Avelo Airlines plots Florida campaign from Wilmington
NEW CASTLE – Avelo Airlines announced its plans Thursday to restart commercial air service in Delaware, and it’s plotting a full-scale Florida campaign right out of the gate, serving five cities from a new base at the Wilmington-New Castle (ILG) Airport.
The airport’s operator, the bistate Delaware River & Bay Authority, heralded the return of service following the departure of rival low-cost carrier Frontier Airlines in June. The Thursday press conference at the airport off U.S. Route 13 came less than two years since the last one, when Frontier began its last attempt at service, but Avelo represents a different opportunity, said Stephen Williams, airport director for the DRBA.
“Why is it going to work? … It will work when we find the sweet spot when we find what matches us with an air carrier, and I think we’ve got that today,” he said.
The startup, 18-month-old Avelo has eyed Wilmington as a potential market nearly from the outset, but instead began service in the Los Angeles suburbs, later growing in Connecticut and Florida, flying more than 1.2 million flights nationwide since. After two years of negotiations – it reportedly considered flying alongside Frontier at ILG before the rival pulled out – Avelo finally landed a market that it wanted.
“We like secondary airports that have really large communities because big airports are very crowded, congested, expensive and full of hassles,” Avelo Airlines CEO Andrew Levy told Delaware Business Times. “We’re trying to focus on the tri-state region and those people who would find this to be a faster, easier alternative.”
That strategy is the foundation for Avelo’s business model, and it puts about 2 million people in its crosshairs who live closer to ILG than any other airport. If adding in a 15-minute traffic hassle factor that Avelo thinks many customers would look to avoid, that target group could grow to 3 million potential customers.
“It’s a big market that we’re going after,” Levy said.
While Frontier struggled to fill its three-time-a-week flights from ILG to Orlando International Airport from February 2021 to this past June – federal data shows its flights were only about 55% full on average over that time – Levy thinks Avelo will do better through more robust destinations on both the Gulf Coast and Atlantic Ocean coast of Florida along with Orlando.
Introductory one-way fares will start at $49 heading to Orlando, Fort Lauderdale, Tampa, Fort Myers and West Palm Beach. The inaugural flight to Orlando will take off on Feb. 1, 2023, and flights will leave Delaware every day of the week afterward aside from Tuesdays.
Levy told DBT that his airline would seek out load factors of 80% to 85%, a significant increase over what Frontier was able to find over the past year but in line with the rival’s scuttled first attempt at Delaware service from 2015 to 2017.
“Our business works on volume, so we have to fill airplanes,” he said, noting that their typical budget traveler is less likely to pay for substantial upgrades and amenities. “We need to build up to having a revenue per customer that that works, and a lot of that is driven right now by fuel prices.”
The inflated cost of jet fuel right now has put a strain across the airline industry, and Levy estimated that it currently accounts for about 40% of Avelo’s total costs. The one-way fuel cost of a flight is roughly $7,500 right now, and to be profitable in the long run Levy estimated that Avelo would need to see returns per customer of about $150 one-way.
Like most airlines, Avelo will use an unbundled pricing approach on baggage fees and other add-on amenities. It doesn’t charge a fee to change or cancel bookings and charges only a nominal fee to book a flight by phone rather than online.
Levy, who was a founder and top executive of now rival low-cost carrier Allegiant Airlines, said that he took the best lessons from Allegiant with him to his new venture.
“We have used aircraft, we fly routes others don’t fly, we take people where they want to go, we distribute the product direct to the consumer. So those things are similar and intensely focused on cost and efficiency,” he said. “Allegiant was very numbers driven and finance driven. Our company is more a people-oriented business.”
At the top of their to-do list is keeping a high flight reliability rate, a key industry metric for the ability to fly as scheduled. To aid that the airline will keep and maintain a Boeing Next-Generation 737 at ILG and employ 35 employees. including crewmembers, customer service, flight attendants, pilots, technical operations and maintenance. Keeping a plane in one place allows it to be better maintained and allows for fewer service interruptions.
With success, the number of planes, and subsequently the number of flights from ILG, could grow. Avelo has two airplanes at its Connecticut base and five in Orlando, for example.
From its New Haven, Conn., base, Avelo serves 14 destinations, and Levy said he could envision additional destinations in Wilmington’s future if the market can support its initial Florida campaign.
“We do serve other places that we think there’s probably interest in flying to from this area, like down into the Carolinas or Nashville. But we’ll see how it goes. First things first, we’ve got to get Florida to work,” he said.
Dreams of flying to Avelo’s base in Los Angeles would be premature though, as the airline is currently limited to flights along either coast.
“If we can make money flying transcontinental, I’d do it tomorrow. I just don’t think we can, especially with the cost of fuel right now,” Levy said.
Assisting the growth and marketing of Avelo in Delaware will be the state’s public-private economic development organization, the Delaware Prosperity Partnership.
“There’s been some comments about whether an airline can be successful here. I don’t think this is a case of an airline is an airline is an airline. I think you’ve heard today, and we’ve experienced in our engagement with the Avelo team, that sometimes it’s about the specific airline or the specific company and the specific situation. And I happen to think that all things have come together in perfect order here,” said Kurt Foreman, president and CEO of the DPP.
Gov. John Carney, who expressed interest in taking advantage of an Avelo flight next winter to see a Philadelphia Phillies spring training game in Clearwater, Fla., agreed with Foreman and said Avelo’s pitch felt different than others that have tried to serve the state in the past.
“I think the experience that folks are having in other airports time-wise, stress-wise, friction-wise, backs their concept as a good one. They’ve got routes that I think will be appealing to people and how do you beat $49?” he said.