In the tradition of “buy low—sell high,” some ambitious entrepreneurs think that now is the perfect time to start a new airline. According to a Wall Street Journal article, more than 90 new carriers will launch before year end. Startups are cropping up in North and South America, Africa and Asia, even as the COVID-19 pandemic still hobbles opportunities for air travel.
Funding is available, according to aircraft leasing firm Avolon Holdings, and plans are in place to darken the skies with Boeings and Airbuses.
Business plans include picking the bones of airlines gone West during the pandemic, restarting business plans that have been languishing in fiscal purgatory, counting on bargain-basement prices for aircraft or leasing options, and swooping in to snap up once-coveted landing slots languishing at desirable airports. There is also the opportunity to be first out of the gate to sign on cash-strapped, furloughed pilots and flight attendants.
One example is Avelo Airlines, which launched last month at Hollywood Burbank Airport. The budget carrier will serve 11 markets across the Western U.S. with fares starting at $19. Founder and CEO Andrew Levy thinks that, despite COVID-19 restrictions, the time is right to jump in. “We stand in a great place to get started here, and especially being up and running for the summer peak season, which should be good.”
Though the WSJ writes that starting an airline “has proved difficult in the best of circumstances,” that isn’t always exactly accurate. Industry experts have complained that “starting” an airline has been easy—too easy. The real challenge is maintaining the momentum after the initial financing dries up and the loss-leader low fares and perks sap revenue. And in the meantime, already-established carriers are forced to compete with those startups operating at unsustainable margins.
$19 fares! When will bankers and airline execs ever learn? Sound like another Skybus clone, just a different location.
Most of these ‘air carriers’ have a load of cargo under the passengers. The low fares make up for the extra space.
I’m reminded of that old saying “how do you make a small fortune in the airline industry…..start with a large fortune”.
And someone else’s money!
There might be cheap airliners available in the US, but not an abundance of 1,500 hour pilots to fly them – virtually all regionals shutdown before corona.
Avelo will be branching out to the east coast. They’ll be bringing airline service to Tweed/New Haven Airport (HVN, Connecticut). The local authority plans on spending $100 million for a new terminal and longer runway, with Avelo spending $60 million at HVN (I don’t know as part of, or in addition to, the above project)
More details here:
http://www.courant.com/business/hc-biz-tweed-new-haven-airport-expansion-20210506-cbzsvp7vm5ehdp342hn7cjx2ee-story.html