transatlantic budget competitors like Norwegian Airlines and Wow Air, but could also undermine the foothold Air France has on the popular New York-Paris route. It's also a bit of an experiment: Could two budget fleets—one all-business, another dominated by pack-'em-in economy seating—be an innovative new way of approaching budget aviation? Time will tell, but in the meantime we'd recommend keeping an eye out for price drops on flights to Paris.
