Upstart Airlines Avelo and Breeze Set for Profitable Year
The Covid-19 pandemic disrupted air travel worldwide, causing significant losses for major U.S. airlines. However, two upstart carriers, Avelo and Breeze Airways, launched during the pandemic and are now on the path to profitability.
Avelo and Breeze have rapidly expanded their operations since their debut in 2021. Their strategy of targeting cities with less competition from large carriers, such as Hollywood Burbank Airport and Islip, has paid off. Despite the dominance of Delta, American, United, and Southwest airlines, which control about three-quarters of the U.S. market, Avelo and Breeze have gained traction and attracted customers.
In 2023, Avelo flew 2.3 million customers with its planes consistently 80% full, while Breeze flew over 2.8 million travelers with flights at 77% capacity. Although these numbers are dwarfed by larger carriers like Southwest Airlines, which carried over 137 million passengers last year, Avelo reported its first profitable quarter in the last three months of 2023, and Breeze is also on track for its first profitable year in 2024.
Both airlines focus on the low-cost carrier segment, offering base fares, add-ons, and flights from secondary airports. Avelo operates out of six bases, including airports in Connecticut and Delaware, flying to about 50 destinations. It expanded beyond the continental U.S. in 2023 and plans to offer international flights in the near future. Breeze, founded by JetBlue Airways and Azul’s founder, flies out of about 50 airports, avoiding major hubs and providing cross-country flights.
To achieve profitability, Avelo and Breeze have faced challenges such as increased operational costs, shortages of pilots and air traffic controllers, and supply chain disruptions. The shortage of pilots has been a particularly significant issue, with larger airlines hiring pilots from smaller carriers. Both Avelo and Breeze have confronted these challenges with strong leadership and dedicated employees.
Despite these obstacles, Avelo and Breeze have continued to announce new routes and destinations. Avelo now has around 75 routes, while Breeze offers approximately 180. Both airlines follow the trend of low-cost carriers by selling base fares with additional fees for checked luggage and advanced seat assignments.
Looking ahead, Avelo and Breeze aim to achieve sustained profitability before considering options such as filing for an IPO. They have no interest in merging with larger carriers, as their focus is on providing competition and diversity in the low-cost carrier space.
In conclusion, Avelo and Breeze have defied the odds by launching during a pandemic and are set to join the ranks of profitable airlines. Their success can be attributed to their unique strategies, targeting less competitive cities, and providing affordable options for travelers. As they continue to expand their operations, Avelo and Breeze will further contribute to the dynamic and competitive landscape of the U.S. airline industry.