The nation’s largest airlines lost a combined $46 billion last year as the COVID-19 pandemic brought the travel industry to its knees.
During the depths of the slump, airlines laid off or furloughed as many as 82,000 workers, thousands of whom haven’t been rehired, and filled remote desert airports with several hundred parked planes, many of which are still languishing.
Is now really the best time to launch a new airline?
Andrew Levy, a former United Airlines executive, thinks so. He is set to begin operating low-fare Avelo Airlines out of Hollywood Burbank Airport on April 28, starting with three planes and 11 routes.
“This is an incredible time,” he said. “The timing is going to be quite good.”
After more than a year of lockdowns and travel restrictions, pandemic guidelines are easing in many places. The Centers for Disease Control and Prevention still urges Americans not to travel, to reduce the spread of COVID-19, but the guidance makes an exception for those who are fully vaccinated.
Levy said he believes Americans are ready to travel again. And he hopes they’ll choose his new carrier.
He also said the price of buying or leasing aircraft has dropped because other carriers have shrunk operations during the pandemic, creating a surplus of planes. Avelo intends to expand, and qualified pilots, flight attendants and mechanics should also be easier to find among the thousands who remain out of work, Levy said.
Aviation experts agree that Avelo can take advantage of the industry’s economic woes. But they say competing low-cost airlines are sure to respond by launching discounted fares on similar routes in an effort to avoid losing customers to Avelo.
“Airlines are not going to just send Avelo a bouquet and bottle of Champagne and say, ‘Welcome to the club,’” said Henry Harteveldt, an aviation consultant with Atmosphere Research Group.
Levy acknowledges challenges ahead. But he hopes Avelo’s fares, choice of destinations and “kinder” fees will propel it to success.
“It’s going to be hard to do,” he said. “It’s a tough industry.”
Levy is not the only executive who thinks this is the right time to launch a new airline. Entrepreneur David Neeleman, who founded Canada’s WestJet before launching JetBlue Airways and the Brazilian airline Azul, has announced plans to start a Utah-based carrier called Breeze Airways. A launch date is expected in the next month or so.
Levy brings more than 20 years of aviation experience to the new carrier. He was previously co-founder and president of Las Vegas-based Allegiant Air and chief financial officer of United Airlines. At Avelo he is chairman and chief executive. The airline will be launched with $125 million in private capital, with Levy as its largest investor.
Avelo is not built from scratch. Levy is converting a charter airline called Xtra Airlines that had been approved for a commercial airline certification by the Federal Aviation Administration and was previously based in Boise, Idaho.
The routes will connect Burbank with small and midsize cities in California, Utah, Oregon, Washington, Montana, Colorado and Arizona. The headquarters will be in Houston. Introductory prices start at $19, but, like other low-cost carriers, Avelo will charge extra for anything beyond a bare-bones ticket.
Passengers must pay at least $4 to select their seat, $10 to board early and $35 for a carry-on bag, but only $10 for the first checked bag. Most airlines charge $30 or more for checked bags. Avelo’s tickets will be nonrefundable, but there will be no change fees, which are typically up to $200 at other carriers.
The airline will start with three Boeing 737-800 planes, each of which can carry 189 passengers in an all-coach cabin. Most of the seats will have 29 inches of pitch, the measurement from one seat to the seat ahead. That is about average for low-cost carriers. But Levy said several rows will have seats with 35 inches of pitch, which will go for a higher price.
Because of the low fares Avelo will charge and the small markets it will serve, the airline is not likely to be profitable at the start, industry experts say. But if the carrier gains traction with air travelers, profit margins should eventually follow.
“The timing is right,” Harteveldt said. “They are going to be able to tap into the spring and summer travel season.”
Matt Cleary, an aviation consultant at ACLA Studio, said the launch of another low-cost carrier serving the Southern California market is good news for travelers who have had to stay home during the pandemic.
“Competition is good for the market,” he said. “It gives more people more opportunities and it drives down prices.”