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 CEO of Avelo, a low-cost airline that will fly to eleven markets in the western United States at the end of April – where there is little direct competition.
“We’re seeing light at the end of the tunnel and it’s coming soon,” Levy told CNBC as he sat in Avelo’s offices in Burbank, California. “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 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, Oregon; and Ogden, Utah. These are markets or regions where travelers typically need to travel through hubs 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.”
Avelo Airlines Founder, Chairman and CEO Andrew Levy speaks at Hollywood Burbank Airport in Burbank, California on April 7, 2021.
Joe Scarnici | Getty Images
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 eventually became CFO before leaving in 2018.
Susan Donofrio, aviation consultant at 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 off to 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 suits a low cost CEO and 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.