With demand for air travel growing quickly as the U.S. reopens from the Covid-19 pandemic, Andrew Levy thinks it’s the perfect time to launch a new airline.
Levy is CEO of Avelo, a low-cost carrier that will start flying in late April to 11 markets in the Western U.S. — where there is little, if any, direct competition.
“We see light at the end of the tunnel, and it is coming soon,” Levy told CNBC as he sat in Avelo’s offices in in Burbank, California. “We stand in a great place to get started here and especially being up and running for the summer peak season, which should be good.”
Levy wanted to launch Avelo a year ago, but the pandemic quickly put an end to those plans. So Levy and his team spent the last year making sure Avelo would be ready when air travel showed signs of coming back. According to International Air Travel Association, the pandemic has cost the airline industry more than $380 billion.
Avelo’s strategy is to offer low-fares to travelers in markets or near airports that have little airline service. That includes places like Grand Junction, Colorado; Eugene, Oregon; and Ogden, Utah. These are markets or regions where travelers typically have to route trips through hubs like Denver or Salt Lake City.
Levy sees massive potential by exploiting the negatives that go with larger airports.
“It takes a long time to get there, you have long lines and there are a lot of headaches and hassles,” he said. “Small airports, quite honestly, are just simply a better experience and I think all customers would agree with that.”
Levy knows the small airport strategy can pay off for a start-up airline, if properly executed. In the late 1990s, he helped Allegiant Airlines launch service out of small airports like Rockford, Illinois, which is roughly an hour northwest of Chicago’s O’Hare Airport. After several years helping Allegiant grow its operations, Levy moved on to United Airlines. There, he ultimately became CFO before leaving in 2018.
Susan Donofrio, aviation consultant FTI Consulting, thinks Avelo can replicate Allegiant’s success.
“While the legacy airlines are focused on leisure growth out of their hubs, this has left a lot of opportunity on the table for airlines like Avelo to grow unchallenged in underserved markets,” Donofrio said.
For now, Levy’s focus is on a clean launch with no hiccups that often hinder start-up companies. Avelo takes off with a fleet of three Boeing 737s and plans to add three more this summer.
Fitting of a CEO focused on low costs, Levy is enjoying the fact that he bought two of the airplanes at a discount from others in the industry looking to unload aircraft to save millions of dollars.
“The two we purchased were probably about a third lower (in price) than they would have been ahead of Covid, so that represented, between the two planes, in the range of a $15 million discount,” said Levy.
Source: Business - cnbc.com
