Breaking out a new niche in air travel can be challenging and high-risk, but the new luxury leisure carrier Beond intends to succeed by relying on many business principles that have helped low-cost airlines grow. Is the luxury leisure market strong enough to sustain a micro-niche airline operation? Beond’s management believes so.
The Low-Cost Model Gets A Luxury Upgrade
Low-cost airline operations are different from low fares. Any airline can offer low fares and lose money. A failure to understand this simple concept or to deploy it effectively has caused several innovative airline concepts to fail. The success of low-cost leaders like Southwest Airlines
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In line with the low-cost airline model, Beond is building a streamlined fleet, relying on Airbus A320-family aircraft, which offer the range the airline needs at a significantly lower cost than the twin-aisle aircraft other carriers fly to the same destinations.
Again, following the low-cost model, Beond will offer point-to-point service. While its headquarters are in Dubai, the airline’s central hub and Air Operator Certificate is in Malé, the Maldives. The airline focuses on getting passengers to this attractive luxury vacation destination.
Like successful low-cost airlines, Beond offers a single-class cabin onboard. But it’s in the class that the parallel between low-cost carriers and Beond begins to diverge. The airline provides custom-made premium lay-flat bed seating, equivalent to business class on many traditional carriers, with four seats per row in a 2-2 configuration.
For now, Beond has a single A319 with 44 seats onboard, but it will receive an additional Airbus A321 aircraft in March of next year with 68 180-degree lay-flat seats. To support expansion, it plans to acquire other Airbus 321LR/XLR aircraft, with deliveries beginning next year. Ultimately, Beond’s vision is to operate a fleet of 32 A320-family aircraft to 52 non-stop destinations in 26 Countries on four continents, serving approximately 1.4 million passengers.
A Razor-Sharp Focus On A Single Niche
Beond’s ambition does not extend to compete directly with established airlines or private jet charter services. In fact, the airline believes it has identified an unserved demand.
“We are not so much of stealing or taking market share away, but rather growing the market,” Taskila says. Beond has identified a leisure travel segment demanding luxury flights to the Maldives at an affordable price. At around $1,600 per person each way, the airfare on Beond to Malé competes well with premium seating on flagship carriers and is only a fraction of private jet charter costs.
Taskila is confident of sustained demand for this micro-niche service. He sees pent-up demand lingering for bucket-list destinations. “If you look at the traditional scheduled carriers, all premium cabins are full of leisure travelers,” he says. “So, in that sense, we are quite confident about the market segment and the size. We can see that demand, and we see the bookings. We are quite comfortable with the strategy we have chosen. Obviously, we do have very ambitious growth plans, and we have to see whether that growth is sustainable in the long term.”
A Luxury Cabin For Couples, Family And Friends
Beond’s target customers are affluent individuals, couples, families, and friends who want to enjoy a luxury vacation in a bucket-list destination. The airline designed the cabin expressly to meet the needs of this segment. “The seat backs are lower than in traditional cabins,” Taskila explains. “That way, you create this airiness and improve communication between families.” He highlights this is an essential differentiation with flagship carriers, whose premium cabin products emphasize privacy, appealing mainly to the business traveler.
While focusing on luxury in design, Beond is also focused on sustainability. The airline offers wireless inflight entertainment transmitted to iPads and wireless headsets the airline supplies. Beond has no seat-back embedded screens. This decision is critical to sustainability, cost-savings, and aircraft range. Embedded in-flight entertainment systems add significant weight to seats, burning excess fuel. “It is roughly 20 plus kilos per seat, which we can save,” Taskila says, “but we’re also giving people flexibility and serenity.”
Digital Detoxing Onboard
Taskila also confirmed there is no Wi-Fi onboard the current aircraft and none on the following aircraft scheduled for delivery. While he doesn’t entirely discount the notion that the airline might one day introduce Wi-Fi onboard, Beond stays true to the low-cost business model by avoiding the weight and high costs of aircraft radome antennas and satellite services. Here again, he says, it addresses the needs of its luxury leisure travelers.
“That was a decision which we made together with the trade and the customer focus groups,” he says. “People want to have a digital detox,” he says. No checking work email while on holiday when flying Beond. “That ruins the moment.” While Taskila acknowledges that some luxury leisure travelers will want to connect to social media in-flight, the airline has found it is not a predominant priority for its customers. However, the airline will be listening to customer feedback. Any in-flight connectivity offered would also need to support a long-range narrowbody operation.
Inspired By The Four Seasons Private Jet
The Beond luxury leisure model appeals to a similar traveler profile as the Four Seasons Private Jet service, which serves luxury vacation packages offered by the Four Seasons hotels brand. Beond’s seats are custom-made for Beond by the same aircraft seating manufacturer: Optimares. But the Beond business model differs significantly. The Four Seasons service is akin to tourism-airlines, like TUI, bringing passengers to the brand’s international vacation resorts. Beond has no ambitions to become a package holiday leisure carrier and will rely on partnerships with luxury travel agents.
Taskila says, “Roughly 50% of our bookings come from direct channels, and 50% come from the trade.” He expects the proportion of travel agent bookings will increase and stabilize to around 65% as operations grow. “We are good at providing the flight experience, making it as seamless and hassle-free as possible, but we don’t have the necessary expertise to create these experiences at the destination.”
He doesn’t discount that, like other low-cost carriers, Beond may introduce future ancillary travel packages with resorts. But, for now, the airline focuses on outsourcing activities that are not core to its operations. That includes maintenance, ground support, catering, and ancillary travel services. “We work with the most important travel agents in the premium leisure segment,” Taskila adds.
The BermudAir Single Class Becomes Double
Perhaps the closest parallel in the market to Beond’s operations is the new service launched by BermudAir, which exclusively serves flights to Bermuda. The airline announced an all-aisle business seating single cabin configuration earlier this year. However, BermudAir has recently announced a permanent change to a mixed business and economy-class cabin to increase the seating capacity on its Embraer jets and meet market demand.
Taskila does not foresee running into the same single-class regrets. “We are quite strong on a single class,” he says. “There is no indication that we would have to introduce economy class. I don’t think we would ever do that. There has been some discussion that some people would like to have ‘all the premium,’ meaning that we would have to have business and first class, as traditional carriers would refer to it. But introducing cabin segments will take away a little bit of that efficiency. For now, I think our strategy will be successful if we focus purely on that one segment—the premium leisure segment. We will try to improve that concept and make it more enjoyable instead of making bold claims.”
The BermudAir single-class cabin featured one seat on each side of the aisle, while the Beond cabin layout allows couples to sit together. Couples seating is essential to the airline’s target customers. Taskila tells us the average booking is for 3.8 passengers, reflecting couples, families with older children, and friends traveling together.
Getting Beond the Launch
Beond launched a trial flight from Dubai to Malé with its first aircraft in October. It will launch service from Riyadh, Munich, and Zurich in November. The airline has already begun selling tickets for its planned launch from Milan Malpensa and Dubai International Airports scheduled for March 2024. It will gradually expand to Delhi, Dubai, Hong Kong, Perth, and other destinations with high tourism demand for the Maldives.
Luxury Flights With A Low-Cost Spirit
The airline industry is vulnerable to economic and socio-political shifts that affect demand. With a cabin capacity of 68 passengers at $1,600 per passenger, there is little room for error to cover the costs of flights.
Still, Taskila says the airline’s calculated break-even load factor is “lower than you would expect. And it is lower than the industry average.” According to the International Air Transport Association, the industry average break-even load factor is 64.7%.
“We are catering to a very niche market,” Taskila says. “Though we are the price leader, it is still a high-yield market.” Taskila attributes the low break-even to Beond’s lean operations. Indeed, fewer passengers require fewer crew onboard, which further reduces operating costs per flight.
“We like to say that we do have a low-cost spirit when it comes to the efficiency of the organization and the operations,” he says. “We focus on one single segment of travelers, like low-cost leaders focus on the low fare passengers and on business passengers. Except, we focus on the other end which is premium luxury travelers. It will be very efficient. Our unit costs are quite competitive when it comes to by-passenger distribution. In that sense, we are in a very fortunate position.”
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