New US airline, Avelo, made splashy launch on Wednesday

It's official. There's a new airline in the U.S.

Avelo Airlines — one of two start-ups launching this year — commenced commercial service on Wednesday, with a round-trip flight from Burbank (BUR) to Santa Rosa (STS), California, departing around 10:30 a.m. local time.

There was plenty of fanfare at Wednesday's inaugural. Both the outbound and return flights sold out within minutes of tickets going on sale roughly three weeks ago. Fares started at just $19.

Members of the media, as well as aviation enthusiasts from across the country, are descended upon Burbank for the festivities, which included a celebration upon landing in Santa Rosa and a wine tasting luncheon for invited guests.

Update from the scene: Trip report: What it was like flying on Avelo Airlines’ inaugural flight

The inaugural flight was operated by one of the carrier's three Boeing 737-800s, laid out in a tight 189-seat configuration with 129 standard slimline 29-inch-pitch seats and an extra-legroom section with 60 seats. The same plane flying for Southwest is outfitted in an all-coach configuration with 175 seats.

Only a handful of pictures of Avelo's interiors had been published prior to the inaugural, but now the public has gotten a chance to see what flying on the airline is like.

Despite the pandemic, this actually isn't a bad time for Avelo to launch, according to Henry Harteveldt, a travel industry analyst and president of Atmosphere Research.

Pick a seat: First look inside and where to sit on Avelo’s Boeing 737-800

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"This is actually a good time for them to get started because of the upcoming summer vacation period. So, this gives Avelo a few weeks to get the operational kinks sorted out... before the peak summer vacation," he told TPG.

Plus, with a recovery in leisure travel well underway, Harteveldt thinks Avelo's timing is actually has an upside "Various airlines that have reported their financials have confirmed, there is very strong demand out there from the public for air travel right now," he said.

While Santa Rosa is Avelo's first destination, it won't be the last. The carrier plans to ramp up service in the coming weeks from its new Southern California base in Burbank to 11 cities, with daily service to Santa Rosa and Mesa/Phoenix, Arizona (AZA), as well as multiple weekly frequencies to other markets like Arcata/Eureka, California (ACV) and Pasco, Washington (PSC).

Being based on the West Coast wasn't the original plan for Avelo. Andrew Levy, the airline's founder, initially had his eyes set on small airports on the other coast, as he recently told TPG.

“We talked to a ton of different airports,” Levy said. “The example we gave was Wilmington, Delaware — a nice small airport, a massive market of 3 million people.”

But the pandemic upended those initial plans. “We wouldn’t have had Burbank but for the pandemic,” Levy said. “I didn’t think we would start in Burbank, but there were so many cutbacks.”

Those cutbacks came fast and furious there during the pandemic. Many of the incumbents, including Delta and JetBlue, pulled back from Burbank, a smaller community airport located just 30 minutes from LAX. Levy hopes to attract local travelers who seek the convenience of flying from a more manageable airport.

Plus, the carrier's rock-bottom fares should help incentivize travelers who might be on the fence. Tickets start at just $19 one-way, with ancillary services — such as checked bags, full-sized carry-ons, priority boarding, pre-assigned seats and in-cabin pets — ranging from an additional $10 to $95.

Either way, Avelo could quickly pivot on its initial route map if necessary. "One of the greatest things about the airline business is airplanes are a fungible asset. If flying from point A to point B doesn't prove to be successful, you fly from point A to point C or from point B to point E, and so on," Harteveldt said.

Avelo's competitors have already started responding to the new entrant.

Alaska Airlines recently beefed-up its service to Santa Rosa (STS), including a new daily nonstop from — you guessed it — Burbank (BUR).

Reading between the lines of Alaska’s press release, the carrier isn’t letting Avelo just walk into one of its markets without putting up a fight.

“Alaska was the first commercial airline to resume service to Charles M. Schulz-Sonoma County Airport in 2007. The airline has long been the airport’s largest carrier. In 2019, three out of four passengers to Santa Rosa/Sonoma County flew on Alaska,” it read.

American Airlines also has taken a stab at Avelo.

Of Avelo’s 11 destinations, just two feature daily service from its Burbank base: Santa Rosa and Phoenix-Mesa (AZA). Cirium schedules show that American Airlines recently added flights between BUR and its hub at Phoenix/Sky Harbor (PHX) hub — perhaps a move aimed at Avelo’s new service.

Beginning in September, AA will fly the route five-times daily (up from four). It also will upgauge all flights from being operated by a regional CRJ-900 to a mainline Airbus A319.

As the pace of vaccinations increases nationwide, the timing of Avelo’s launch might be fortuitous for the carrier, since it could capitalize on pent-up demand from pandemic-weary travelers who are increasingly ready to fly. But, Harteveldt also pointed to a drawback: the competition "will be far more defensive" and "fight much more" for leisure demand than they would have in the past.

Before the pandemic, airlines were focused on carrying the lucrative business traveler. With a recovery in corporate demand still in its infancy, the incumbents have spare planes to crowd out the market for Avelo.

Turns out, Avelo's first flight made it the first significant U.S. start-up airline to launch flight in nearly 15 years, but it won't hold that title for long. That's because serial airline entrepreneur David Neeleman – best known in the U.S. for founding JetBlue – is getting into the act with his latest new airline, Breeze Airways, later this spring.

Breeze's playbook is expected to be strikingly similar to Avelo's. It'll focus on a low-cost operation with point-to-point flights in underserved markets, eschewing the hub-and-spoke model of most major airlines.

The full launch and network details are expected in the coming weeks, pending final Federal Aviation Administration certification.

For now, however, all the attention is on Avelo.

Only time will tell whether it'll be successful. But one thing's for certain according to Harteveldt: "it's both the best of times and the worst of times to start a new airline."