There are risks to starting an airline in any economic climate. But during a pandemic? The entrepreneurs behind the budget airlines Avelo and Breeze Airways see an opportunity.
A year after the pandemic’s arrival, U.S. passenger air travel remains at roughly half its pre-Covid levels and may not fully bounce back anytime soon. Is this really the time to launch a new domestic airline? How about two new airlines? A couple of industry veterans-turned-entrepreneurs think so. Look for flights from the low-fare carriers Avelo Airlines and Breeze Airways soon.
Andrew Levy, the former president of the budget carrier Allegiant Airlines, purchased the charter airline XTRA Airways in 2018. He renamed the company Avelo and planned to turn it into a low-fare, customer-focused airline with scheduled service from smaller airports that serve large metro areas. The official start of the Houston-based airline will happen in early April, and in the meantime, the company is keeping flight destinations under wraps as they get finalized.
Mr. Levy had hoped for the company’s first flights to take off in November 2020 but the pandemic forced the airline to slow things down. Now though, Mr. Levy feels there are a number of factors coming together to make this spring the right time to launch.
The major airlines have reduced their numbers of flights, so there is airplane gate and office capacity at airports that had previously been constrained, he said. It’s also a good time to hire flight crews and other experienced airline staff, he added, because many of the big airlines have laid off employees or offered early retirement packages.
In addition, “planes have never been cheaper” said Mr. Levy. The company will fly all Boeing 737-800s, each with a passenger capacity of 189. Keeping to one airplane model helps keep costs down because there are more uniform maintenance procedures, replacement components and crew training.
Three external factors will be critical to the company’s success, Mr. Levy said. They include pent-up demand for travel; improvement in the economy; and the continuation of positive news about the pandemic and vaccine availability, which will make people feel more comfortable about the prospect of flying.
While the company would not confirm its planned routes, a recent public commission meeting and job postings on the company website point to Hollywood Burbank Airport in Burbank, Calif., as one base of operations.
Mr. Levy did confirm that the first routes would be between airport pairs that currently have no direct service between them. “We don’t want to go in and do what other people are doing,” he said.
Airfares are low across the board right now, so Mr. Levy plans to compete by marketing the convenience he says his airline will offer. He believes flights from a smaller airport nearer to the flier’s home will appeal.
The other new market entrant, Breeze Airways, based in Salt Lake City, also aims to be a low-cost carrier focusing on routes that don’t have current nonstop service, including some airports that the larger airlines have pulled back from. The company was founded in June 2018 by David Neeleman, an aviation veteran who had previously founded other airlines, including the low-fare offerings WestJet and Morris Air, which was purchased by Southwest. Breeze will start 21 years after his launch of JetBlue.
The strategy had always been to serve smaller destinations, said Mr. Neeleman, but the specific airports the company will start flying to first, have been influenced by the pandemic. A new airline can “cherry-pick what routes to begin with, which offer the most opportunity, and then hyper-focus on those markets to make sure they do really well,” he said.
The airline hopes to receive final certification from the Department of Transportation in the next month or so. At that time, the company will announce routes, start dates and when customers can buy tickets.
In the meantime, the airline, which will be flying Airbus A220s and two Embraer models, has taken delivery of its first few aircraft. The planes are metallic blue, which sets them apart from others in the sky, said the company spokesman, Gareth Edmonson-Jones. “When these fly overhead there will be no question which airline it is.”
While low-fare airlines can have a decidedly cramped or “budget” feel — something that many pandemic-weary passengers are likely to be wary of — the new airlines are working to avoid that. While Avelo’s aircraft will seat the standard number of passengers, the company is working to create a “people-focused culture” and an emphasis on customer service.
Breeze will offer some seats with additional legroom, “but ultimately the feeling of being on a budget carrier comes not just from a lack of legroom but from an overall lousy flight experience,” Mr. Edmonson-Jones said. “Breeze is focused on providing a great travel experience for all customers.”
Breeze has said it will offer flexible booking, allow for one free personal item on board, and believes seating limitations will no longer be necessary when the airline launches. Avelo has not announced details such as reservation cancellation policies, carry-on luggage fees or pandemic-related seating restrictions.
Analysts weigh in
There are other factors working in the new airlines’ favors. The longer-term trend of some people relocating to work remotely from smaller cities means there will be a new set of passengers to serve, said Sherry Stein, head of technology strategy for the airline industry association Societe Internationale de Telecommunicatios Aeronautique. “This shift is creating a new opportunity for new domestic players to enter the market at smaller regional airports, particularly as the big carriers retreat to their hubs,” she said.
Consumers are also open to trying a new low-cost airline, according to Jonathan Kletzel, who follows the industry for PwC, a consulting firm. His group’s analysis found that for roughly the next three to six months, passengers are prioritizing cleanliness, safety and price over airline loyalty programs.
The pent-up demand for travel worldwide is evident. The low-cost airline EasyJet, based in London, saw a surge in bookings when the British prime minister, Boris Johnson, announced a plan on Feb. 22 for easing travel restrictions. Dublin-based Ryanair also reported a large number of new bookings following the news.
There are, of course, risks to starting an airline in any economic climate. The companies require immense capital investment, stringent adherence to a long list of regulations, complex contracts and facilities management, and the development and implementation of spotless safety procedures. The competition is large, entrenched and powerful.
Still, by serving specific locations and controlling costs, and with an eye toward the accelerating vaccine rollout, Avelo and Breeze hope to make it work.
S: NY Times