Startups Aim To Stimulate Demand For Low-Fares Leisure Traffic
Executives from new airlines see opportunity despite the pandemic.
While the COVID-19 pandemic has devastated the bottom line of the global airline business–with government assistance keeping many carriers afloat–a host of startup carriers have emerged during the crisis.
The key, said executives from startups speaking Feb. 15 at the Routes Americas conference in San Antonio, Texas, is to find a unique business model that gives a new airline access to a niche not being served by other airlines. “Never build [an airline] business long term that replicates something that is already out there,” Breeze Airways CCO Lukas Johnson said.
Breeze was launched in May 2021 by JetBlue Airways and Azul Brazilian Airlines founder David Neeleman. It operates a fleet of Embraer E190 and E195 aircraft on 42 point-to-point routes, 95% of which are not served by another carrier.
Breeze will operate six to seven Airbus A220-300 aircraft by this summer, Johnson said. The aircraft type, for which the startup has 80 on order, will expand on the 1-2.5 hr. range of most of its current Embraer flights. “The A220 will be able to fly transcon pretty easily,” Johnson said.
One reason airlines are starting up now is that the COVID-19 pandemic has created a favorable environment for negotiating aircraft lease rates, aircraft purchase prices and airport charges. “These deals we did on these [15 former Norwegian Air Shuttle Boeing 787s Norse has leased] were phenomenal,” Norse Atlantic Airways CEO Bjorn Tore Larsen told Routes Americas delegates, noting he negotiated a 50% discount on lease rates.
“If I went to other leasing companies and tried to replicate [his deals on the 15 aircraft], they would kick me out,” he added.
Scott Hall, the EVP of Airbahn, a Los Angeles-area startup that is trying to get off the ground this year, said new airlines need to make a good impression on first-time passengers. “We have one shot,” Hall said. “A family may take a trip once a year, and if we flub it, they’ll be all over Facebook complaining …With social media today, you can get killed in no time flat.”
Vijay Bathija, CCO of Lynx Air, a Canadian startup that is nearing its first commercial flight with a Boeing 737 MAX aircraft, said it is no coincidence that most airlines that have launched or will launch during the pandemic are low-cost leisure-oriented airlines. “It’s the leisure market that will come back first and our target is the leisure market,” he explained. “We want to go into the big [Canadian] cities and grow the market with low fares.”
Larsen bluntly pointed out that many startup airlines fail. “Statistically we don’t have great odds, none of us,” he said. “Investing in an airline is a risky proposition. If you execute well, you can have success.”