With demand for air travel growing rapidly as the United States reopens from the Covid-19 pandemic, Andrew Levy believes this is the ideal time to launch a new airline.
Levy is the CEO of Avelo, a low-cost airline based in Burbank, California, that will begin flying in late April to eleven airports and markets in the western US – where there is little, if any, direct competition.
“We see a light at the end of the tunnel and it’s coming soon,” Levy told CNBC as he sat in the Avelo offices. “We stand in a great place to start here especially getting ready and running for the summer peak season, which should be fine.”
Levy originally wanted to launch the Avelo a year ago, but the pandemic quickly put an end to those plans. So Levi and his team have spent the past year making sure the Avelo will be ready when air travel shows signs of returning. According to the International Air Travel Association, the pandemic has cost the aviation industry more than $ 380 billion.
Avelo’s strategy is to offer low prices to travelers in markets or near airports that have little to no flight services. Includes places like Grand Junction, Colorado. Eugene, RAW, and Ogden, Utah. These are markets or areas where travelers usually have to direct flights through major city hubs such as Denver or Salt Lake City.
Levy sees huge potential to exploit the negatives that come with big airports.
“It takes a long time to get there, you have long lines and there is a lot of hassle and headache,” he said. “Smaller airports, frankly, are just a better experience and I think all customers agree with that.”
Levy knows that a small airport strategy can pay off for a budding airline, if done correctly. In the late 1990s, Allegiant Airlines helped launch service from smaller airports such as Rockford, Ill. , Which is about an hour northwest of Chicago O’Hare Airport. After several years of helping Allegiant grow its operations, Levy moved to United Airlines. There, he rose through the ranks and eventually became CFO before leaving in 2018.
Susan Donofrio, FTI Consulting, aviation consultant, thinks Avelo can replicate Allegiant’s success.
“While the legacy airlines are focusing on entertainment growth outside of their hubs, this has left a lot of opportunities 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 without the hiccups that often hold back startups. Avelo takes off with a fleet of three Boeing 737 aircraft and plans to add three more this summer. Levi noticed that he had bought
By hooking up a CEO focused on low costs, Levy is enjoying the fact that he bought two planes at a discount from others in the industry looking to offload planes to save millions of dollars.
“The two we bought were probably one-third less (in price) than they were ahead of Covid, so this is, between the two planes, in the $ 15 million discount range,” Levy said.