Upstart airlines Avelo, Breeze prepare for a profitable year

The inaugural flight of an Avelo Airlines Boeing 737-800 takes off from Hollywood Burbank Airport to Charles M. Schulz-Sonoma County Airport in Santa Rosa on April 28, 2021.

Patrick T. Fallon | AFP | Getty Images

In the nearly four years since the Covid-19 pandemic upended air travel, the largest U.S. airlines have returned to profitability. The CEOs of two upstart airlines that launched in the middle of the pandemic say they’re about to join them.

Avelo and Breeze Airways, two low-cost carriers that debuted in 2021 when U.S. air travel demand was more than 30% below pre-pandemic levels, have both grown their operations rapidly.

They’ve launched dozens of new routes across the country, and their founders say their strategy of linking cities where there’s less competition from large carriers is paying off. Think Los Angeles’ Hollywood Burbank Airport, rather than Los Angeles International, or Islip, Long Island, over New York City.

“When you have Goliaths, and you’re just David, it’s really hard,” said Avelo Airlines CEO Andrew Levy.

Delta, American, United and Southwest together control about three-quarters of the U.S. market, according to Cirium data.

Avelo says it flew 2.3 million customers in 2023, and that its planes were more than 80% full on average. Breeze flew more than 2.8 million travelers last year, and its flights were 77% full, according to the company. The carriers are still tiny. For comparison, Southwest Airlines, the largest domestic carrier, flew more than 137 million passengers last year.

Yet, Avelo reported its first profitable quarter in the last three months of 2023, and a company spokesperson said the airline will likely turn an annual profit in 2024. It brought in revenue of $265 million for the full year 2023, up 74% from the prior year.

Levy said he had expected the airline to turn a profit sooner, but high fuel costs during a period of broad inflation and Russia’s invasion of Ukraine two years ago pushed back the timeline.

Breeze is also on track for its first profitable year in 2024, said CEO David Neeleman.

David Neeleman, founder and CEO of Breeze Airways, before boarding the airline’s inaugural flight at Tampa International Airport in Tampa, Florida, on May 27, 2021.

Matt May | Bloomberg | Getty Images

It typically takes two to four years from launch for airlines to turn a profit, said Henry Harteveldt, president of Atmosphere Research Group, a travel industry consulting firm. Avelo and Breeze each faced additional challenges that have weighed on the entire industry, including a jump in oil prices, supply chain snarls and shortages of pilots and air traffic controllers.

“The fact that the airlines are both still operating is a credit to [Levy’s and Neeleman’s] visions, their leadership, but also the dedication of their employees,” Harteveldt said.

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