Opportunity in Crisis - I

While the air transport industry continues to struggle through the revenue-draining pandemic, low-cost start-up airlines forge ahead with plans to fill the void with point-to-point commercial airline service in North America. Robert W. Moorman looks at two of the startups.

These new airlines, low-cost carriers (LCCs) mainly, believe the industry needs point-to-point service provided by new or slightly used aircraft that can be leased at reasonable rates due to excess inventory.

Timing helps. Start-up capital is cheap and Captains and First Officers furloughed from other airlines are available for hire.

One risk is that some new LCCs could be forced to compete with established providers, such as Spirit Airlines, Frontier Airlines, Allegiant Air and Southwest Airlines, which invented the LCC concept a half-century ago.

The opportunity for new-starts in North America began years ago with the consolidation of larger major carriers. “Historically, airline industry downturns often create opportunities for both new-start as well as existing carriers that may be looking to expand,” said Ray Jaworowski, Senior Aerospace Analyst, Forecast International. “During the pandemic, many mainline carriers consolidated their route networks by reducing flight frequencies on some routes and even completely abandoned others.”

These new LCCs can fill service gaps as air traffic revives in certain markets. “The ability to provide low-cost, convenient, point-to-point service can be very appealing to customers, who otherwise might have to make a connecting flight to reach their destination,” added Jaworowski.

Having significantly lower direct operating costs than major airlines, which are locked into what some believe is an outdated hub-and-spoke system, also opens the door for LCCs in North America.

We’ll look at two relatively new airlines: Cottonwood Heights, Utah-based Breeze Airways, the fifth airline formed by JetBlue founder David Neeleman, and Houston, Texas-based Avelo Airlines.

Neeleman Offspring

Breeze Airways growth plan is split between twin-engine Embraer EJets and Airbus A220s, which are being assembled in Mobile, Alabama. Breeze has 80 firm orders for the A220, plus options for 40 more. The LCC was to get its first aircraft in October 2021. At the time of our interviews, Breeze operated 10 Embraer E190s and three E195s to 16 destinations.

For the EJets, Breeze flies four days per week and there are no overnight stays for flight crews. The aircraft return to bases in Tampa, Florida; New Orleans, Louisiana; Charleston, South Carolina; and Norfolk, Virginia.

“We provide a quality-of-life proposition for these airline pilots,” said Christopher Owens, VP Flight Operations, a 32-year airline veteran, who has flown for TWA, Airborne Express and Virgin America/Alaska Airlines.

The A220s will follow a more traditional business model with transcontinental service and some overnight stays for flight crews. Range of the A220-100 is around 3,400 nm.

“Given the capability of the A220, you can easily reach the Hawaiian Islands from the West Coast and Europe from the East Coast,” said Owens, adding that there are no immediate plans for adding service to Hawaii or Europe.

The addition of the A220s (formerly the Bombardier Aerospace CSeries) to the fleet “will be a real growth engine for Breeze,” said Owens.

“Initially, we hired Captains, who are also check airmen, from leading regional airlines,” Owens said. For the first six veteran Captains hired, four came from SkyWest Airlines, one from Republic Airways and one from Mesa Airlines. Each pilot had around 12,400 hours of flight time.

Breeze offers an accelerated career path for pilots. The upgrade from First Officer to Captain “is very rapid,” said Owens. The company is developing a Captain Command Leadership Program. The FO is brought in for upgrade training, a five-day program, for which leadership is covered.

Breeze has a Part 121-approved training program, but partners with CAE and FlightSafety International, using a combination of in-house and CAE and FSI instructors.

Owens laid out the training program for pilots. Each new-hire goes through 25 days of ground school, which includes basic indoctrination, security, hazardous materials, meteorology and systems integration instruction, which is done on a static device. Following ground school, Breeze pilots undergo seven days of flight training using a full-flight Level D simulator, four-hour sessions per day for 28 hours.

Following simulator training, the pilots perform three qualification segments at four hours apiece. This includes an oral examination, proficiency check or type rating, if the person hired is not type rated on the aircraft. The pilots finish up with extended envelope and unusual attitude training, plus Line Oriented Flight Training (LOFT).

Breeze and other LCCs to whom CAT spoke employ advanced flight training devices (FTDs) and desktop training aids as well.

David Neeleman has founded five commercial airlines: Morris Air, WestJet, JetBlue Airways, Azul Brazilian Airlines, and Breeze Airways. Image credit: Breeze Airways.

Avelo West

Owned by Houston Air Holdings, Avelo Airlines has solid experience at the top ranks. Andrew Levy, Co-Founder of Allegiant Air and former Chief Financial Officer at United Airlines, is Avelo’s Chairman and CEO. He’s also a board member of Copa Airlines, a prominent Latin America carrier.

Avelo began operations in late April 2021 to several western destinations, including the recently announced nonstop service from Sonoma County Airport (STS) near Santa Rosa California to McCarran International Airport (LAS), Las Vegas, Nevada. Avelo operates six Boeing 737s (three 700s and three 800s) to 12 destinations.

In mid-September 2021, the airline announced nonstop service between Tweed-New Haven Airport (HVN) in Southern Connecticut and Palm Beach International Airport (PBI), the 5th Florida destination Avelo now serves from New Haven. As part of a $100-million airport renovation project, Avelo and Tweed are hiring more than 100 people to work at the airport. For its part, Avelo will invest $1.2 million to upgrade facilities.

Growth continues. On July 29, Avelo expanded service from Hollywood Burbank Airport (BUR) near Los Angeles with nonstop flights to: Monterey, California; Fort Collins-Loveland, Colorado; and Provo and St. George, Utah.

Like other new-starts, Avelo hired several furloughed Captains initially, but is transitioning to hiring only First Officer candidates from prominent regional airlines. Each pilot candidate goes through a thorough assessment.

On the MRO side, the airline prefers aircraft maintenance technicians with 737 experience. Flight attendants are hired without prior experience.

"The business plan is based on domestic routes,” said Andrew Lotter, Vice President of Flight Operations. “We will be opportunistic if we see an international route that makes sense and there isn’t a lot of competition.” For now, the carrier remains a point-to-point operator on non-competitive routes in the contiguous US.

Wheels Up: Avelo's inaugural flight departed from Hollywood Burbank Airport.  Image credit: Avelo Airlines.

The company provides an in-house training program for pilots on the 737-700s and -800s. Avelo is moving rapidly on adopting an Advanced Qualification Program (AQP) training system for new hires. AQP is a voluntary, data-driven alternative means of compliance to the traditional regulatory requirements under 14 CFR Parts 121 and 135 for training and checking.

According to FAA, AQP requires “front-end analysis of both training and operational data to establish proficiency objective requirements for all aspects of training.” Unlike traditional pilot training, AQP allows for data-driven improvement and program flexibility, integration of cockpit resource management (CRM), crew evaluation, scenario-based training and other benefits.

Avelo and Breeze new hires are required to undergo Upset Prevention & Recovery Training (UPRT) training. The European Union Aviation Safety Agency (EASA) require all approved training organizations to provide UPRT in their initial type rating courses for pilots. In the US, in 2016, the FAA added the Flight Simulation Training Device Qualification Standards for Extended Envelope and Adverse Weather Event Training Tasks Final Rule.

Pilot mentoring programs for both airlines are being rolled out for flight deck and cabin crews. Flight crews at both airlines are also given additional training on dealing with unruly passengers, including those who refuse to wear a mask.

Avelo utilizes “virtual ground schools,” said Lotter. “Basic indoctrination training and systems training is done remotely,” he said. “The first time we get together is for emergency drills.”

The airline uses advanced simulators of Dallas-based Avenger Flight Group, a privately owned simulation and training organization.

Asked about a career path for its pilots: “We’re pitching a quality of life to the pilots, said Lotter. “It’s a hard sell, with the majors and other regional airlines offering big signing bonuses. But we have to keep our fixed costs down. “

He added: “If you want to fly big iron, we’re not the airline for you.”

As a general rule, independent LCCs don’t offer signing bonuses. So competing for talent is tough. Endeavor Air, a regional airline subsidiary of Delta Air Lines, launched an $80,000 Pilot Retention Program this year to attract the best pilots. Envoy Air, the largest regional carrier of American Airlines Group, offers experienced pilots signing bonuses of up to $45,000.

So strict is Avelo about watching costs and generating revenue that the airlines recently stopped service to Grand Junction, Colorado; Boseman, Montana; and Mesa, Arizona. Either the routes make money, or Avelo looks elsewhere for revenue.

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