All-business class airline Silverjet suspends operations

Sunday, June 1, 2008, 8:11 by Aviation Correspondent

Silverjet, the all-business class airline based in the United Kingdom, has suspended all operations after failing to secure new funding.

The airline, based at London’s Luton Airport and having just three aircraft, was operating two transatlantic services a day between London’s Luton Airport and Newark Liberty International Airport, New York. It also ran a daily return service to Dubai from London’s Luton Airport.

Silverjet’s services were suspended after the final flight arrived at London’s Luton Airport from Dubai at 2.45 p.m. on May 30, 2008.

Silverjet was among a number of new, business-only airlines launched up to take advantage of the ‘Open Skies’ agreement, which lifted restrictions on other than four designated airlines to operate transatlantic flights.

The other two airlines competing in the all-business class market, MaxJet and Eos, had closed down recently.

Over a dozen airlines have closed down in the past six months after the prices of aviation fuel started soaring.

Silverjet was the last survivor among three business-class carriers operating between London and the United States.

Maxjet Airways and Eos Airlines had blamed their collapse on higher costs of fuel, competition from network carriers and an inability to raise more capital as a result of global tightening of credit.

Silverjet, launched in January 2007, had announced on May 23, 2008, that it had yet to receive the proceeds of a $5 million drawdown request made under its loan facility with Viceroy Holdings LLC.

Silverjet had also said in a statement that its “working capital reserves were limited and that advances under the loan facility were required as a matter of urgency and that it had not received any further sums from Viceroy Holdings LLC and had no choice but to suspend operations with immediate effect.”

The company, in a statement issued on May 30, 2008, told customers: “Your belief in us was shared by our investors, but regrettably, due to unforeseen circumstances, they were unable to unlock the finance that we needed. As a result, we are very sad to announce that from May 30, 2008, we will cease operations and we are no longer able to honour flight reservations.”

Trading in Silverjet shares had been suspended a week ago.

The company had been losing money since it began flying in January 2007.

After suspending operations, Silverjet advised passengers already booked on Silverjet flights “to try and find alternative travel arrangements with other carriers, and to contact their credit-card company or travel agent directly for information on obtaining refunds.”

The website reported that thousands of people who had paid up to £1,100 to fly on an exclusive business-class service to New York or Dubai by Silverjet had run out of cash.

The Civil Aviation Authority, Britain’s regulator of civil aviation, estimated that nearly 10,000 passengers had been affected by the suspension of Silverjet’s operations.

British Airways, Virgin Atlantic and Dubai-based carrier Emirates offered special deals for stranded passengers or prospective passengers of Silverjet.

The price of oil, which cost around $50 a barrel when Silverjet started flying in January 2007, has jumped to $135 (£67) a barrel now. The credit crunch made matters tougher for the airline, the company said.

According to analysts, Silverjet’s troubles seemed to have lessened in April 2008 when the airline said it had secured £12.7 million in emergency funding from an investor in Abu Dhabi. But the company was compelled to suspend trading in its shares a week ago when it came to be known that it had not received a part of the pledged money.