Startup airline Avelo eyed the East, but rivals' cuts in the West were too good to pass up

Six months ago, Andrew Levy expected to start an East Coast airline focused on an underserved secondary airport.

“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.”

On Thursday, Levy’s low-cost, low-fare startup, Avelo Airlines, announced plans to begin flying April 28 from its base in Burbank, California, to 11 cities in the West.

Levy is still focused on a secondary airport, but Hollywood Burbank Airport (BUR) emerged as the favorite after losing much of its service when carriers including Delta and JetBlue cut back during the pandemic. JetBlue, for instance, has cut both Burbank and Long Beach service, saying it wants to focus on LAX. Passenger totals fell to about 2 million in 2020 from 6 million in 2019.

“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.”

BUR is about 30 miles from LAX. “More people (are) closer to Burbank than to LAX,” Levy said. “It’s a nicer experience, but it’s not for everybody. If you live in Santa Monica, LAX is down the street. But L.A. is massive.” Burbank is closer “if you live in the middle of L.A. or in the San Fernando Valley,” he said.

“Most airlines serve the main airport in a big metro area,” he said. “That’s part of why we’re doing something different. I love small secondary airports.”

Launch details: New budget airline Avelo announces 12 cities, will begin flying April 28

Avelo’s 11 destinations will initially include just two with daily service — Phoenix-Mesa (AZA) and Santa Rosa, California (STS)— and just one — Ogden, Utah (OGD) — with six weekly flights. Four weekly departures will serve Arcata-Eureka, California (ACV); Bozeman, Montana (BZN); Eugene, Oregon (EUG); Medford, Oregon (MFR); and Grand Junction, Colorado (GJT). Three weekly flights will serve Bend, Oregon (RDM); Pasco, Washington (PSC); and Redding, California (RDD).

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Avelo will fly 189-seat Boeing 737-800 aircraft with 129 standard slimline 29-inch-pitch seats and an extra-legroom section with 60 seats. The most spacious premium seats will have up to 38-inch pitch and cost about $35 more than a regular seat.

Initially, the fleet will consist of three aircraft, 15 to 17 years old, but Levy intends to grow with slightly younger planes, adding three more in the third quarter. The industry’s pandemic downsizing has made airplanes widely available at low prices, the same phenomenon that contributed to the 1993 startup of ValuJet, where Levy got his first airline job in 1994.

TPG archives: Sneak peek: America’s newest airline paints its first jet

Like most low-cost carriers, Avelo will benefit from quick turns at lower-cost airports that are unlikely to require waits before gates become available. Levy plans daily aircraft utilization of about 10 hours, but will start at around nine hours daily to ensure “plenty of room to deal with irregular operations.”

As for staffing, Avelo hires reached 199 on Wednesday. Levy foresees starting operations with about 225 to 250 employees. Asked how long it will take employees to unionize, he said, “I hope they never need a third party to represent them, (but) I know the history of this industry. I know that over time as you get bigger it becomes more of an opportunity for organized labor to represent people. I hope it’s way down the road.”

Levy has spent a quarter century in the airline business, including 13 1/2 years at Allegiant, where he was a co-founder and learned the science of spotting secondary cities and keeping fares low. “I was there with Maury (Gallagher); we took it out of bankruptcy with one airplane and few prospects,” he said. “I oversaw strategy and planning. Allegiant was a great success.”

More:Allegiant unveils 34 nonstop routes for spring, summer schedule

With introductory fares starting at $19, Levy said the competition is not other airlines but rather “the couch (and) other forms of spend."

“The idea is to make it easy and convenient as possible to fly,” he said.

Six months from now, Levy said, Avelo might well be looking for a second base, perhaps at an East Coast airport, although he noted that Dulles is “way too big.” Besides Wilmington, he mentioned Hagerstown, Maryland, and said that Trenton, New Jersey, would be nice “if Frontier wasn’t there.”

There’s no rush, he said, to expand or to go public. “We’re just getting started, trying to find a niche,” he said. “The race goes to the tortoise.”