On April 28, 2021, the first Avero Airlines Boeing 737-800 flight took off from Hollywood Burbank Airport to Charles M. Schulz Sonoma County Airport in Santa Rosa.
Patrick T. Fallon | AFP | Getty Images
Nearly four years after the Covid-19 pandemic upended air travel, America’s largest airlines are back in the black. The CEOs of two start-up airlines that launched in the midst of the pandemic say they are also looking to join.
Avero and Breeze Airways, two low-cost carriers that debuted in 2021 when U.S. air travel demand was more than 30% below pre-pandemic levels, have both grown their businesses rapidly.
The company has opened dozens of new routes across the country, and its founders say their strategy of connecting cities with less competition from major airlines is paying off. Think Los Angeles’ Hollywood Burbank Airport, not Los Angeles International or Islip on Long Island, high above New York City.
“When you have Goliath and you’re just David, it’s really tough,” said Andrew Levy, CEO of Avero Airlines.
delta, American, united and southwest The two companies control about three-quarters of the U.S. market, according to Cirium data.
Avero said it carried 2.3 million customers in 2023 and its planes were more than 80% full on average. Breeze flew more than 2.8 million travelers last year and its flights were 77% full, the company said. My career is still small. For comparison, Southwest Airlines, the nation’s largest airline, flew more than 137 million passengers. last year.
Still, Avero reported its first profitable quarter in the last three months of 2023, and a company spokesperson said the airline was likely to reach an annual profit in 2024. The company generated revenue of $265 million for the full year of 2023, an increase of 74% from the previous year. previous year.
Levy said he had expected the airline to become profitable sooner, but that schedule was delayed by rising fuel costs during a period of widespread inflation and Russia’s invasion of Ukraine two years ago.
Breeze is also on track to become profitable for the first time in 2024, CEO David Neeleman said.
Breeze Airways founder and CEO David Neeleman before boarding the airline’s first flight at Tampa International Airport on May 27, 2021 in Tampa, Florida.
Matt May | Bloomberg | Getty Images
It typically takes an airline two to four years to become profitable, said Henry Harteveld, president of travel industry consulting firm Atmosphere Research Group. Avero and Breeze each faced additional challenges weighing on the industry as a whole, including high oil prices, supply chain disruptions, and a shortage of pilots and air traffic controllers.
“The fact that both airlines are still operating [Levy’s and Neeleman’s] It’s not just the vision, the leadership, but the dedication of our people,” Harteveldt said.
skip hub
Both airlines have stakes in the low-cost airline segment. frontier and loyalistoffers base fares, add-ons, and secondary airport flights.
Avero flies to approximately 50 destinations and operates from six bases, including Tweed New Haven Airport in Connecticut and Wilmington Airport in Delaware. Many of our destinations are from the Northeast to popular vacation destinations in Florida and South Carolina, but we also serve destinations in California and other western states.
The airline will begin operating beyond the continental United States in 2023, starting with service to Puerto Rico, and will likely expand to international destinations this year, Levy said.
Breeze Inc., which Mr. Neeleman also founded after starting his own business. jet blue airlines and Brazilian career azurFlights mainly avoid major hubs, departing from about 50 airports, including New York’s Westchester County Airport and Ohio’s Akron-Canton Airport.
In addition to flights to classic vacation destinations, the airline also offers cross-country flights from cities such as Hartford, CT and Charleston, SC to destinations such as Las Vegas and Los Angeles. The company hopes to start international services by 2025.
Both Avero and Breeze continue to announce new routes and destinations this year. Avero operated 11 routes immediately after launching in the summer of 2021, but currently operates approximately 75 routes, while Breeze operated approximately 16 routes in the summer of 2021 and currently sells approximately 180 routes. .
A Breeze Airways plane on the tarmac at Tampa International Airport on May 27, 2021 in Tampa, Florida.
Matt May | Bloomberg | Getty Images
Breeze and Avero sell base fares, some as low as double digits, but they also charge fees for checked baggage and advance seat selection, making them more than just low-cost carriers. This is a surcharge that is also common on most major airlines.
Breeze’s lowest fare option allows travelers to bring only personal items, but the airline also sells first class seats and legroom options with more amenities. Both airlines’ base fares do not include carry-on baggage.
operating costs
For Avello and Breeze, offering low airfares makes it even more difficult to combat rising costs across the industry.Nationally For example, pilot shortages and rising labor costs post-pandemic are challenges.
Large airlines, which can offer high salaries to pilots, have been hiring pilots from smaller and midsize airlines in recent years to fill post-pandemic workforces.
“What we really want to monitor with our pilots is our attrition rate. … Our attrition rate was higher than we would have liked, but now it’s where we want it to be,” Neeleman said. Told.
He added that the carrier has a number of first officers who will be promoted to captain, helping alleviate the shortage.
Airlines have also faced delays in aircraft deliveries and difficulty obtaining thousands of replacement parts.
Andrew Levy, founder, chairman and CEO of Avero Airlines, speaks at Hollywood Burbank Airport on April 7, 2021 in Burbank, California.
Joe Scarnici Getty Images
CEO Levy said Avero is experiencing delays in delivering used Boeing 737 aircraft that it leases. The company currently has 16 aircraft in its fleet and five more on order.
“Since COVID-19, the entire aviation supply chain system has been disrupted, and it’s still not completely back to normal,” Levy said.
Last month, Brees announced it would exercise options on 10 more Airbus A220s. The company plans to operate the A220 exclusively for commercial services by the end of 2024. The airline currently operates 22 A220s, with 32 expected to be in service by the end of 2024, Neeleman said.
Neeleman said Breeze aims to turn a profit before deciding whether to file for an initial public offering or another option. Avero also hopes to achieve sustainable profitability levels by the IPO.
Levy said Avello’s focus is on “getting the company to a point where it’s ready for an IPO” and that he has no interest in selling the company.
Some airlines, particularly low-cost carriers, have recently considered merging to take away some of the dominance of the big four airlines. JetBlue and Spirit announced plans to merge in July 2022 to create the fifth-largest airline in the United States, but a federal judge blocked the merger in January. These airlines appealed this decision.
Hawaiian Airlines and alaska airlines Although the two companies plan to integrate, they will continue to operate their brands as separate carriers.
Both Levy and Neeleman said there is room for multiple players in the low-cost airline space.
“The more competition there is in the U.S. airline industry, the better it is for the traveling public,” said Atmosphere Research Group’s Harteveldt.
—CNBC’s Leslie Josephs contributed to this report.
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