With the demand for air travel growing rapidly as the US reopens from the Covid-19 pandemic, Andrew Levy believes this is the perfect time to start a new airline.
Levy is the CEO of Avelo, a low-cost airline based in Burbank, California that will fly to eleven airports and markets in the western United States in late April – where there is little 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 start and especially to be up and running for the summer high season, which should be good.”
Levy originally wanted to start Avelo a year ago, but the pandemic quickly put an end to those plans. So Levy and his team have spent the last year making sure Avelo is ready when air traffic shows signs of returning. The pandemic has cost the aviation industry more than $ 380 billion, according to the International Air Travel Association.
Avelo’s strategy is to offer cheap fares to travelers in markets or near airports with little flight service. These include places like Grand Junction, Colorado; Eugene, Ore. And Ogden, Utah. These are markets or regions where travelers typically have to take trips through major cities like Denver or Salt Lake City.
Levy sees enormous potential in exploiting the disadvantages of larger airports.
“It takes a long time to get there, there are long lines and there are a lot of headaches and problems,” he said. “Small airports are honestly just a better experience and I think all customers would agree.”
Levy knows that a small airport strategy can pay off for a start-up airline if carried out properly. In the late 1990s, he helped Allegiant Airlines launch flights from small airports like Rockford, Illinois, which are about an hour northwest of Chicago’s O’Hare Airport. After helping Allegiant expand its business for several years, Levy moved to United Airlines. There he rose through the ranks and eventually became CFO before leaving in 2018.
Susan Donofrio, aerospace consultant FTI Consulting, believes Avelo can replicate Allegiant’s success.
“While the legacy airlines focus on recreational growth outside of their hubs, airlines like Avelo have left plenty of opportunities on the table to grow unchallenged in underserved markets,” said Donofrio.
Right now, Levy is focused on getting a clean start without the hiccups that often hinder startups. Avelo launches with a fleet of three Boeing 737s and plans to add three more this summer. Levy noticed that he had bought
Levy is delighted with the fact that he bought two of the planes at a discount from others in the industry to unload planes and save millions of dollars.
“The two we bought were likely a third lower (in price) than they would have been before Covid, leaving a $ 15 million discount between the two planes,” Levy said.