Avelo plane.
Source: Avelo
As the demand for air travel increases rapidly as the US reopens from the Covid-19 pandemic, Andrew Levy thinks this is the ideal time to launch a new airline.
Levy is the CEO of Avelo, a low-cost service in Burbank, California, which will start flying to eleven airports and markets in the Western USA at the end of April – where there is little or no direct competition.
“We see light at the end of the tunnel and it’s coming soon,” Levy told CNBC as he sat in Avelo’s offices. “We are in a great place to get going here, and especially to get going for the summer peak season, which should be good.”
Levy originally wanted to launch Avelo a year ago, but the pandemic quickly put an end to these plans. So over the past year, Levy and his team have made sure Avelo would be ready when air travel shows signs of return. According to the International Air Travel Association, the pandemic cost the airline industry more than $ 380 billion.
Avelo’s strategy is to offer cheap fares to travelers in markets or near airports with few airlines. These include places like Grand Junction, Colo .; Eugene, Ore. And Ogden, Utah. These are markets or regions where travelers usually have to drive through major city centers like Denver or Salt Lake City.
Levy sees great potential in leveraging the negative aspects of larger airports.
“It takes a long time to get there, you have long queues and there is a lot of headaches and red tape,” he said. “Small airports, honestly, are just a better experience and I think all customers agree with that.”
Levy knows that the small airport strategy can bear fruit for a new airline if it is executed well. In the late 1990s, he helped Allegiant Airlines start service from small airports such as Rockford, Illinois, which is about an hour northwest of Chicago’s O’Hare Airport. After a number of years helping Allegiant grow its operations, Levy switched to United Airlines. There, he rose through the ranks and eventually became chief financial officer before leaving in 2018.
Susan Donofrio, aviation consultant FTI Consulting, thinks Avelo can repeat the success of Allegiant.
“While the obsolete airlines are focused on growing leisure at their core, it has left many opportunities on the table for airlines like Avelo to grow unquestionably in markets that are not under service,” Donofrio said.
For now, Levy’s focus is on a clean launch without hiccups that often hinders start-ups. Avelo is leaving with a fleet of three Boeing 737s and plans to add three more this summer. Levy noted that he bought
And according to a low-cost CEO, Levy enjoys the fact that he bought two planes at a discount from others in the industry to charge planes to save millions of dollars.
“The two we bought were probably about a third lower (in price) than they would have been before Covid, which represented a $ 15 million discount between the two aircraft,” Levy said.