The Avelo plane.
Source: Hazel
With the rapidly growing demand for air travel as the US reopens from the Covid-19 pandemic, Andrew Levy believes it is the perfect time to launch a new airline.
Levy is the CEO of Avelo, a low-cost carrier based in Burbank, California, that will begin flying in late April to eleven airports and markets in the western United States – where there is little, if any, direct competition.
“We see light at the end of the tunnel and it will come soon,” Levy told CNBC as he sat in Avelo’s office. “We’re in a great place to start here and especially to be up and running for the summer season, which should be good.”
Levy originally 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 was ready when the air travel showed signs of recovery. According to the International Air Travel Association, the pandemic has cost the airline more than $ 380 billion.
Avelo’s strategy is to offer reduced fares to travelers in markets or near airports that have a reduced air service. This includes places like Grand Junction, Colo .; Eugene, Ore. And Ogden, Utah. These are markets or regions where travelers usually have to direct their travel through large hubs, such as Denver or Salt Lake City.
Levy sees massive potential exploiting the negatives associated with larger airports.
“It takes a long time to get there, you have long queues and there’s a lot of headaches and headaches,” he said. “Honestly, small airports are simply a better experience and I think all customers would agree with that.”
Levy knows that the small airport strategy can pay off for a starting airline, if executed correctly. In the late 1990s, he helped Allegiant Airlines launch the service from small airports such as Rockford, Illinois, which is about an hour northwest of Chicago’s O’Hare Airport. After a few years helping Allegiant develop its operations, Levy switched to United Airlines. There, he grew up among the ranks and eventually became the CFO before leaving in 2018.
Susan Donofrio, aviation consultant at FTI Consulting, believes that Avelo can replicate Allegiant’s success.
“While old airlines are focusing on increasing leisure time outside their centers, this has left a lot of opportunities on the airline for airlines like Avelo to grow unquestionably in disadvantaged markets,” Donofrio said.
For now, Levy’s focus is on a clean, hiccup-free launch that often hinders start-ups. Avelo is taking off with a fleet of three Boeing 737s and plans to add three more this summer. Levy noticed that he had bought
And according to a low-cost CEO, Levy is happy to have bought two of the planes at a discount from others in the industry who want to unload planes to save millions of dollars.
“The two I bought were probably a third lower (in price) than they would have been before Covid, so that was a $ 15 million discount between the two planes.” said Levy.