Business Class 101: The Fall of EOS Ariline

As of today, EOS Airlines is officially closing it’s doors and has filed for bankruptcy. EOS was one of four “business-class only” airlines that opened in the last two years. Maxjet, one of the others, closed in December. As always, there are things we can learn from these business failures. So let’s take a look. Oh, and just for fun, we’ll call today’s lesson “Business Class 101″ (pun intended).

What caused the Bankruptcy?

Well, right off the bat I see some potential problems. The first being that this airline decided to create a very small niche in an already shaky industry. The airline industry was hit hard by the events of 9/11. Gas prices have also been on a steady rise since that time. So why would you want to own an airline, that would charter cross-country flights carrying only 48 people per flight? Seems a little risky….

The second problem that I see with this business niche is that there doesn’t seem to be a real market for it. With the state of the economy, most business-owners are looking for ways to cut cost. So the guy who would have flown business-class eight years ago is now pecking on his laptop in the seat next to us(economy class travelers). This has been going on for the better part of a decade(which is when EOS went “business-class only”) so how could they not foresee a potential problem only 2 years ago? I don’t know. Maybe, it’s easier to see in hindsight or from the outside looking in….but I find it hard to believe that EOS execs haven’t come to the realization that it was just a bad idea.

All of us (entrepreneurs) have them. We come up with scenario after scenario and all of them seem like gems until we actually begin to put them into action. Then we close one after another, until we find the one that actually works. There’s nothing wrong with this process, UNLESS, you learn nothing from those failures. So what did we learn from EOS?

1) Niche does not always equal rich?

Creating a niche is theoretically a great way to expand your business. However, (as stated earlier) theoretical ideas do not always convert into realistic success. Picking a niche can be difficult, so just be sure that it is the correct thing to do for your business at that time. For more on the correct way to “niche” see Niche and Get Rich.

2) Timing Is Everything

I think that EOS’ business model would have been great had it been implemented 10 years earlier. However, the window of opportunity to profit from an idea is usually small and this case proved to be no different.

3) Can you think of any?

I look forward to hearing what interesting things you learned from EOS and how we can apply it to our own ventures. Please leave a comment.

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entrepreneurship, EOS Airlines, bankruptcy, gas prices