Yesterday saw the first launch of a new, significant US-based airline since Virgin America more than a decade ago. Though I didn’t take the flight, I did drive up to Burbank Airport so I could interview CEO Andrew Levy and observe the festivities from afar. Below you’ll find our “across the aisle” interview which was really across from each other sitting in airport waiting room chairs…
Brett Snyder, Cranky Flier: This is happening. It’s official. You have airplanes. You have passengers. You have government approval. You’re ready to go. Since I last talked to you right before the launch announcement, a couple of things have happened. The first thing I want to ask you about is just how have bookings been in general?
Andrew Levy, CEO Avelo Airlines: You know, I think bookings have been great. It’s really hard. I had no expectations on day one as far as what would define “good.” I know what’s good long term, but it’s a new brand. It’s still a pandemic, and you know, we got to build a business from zero. And so I’m really encouraged by where we are. We’ve sold a lot of our inventory that’s available for sale through September, which is the metric I’m looking at more than anything. It’s just the percentage sold.
Cranky: Can you share any of those numbers?
Andrew: It’s over 10 percent over the whole schedule, which I feel really good about for today being our first flight. It’s a tight booking curve today in the market, and so I feel really good about what we see. Obviously some routes are performing better than others — some are right on where we thought — but I think it’s really too early to tell. But one thing I think we definitely know is that there’s definitely demand for this product, and I don’t think it’s gonna be very difficult to fill up airplanes.
Cranky: Can you talk about what routes are doing well? Anything you can share on that specifically?
Andrew: Um, no, I don’t want to get into the specifics.
Cranky: I had to ask…
Andrew: Yeah, sure. I’m familiar with a lot of these routes or markets from my Allegiant days. Some of these cities are kind of similar to the types that we used to fly into, and not surprisingly they’re performing as I would expect. And then of course Santa Rosa is one that we never flew at Allegiant because we didn’t have the equipment when I was there. You know, the MD-80 just couldn’t handle that runway, but I’ve had my eye on it for 15 years and just thrilled to be able to start with that as our first route. We’re really excited to serve that route in particular.
Cranky: Maybe you can tell me in general — because it seems like you have a few different types of markets here. You have the the higher frequency, bigger markets like Phoenix/Mesa and Santa Rosa. You’ve got some of the “let’s just hope that this is a market.” I’m sure you’re looking at data, but these are markets you’re trying to open up that may not exist. Are you seeing similar success in each type of market? Or are you finding certain things in certain types that are really excelling?
Andrew: Let’s see… look, it’s across the board. I don’t see any common themes, put it that way. It’s market-specific, but the markets we’re flying with more flights are markets that are just simply bigger markets. We’re putting more capacity in those markets because we think that it’s justifiable.
Phoenix to Burbank is a huge market, including LA, if you look at it broadly, it’s a really huge market and we’re just trying to capture a very, very small piece of that and offering service from two amazing convenient airports on each end. Santa Rosa, of course, is kind of a hybrid, and it’s more isolated but it’s also a huge part of the of the Bay Area. I mean, not everybody in the Bay Area is going to find Santa Rosa convenient, but a lot of people will, and then Ogden same thing. Salt Lake City’s grown like crazy. It’s a big market with a lot of demand, and we think just offering a differentiated product to a small convenient airport for those who live or want to go closer to that part of Salt Lake is a terrific option. This is a lot of test and measure; do more of what works well, do less of what works less.
Cranky: Those three markets you mentioned, two of them have seen capacity increases if you’re including the broader area. Ogden has not. Delta seems to have a different strategy in its hubs with ULCCs as I’ve seen compared to some of the others. Has that done anything to how you view these markets? In Burbank-Santa Rosa, you’ve got Alaska in there now; Burbank-Phoenix you’ve got American with a big increase in number of seats. Does that change how you view anything or…?
Andrew: No, not at all. We’re focusing on what we can control. It’s a competitive industry, but I haven’t lost a wink of sleep about either of those and you know, I’m not sure I understand that. But look, it doesn’t trouble me one bit.
Cranky: I think maybe Burbank-Santa Rosa is a little more understandable, from the Alaska perspective,
Andrew: Yeah, we know Alaska cares about Santa Rosa for sure so we understand that. I think there’s room in the market for a really high quality ULCC. There isn’t one today, and we aim to be that, and we believe there’s room in the market to stimulate traffic from Burbank, which is just a fantastically convenient airport to a lot of people. We think it’ll make it easier for people to travel and travel more often.
And Phoenix/Mesa, it’s Phoenix metro but it’s a totally different airport. It’s a totally different part of the metro area. And you know, if you want to go to Sky Harbor or fly out of Sky Harbor and deal with all the headaches and hassles of a really big airport, then you’ve got lots of choices. But if you’d rather go to a small easy-to-use airport like Phoenix/Mesa and get to a really small easy-to-use airport like Burbank, we offer something that’s different.
Cranky: Now Santa Rosa, that’s a higher fare market, probably more of an umbrella for you to come in with low fares. Phoenix… may be not quite to the same extent there. Has that impacted anything? Because I assume that the fares are probably — I mean, of course your intro fares are very low — but in general the fares… the delta is not as big.
Andrew: Yeah, “that market has been stimulated”… I think your point is, right?
Cranky: Right.
Andrew: There’s already low fares there. And to some extent that’s true, but if you try to book travel certainly last minute within seven days, it’s not cheap at all. It’s actually exceptionally expensive. We talk about having everyday low fares, and we really mean everyday low fares. Now, that doesn’t mean $19 forever by any means. That’s an intro fare. But I think that over time, customers will find that if they are looking to travel, especially last minute, that we can offer really significant value relative to competitors.
And I think back to the airport; we’re offering something that’s different. And you know it’s not for everybody. If you live in Orange County, you’re probably not coming to Burbank. And if you live up in the northwest part of the Phoenix metro, you’re probably not going to drive down to Phoenix/Mesa.
But for a lot of people, I think it is a really convenient alternative, and there’ll be enormous reception. We’re very happy with the bookings so far, and we were very optimistic about that route.
Cranky: Well, this is why it’s interesting to me because I live in Long Beach. I’m not coming to Burbank to fly to Phoenix. There’s no reason. But to go to Eureka? Sure. So you have very different dynamics.
Andrew: Conversely, if you live in Ventura County you probably would go to Burbank to go to Phoenix.
Cranky: Sure. Oh, absolutely. But are you seeing that with the zip codes that are booking? Are you seeing different geographies?
Andrew: Honestly, Brett, I just haven’t really had a chance to drill into that level of detail. We’re still just trying to get our arms around all this new information. But we will. Ask us in a month, and we’ll be able to slice and dice and really understand the market exceptionally well.
Cranky: I know it’s early, because you don’t have that many flights or destinations starting within the week here. But with Santa Rosa, did you see a ramp up within seven days?
Andrew: Well, as you know, unfortunately we had the misfortune of having a very severe outage of our reservation system.
Cranky: That was my next question.
Andrew: Yeah, that lasted over four days. It was incredibly frustrating, and it happened at you know, not a great time. That being said I suppose the silver lining is, I guess, I’m happy it happened [last week] instead of a week later, which would have made today a lot more difficult.
But we’re seeing good bookings. It started up again on Sunday, so we’ve had three days of bookings. Today’s the fourth day. We’re seeing it accelerate, and we feel really good about Santa Rosa. I think the market’s gonna perform exceptionally well.
Cranky: Okay, so let’s talk about [the Radixx reservation system failure] a little bit here. That was uh, I don’t know if disastrous is the right word, but it’s probably pretty close. I’ve never seen anything quite like this.
Andrew: It was not ideal for sure.
Cranky: You didn’t have an operation to worry about at that point, but you obviously lost four days of bookings right before you’re about to start flying. Has this changed how you view Radixx? Are you looking at possibly switching systems now?
Andrew: Well, look. We’re still in the middle of it, quite honestly, because while while the website is back up and we’re taking bookings, there are still some features and functionality that we’re still working on…. Some of them are just in the back office, administrative functions, but… look, Radixx has been a good partner of ours. And obviously we’re really disappointed with what happened. I know… I’m sure they’re as disappointed as anybody, and I think as far as how things go in the future, we’ll have to see how things evolve and how we get through this issue. Because we’re not totally free just yet, but we’re through the most painful.
Cranky: Wow, there’s still more.
Andrew: That’s right. It’s still some stuff that, you know, we’re still kind of in the “in the moment” mode, and there’ll be time at some point to look back and get some lessons learned. I can tell you if there’s any risk of this happening again, any measurable risk of this ever happening again, that would be a real problem as we have to be able to rely on critical suppliers like our PSS [reservation system] provider.
Cranky: I just assumed this is an elaborate ploy by Sabre to upsell you into Sabresonic.
[Andrew laughs heartily]Cranky: Didn’t work though.
Andrew: They never asked, but I was expecting them to say “what about Sabre and GDS participation?”
Cranky: I’m curious what’s next on your list? I was thinking about some parts of the experience. As I mentioned, we’ve booked flights. We actually made a change already because — not that this matters to you but — there was a camp that my daughter wanted to go to so we switched later. It was nice having no change fees, but it’s a little clunky to try and make the change, and then using the credit voucher is really tough. Then things like… Precheck’s not up and running, you’re not on Google Flights yet…. What are the priorities? What are the things we’re going to see that are going to be coming out soon?
Andrew: Well, I hope Google Flights will be up really soon, very soon. That is actively being worked on by us, by Google. I wish it was up now, but it’ll be up very soon. I don’t know what “soon” is. I don’t know if that is in a day or two or in a week or two, but I do know that there’s a lot of dialogue going back and forth on the API and making sure it’s built properly and it’s stable.
Cranky: Are you doing something different than others have done?
Andrew: No. It’s just connecting it to an API that didn’t exist. So that’s the first thing. Precheck is coming really soon. That’s a very high priority of us, because we’re selling convenience and not having Precheck is an inconvenience for those of us who rely on it. Those are two of the most important things that we’re focused on by the end of this year. I expect we’ll have our own internet booking engine built.
Cranky: Oh you will?
Andrew: This is ezyCommerce which is part of Radixx, and it’s a good product, but it’s limited in terms of what you can and can’t do. There’s a lot of functionality in there that to us is not ideal, and probably to our customers certain features may not be ideal. As a result, it’s a priority for us to build our new booking engine which I expect will be done by the end of this year. The reason we didn’t do that now is in our view, once we decided to get going quickly, the priority was to get going quickly. We felt we had a professional product we could put out there even though it’s not ideal. But you know, websites are never done.
We’ll move to a platform that we can do a lot more of the things that we’d like to do, to make it easy for you to be able to manage your your business remotely without having to reach out and talk to us. That’s certainly the goal; make it as easy and smooth as possible for our customers.
Cranky: Yeah, the reservations agent I spoke with was very friendly, very nice, but I’d rather not talk to her. No offense.
Andrew: Many others feel the same exact way,
Cranky: It’s nice to know the support is there if you need it though, which is good.
Andrew: Yeah, the support is there and obviously there’s a lot of folks who still actually do prefer to talk to people. So we’re doing that and not charging a booking fee for those people, because like you, I believe most people would prefer just to just a book something quickly on their [mobile] phone and be done with it.
But we’re gonna see continued improvements in what we do. We’re gonna have eventually in the very near term — whether this is a month or two — but we’ll have the capability to accept more forms of payment… Amex, Discover, Google Pay, Apple Pay… so that’s all coming as well.
Cranky: Is there anything since you announced the launch that you’ve learned in that time that you said “okay, we need to shift. We need to pivot here.” Or has it all been kind of as expected?
Andrew: Let’s see. No, it’s too early I think to make those judgments. You start out with some biases and what you think you’re gonna see in the data, and there are some things that certainly I’m seeing in the data that are confirmatory. But it’s too early really; we don’t have Google Flights up and running, right? So it’s really hard to say, “oh yeah that flight doesn’t work very well” when we don’t have Google Flights going. We just have to hang in there and give it some time.
I’ve tried hard with our pricing team to emphasize that we need to be patient, and this is about filling up the airplanes. It’s not about yielding up right now. We started with a really short booking curve; we had three weeks to sell. That was obviously not ideal.
Right now the goal is to create as much brand awareness as possible, fill up the airplanes, because at the end of the day the word of mouth is what’s gonna be really critical over time. It’s making sure that we get people on the airplane and we do a great job for them. They tell their friends and family, and that’s really powerful marketing. So what we’re trying to do right now is just get the foundation built up.
Cranky: So when are we gonna get that next base? When are we gonna hear?
Andrew: Actually, pretty quickly. I would say very likely it’ll be sometime in May, announcing something which will start up a little later in the year and we’re really excited about it. We’re not quite done yet — we’re still finishing up a couple of points of negotiation — but we’re really, really excited about a couple different options out there that we’re looking at.
Cranky: I know Burbank was a pandemic pivot, right? Because of opportunity? Has the Burbank pivot impacted the next base or will the next base go back to your original plan?
Andrew: No. There’s actually a couple places that we’re looking at, and I’d say certainly one of them there’s an opportunity that may not have been there before, and the other one is something that’s just a little bit different. But both of those markets were airports that we were very much focused on from day one. And Burbank was too. We expected to serve Burbank more as a spoke in LA, but all the reductions and service we saw here gave us the opportunity to create a little bit of geography here for ourselves, a little real estate. We just couldn’t pass that up.
Cranky: Fair enough.
Andrew: I’ll take advantage of it.
Cranky: All right, good. Well, congratulations on the launch today.
If you made it this far, congratulations. I know it was a long one, but hopefully you agree it was worth reading.