July 19, 2024

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Avelo launches first East Coast flights today; budget carrier’s founder tells TPG why they’ll succeed



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Startup budget carrier Avelo Airlines will launch its East Coast operations on Wednesday, marking a new phase in the airline’s planned expansion.

The low-cost carrier will operate a ceremonial first flight from its new base at Tweed New Haven Airport (HVN) in Connecticut to Orlando, before settling into a schedule of five weekly flights between the cities.

Avelo will launch service to three other cities in Florida — Fort Lauderdale (FLL), Fort Myers (RSW) and Tampa (TPA) — later this month, all using a fleet of Boeing 737-700 aircraft.

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Avelo launched in April with service primarily from Burbank, California (BUR), to cities across the West Coast and Rocky Mountain region.

Despite having bases and serving routes on both coasts, the airline doesn’t plan to connect the East Coast network to the West Coast one, founder and CEO Andrew Levy told TPG during an interview.

“They really are two standalone little airlines,” Levy said. “I mean, that’s how I think of them.”

“Obviously it’s one airline, but they’re really two standalone bases and never the two shall meet, or at least not now.”

Instead, Levy, who was previously the president at Allegiant Air and CFO at United, imagines both operations managing on their own.

Read more: Fanfare galore: What it was like flying on Avelo Airlines’ inaugural flight

“The West Coast needs to back itself up, and New Haven needs to back itself up.”

Part of the reason for the separation is pure distance; Avelo exists to fly short-haul, Levy said, and connecting the two networks would involve flights that are too long to fit within the business model.

“Florida’s not even really my definition of ‘short-haul,’ but you can’t not fly to Florida,” Levy said. “We’re trying to stay short, turn the airplane often, get lots of cycles on the airplane, carry lots of people each and every day, have fast turnarounds — that’s a way to keep the costs down.”

That, and avoiding larger hubs in favor of smaller airports with lower costs, follows the playbook first written by Southwest.

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“The old traditional LCC model, right, that Southwest kind of popularized 50 years ago,” he said. “Turn the airplanes fast, put a lot of turns on them, fly short, and you get the best yields per flight.

Since the late 2000s, New Haven has had regular service on just one airline — American, which assumed partner US Airways’ service there to its hub in Philadelphia. But American pulled out of New Haven altogether at the end of September, part of broader pandemic-era changes to that carrier’s network.

American’s departure left the airport without any airline service during October, a monthlong drought that will come to an end with Avelo’s debut there Wednesday.

It’s that backdrop that Levy says presents the perfect canvas for Avelo to make hay on East Coast with its low-cost formula. He thinks there’s space — and demand — to support a rapid expansion.

“In 2022, I would expect that we’re going to carry maybe half a million customers out of [New Haven],” Levy said. “Maybe not quite that high, but it’ll be awfully close to that number. And then it goes from there.”

Levy believes that southern Connecticut is an underserved market, ripe for opportunity with leisure and personal travel-focused routes.

“You live in southern Connecticut, you really have some lousy options,” Levy said, citing long drive times to New York-area airports or Bradley International Airport in Hartford. “So we have the ability to go in there and offer not just a great fare, but incredible convenience.”

Budget carrier battle: America’s 2 newest airlines, Avelo and Breeze

The airline, like most budget carriers, relies on low fixed and capital expenses to keep profitable. For Avelo, that’s meant acquiring planes second-hand and maybe not doing too much to customize them. Some of the 737-700 planes acquired from Southwest still have the old owner’s interiors — and will for the time being.

“If you don’t know [to look for] Southwest, you wouldn’t walk on and say, ‘Oh wow, this is Southwest.’ I mean, there’s no Southwest signage or anything,” Levy said.

Eventually, Levy said, he expects to standardize the interior among all of Avelo’s aircraft, but that won’t happen for a while.

“When you’re early stage like we are, capital is really precious and investing in new seats or things of that nature is really difficult to get comfortable with,” he said. “So it wasn’t a priority for us. It still isn’t.”

“But our intention over time is absolutely to have a standard interior, a standard seat.”

The question is whether that matters at all to Avelo’s new passengers.

“I don’t think customers care as long as it’s cheap, it’s comfortable and we offer great convenience,” Levy said.

Reliability is also important, and Levy said that the airline would start service with slack built into the system to avoid meltdowns like those experienced by Southwest and American in recent weeks.

Service consistency is another key point. Avelo has already cut several routes from its West Coast network shortly after announcing them, in some cases before service even started. Levy said that has nothing to do with the airline’s capability, but rather with demand, which was partly impacted by the delta variant surge in the U.S.

“We had three markets that, unfortunately, when we announced, it seemed like the market just wasn’t ready for our service. It wasn’t the right time, there wasn’t enough interest, whatever it may be,” Levy said. “I think the routes we announced and didn’t serve are all routes that I expect we will probably try again at an appropriate time in the future.”

“At the end of the day, this is a business that needs to earn a return for it to grow and prosper, and to deliver value to all of our stakeholders,” he added. “A big part of that is making sure that you’re flying where you need to fly, when you need to fly, and how often.”

TPG will be on board the first flight from New Haven, so be sure to check back for additional coverage from the launch.

Featured photo by Joe Scarnici/Getty Images for Avelo Air.

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