With air travel demand growing rapidly as the US reopens from the Covid-19 pandemic, Andrew Levy thinks now is the perfect time to launch a new airline.
Levy is the CEO of Avelo, a low-cost airline based in Burbank, California, which will fly to eleven airports and markets in the western US in late 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 office. “We’re in a great place to get started here and especially to be in the high season in the summer, 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 over the past year made sure that Avelo would be ready if the air travel showed signs of a return. According to the 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 with few airline services. That includes places like Grand Junction, Colo. Eugene, Ore. And Ogden, Utah. These are markets or regions where travelers typically need to take trips through major city centers such as Denver or Salt Lake City.
Levy sees huge potential to exploit the negatives of larger airports.
“It takes a long time to get there, you have long lines and there are a lot of headaches and hassle,” he said. “Small airports are, frankly, just a better experience and I think all customers would agree.”
Levy knows that the small airport strategy can pay off for an airline startup, if done properly. In the late 1990s, he helped Allegiant Airlines launch flights from small airports such as Rockford, Illinois, about an hour northwest of Chicago’s O’Hare Airport. After several years of helping Allegiant expand its business, Levy switched to United Airlines. There, he climbed through the ranks, eventually becoming CFO before leaving in 2018.
Susan Donofrio, aviation consultant FTI Consulting, thinks Avelo can replicate Allegiant’s success.
“While the traditional airlines focus on growing leisure activities from their hubs, this has opened up many opportunities for airlines such as Avelo to grow unquestionably in disadvantaged markets,” said Donofrio.
For now, Levy’s focus is on a clean launch without hitches that often hinder start-ups. Avelo is departing with a fleet of three Boeing 737s and plans to add three more this summer. Levy noted that he was buying something
And thanks to a CEO who focuses on low costs, Levy enjoys buying two of the planes at a discount from others in the industry looking to unload planes to save millions of dollars.
“The two we bought were probably about a third lower (in price) than they would have been for Covid, so that represented a $ 15 million discount between the two planes,” Levy said.