Investing in airlines has traditionally been a rather risky proposition and yet, the aviation industry continues to exert a gravitational pull that many entrepreneurs find hard to resist.
It is remarkable that even during the worst of the COVID-19 pandemic, with fleets grounded across the globe and carriers hemorrhaging cash, there was no shortage of new airline projects taking shape.
During the last couple of years, the US has proven to be a particularly fertile ground for new operators. America may well be a consolidated market as far as air travel is concerned, but startup airlines have been quick to emerge whenever a market segment is perceived to be underserved by the incumbents.
No less than three startup airlines, each ready to challenge the status quo in its own way, have taken to the skies recently in the United States or are preparing to do so in the near future: Breeze Airways, Avelo and Northern Pacific Airways.
But which gap in the market have their founders spotted? And what are their respective value propositions? Let’s take a look.
Breeze Airways is the latest project of one of the most prolific and successful entrepreneurs in the international aviation scene.
When it comes to starting new airlines, the track record of David Neeleman, founder of Breeze Airways, is second to none.
Prior to Breeze he had already launched no less than four other carriers in three different countries: Morris Air and JetBlue Airways in the US, WestJet in Canada, and Azul in Brazil. On top of that, Neeleman also temporarily took over and managed TAP Air Portugal and was a minority investor in French carrier Aigle Azur.
If JetBlue and Azul represented a transformational force in their respective markets, Neeleman now aims to do it all over again, just this time in a somewhat different segment.
Rather than face official on its own turf, Breeze airways is bypassing major hubs in order to connect second and third-tier American airports that, until now, had few or no direct air links between them.
To do so, the new airline is using relatively small Airbus A220-300s, configured to seat between 126 and 137 passengers and, temporarily as a stop-gap solution, even smaller Embraer E190s and E195s (sourced from Azul, another airline in Neeleman’s orbit).
This is a similar approach to that followed in Europe by another airline that successfully pioneered this type of inter-regional low fare concept, Barcelona-based Volotea, which started using Boeing 717s to later switch to Airbus A319s.
Breeze seems to be following in the footsteps of JetBlue, which, back at the time of its launch, tweaked the traditional low-cost rule book to introduce what could be described as a hybrid product.
Low fares remain one of the tenets of Breeze, but the new carrier also places the accent on being a “nice” carrier. To drive the point home, its three fare classes are named “Nice”, “Nicer” and “Nicest”, depending on the bundle of services you purchase.
And, while the “Nicest” product may be comparable to a business class, the more basic tiers also benefit from some of the elements more typically associated with a premium product, such as the ability to change or cancel your ticket free of charge.
Interestingly, free changes and cancellations are also a major selling point for Avelo Airlines, another newcomer.
This ultra low-cost carrier is the latest incarnation of a pre-existent charter operator called Xtra Airways, which has entered the scheduled market after a change of ownership and a thorough rebranding and re-launch.
Avelo, which defines its mission as “saving time and money for travellers”, operates a fleet of B737NG aircraft (of both the -700 and -800 versions) offering a bare bones product (no food, drink, or inflight entertainment onboard, even if you are willing to pay for it) although you can add some seating and baggage options for a fee.
Curiously, Avelo runs not one, but two parallel networks, one on each coast of the United States, without any of its routes linking them.
Northern Pacific Airways
Northern Pacific Airways, the third of the new airlines we are looking at, aims to replicate in the trans-Pacific market what Icelandair have been doing for decades in the North Atlantic: offer a good value intercontinental travel option, with the additional allure of the opportunity to explore an interesting place along the way.
The founders of Northern Pacific Airways are linked to America’s northernmost state through their prior acquisition of Ravn’s assets. Ravn was Alaska’s largest regional airline when it went bankrupt during the COVID-19 pandemic. After relaunching Ravn and drawing up plans for its future growth as a would-be electric aircraft operator, they started planning the next aviation venture.
If Icelandair has found a viable niche flying people between Europe and America through Keflavik, Northern Pacific Airways wants to link the “Contiguous 48” to East Asia by way of Alaska.
The parallels don’t end there. Northern Pacific has also selected the Boeing 757, which for decades was Icelandair’s workhorse, as its aircraft of choice. This is certainly not a state-of-the-art aircraft, but the combination of availability at a reasonable cost, capacity and proven reliability is expected to do the trick.
The Alaskan link is a key element of this project and the necessary stopover in Anchorage (ANC) is seen as a commercial opportunity and an element of differentiation, rather than an encumbrance. Northern Pacific plans to offer, in cooperation with the Alaskan tourism industry, a number of products specifically designed to help passengers explore and enjoy this huge Arctic state during their stopovers.
The idea sounds straightforward enough, yet its implementation hasn’t all been plain sailing.
Northern Pacific Airways unveiled its first aircraft in January 2022, but the launch of regular services has been repeatedly delayed because COVID-related travel restrictions in the target markets of Japan and South Korea have been lingering until quite late this year. As a result, Northern Pacific’s managers started to look for alternative ways to deploy their aircraft. A proposed service to Mexico from Ontario, California, hasn’t materialized and the airline’s management have subsequently been scouting for opportunities elsewhere.
In October one of Northern Pacific’s Boeing 757s stopped in Saipan, in the Northern Marianas, on its way to Alaska. The purpose of this trip was to pitch the possibility of part of Northern Pacific’s fleet being based in this US territory in the Pacific and acting as the archipelago’s home carrier under a wet lease agreement.
During a recent phone call, Northern Pacific’s CEO, Rob McKinney confirmed that if this arrangement finally goes ahead, the airline will most likely deploy a couple of airplanes to Saipan, with the remainder being allocated to the Alaskan operation, as originally planned.
Regardless of its name, this would make this startup a truly pan-Pacific airline.