Former United Exec Wants To Launch Low Cost Carrier

Filed Under: United

Nope, fortunately it’s not Jeff Smisek.

A new low cost carrier could be launching this year

Andrew Levy is United’s former CFO, and prior to that was the President of Allegiant Travel. He abruptly resigned at United in 2018, leaving many to wonder if there was more to the story.

Well, it has now been revealed that Levy plans to launch a low cost carrier in the US, and it could be flying as soon as late 2019 or early 2020. He’s working on securing $100 million in funding by June for his new Houston-based company.

As explained by Bloomberg, the airline already has a Part 121 commercial airline certification, which is needed to launch operations. That’s because he purchased XTRA Airways, which is a Florida-based charter airline with a single 737-400 (this is the carrier that operated Hillary Clinton’s 2016 campaign plane). This will make the process of getting started easier.

What will make this airline different?

The plan is to operate primarily to secondary markets. While they haven’t decided on an aircraft type, they’re leaning towards leasing Boeing 737-800s, and configuring them with 189 seats. For context, Ryanair has 189 seats on their 737-800s, while Southwest only has 175 seats, so these planes would be densely configured.

We already have a lot of budget airlines in the US — Allegiant, Frontier, Spirit, etc. — so what will make his new airline different?

“We think the opportunity exists for a real high-quality, highly reliable, extremely low fare, basic transportation service.”

He claims the airline will offer “a better product and experience but still offer really low prices.”

Levy recognizes the product needs to be different than competitors, so he would hope to innovate parts of the experience to differentiate the airline from Allegiant or Spirit. This would include a simplified fee structure.

As mentioned above, the airline would fly to secondary markets. This isn’t just about flying to lower cost airports, but rather to create a “defensible” route network, that isn’t threatened by the “big” carriers. So he hopes to create demand for new air travel by operating routes that are underserved.

How does this compare to Moxy?

This isn’t the only new start-up airline in the US. We also know that JetBlue co-founder David Neelman plans to launch a US low cost carrier named Moxy, operating Airbus A220 aircraft. However, this new carrier from Levy could launch before that.

Moxy also plans to launch flights to secondary markets, serving markets like Providence, Rhode Island, Fort Worth Texas, and Burbank, California.

Interestingly Moxy plans to offer spacious seats and free wifi, so in terms of product it should be different than Levy’s airline (which is most definitely not offering spacious seats).

Bottom line

The US airline industry sure could use some more competition to keep the “big guys” honest, so I wish Levy all the best. There are still lots of details to be ironed out, though in general it looks like the plan is to fly densely configured aircraft between secondary markets with a straightforward fee structure.

I appreciate that Levy recognizes the need to be different than what’s already out there, though it remains to be seen how different the execution actually is.

What do you make of this new startup concept?

(Featured image courtesy of Owen O’Rourke)

Comments
  1. If they want to start flying from Boise as a secondary market and shake up some of the pricing, I’d welcome any new airline! Allegiant started flying to Phoenix/Mesa from here for roughly $125 roundtrip and has given American a run for their money since they regularly charged $280+. I flew American in January for $100.50 roundtrip in basic economy…unreal!

  2. Isn’t Sun Country, under it’s new ownership, already attempting this business plan? How may low cost carriers can viably chase the mysterious secondary market?

  3. I guess the question is whether there’s enough secondary markets with enough pax to make this work. Why do you need a densely configured 737 to fly between small markets without much traffic? Moxy’s model seems to make a bit more sense. But I guess it also depends how much you’re paying for the leases. Tiny point to point networks between small markets doesn’t sound like a recipe for success. But I suppose you gotta start somewhere.

  4. Unrelated, but haven’t seen you post on Kazakhstan changing the name of its capital city from Astana to Nursultan. When should we expect the airport name/abbreviation to change?

  5. @ The nice Paul: Is it not entirely a different issue? Boeing bullied Bombabier and blockaded it from launching the aircraft. Bombadier decided to sell the project to Airbus because it wanted the project take off the ground and compete with Boeing. Boeing does not have an ally in Canadian aviation industry.

  6. @ Evan
    It’s been 43 years since Saigon became Ho Chi Minh City. The airport code is still SGN and Beijing is still servide by PEK. So I’d guess at least 43 years.

  7. Does XTRA Airways have any connections to XTRA aerospace. XTRA Aerospace is the company who tried to fix the faulty lion air sensor. Both are based in Florida.

  8. Sure could use a cheaper option here in Wisconsin to fly from Wausau to Chicago….a one hour flight with a checked bag costs over $300.
    My fiancé is in India so I fly outta Chicago, that one hour flight costs half as much as the 20 hour flight to Mumbai does. It’s a 7 hour drive to Chicago and multi hour drives to any other international airport for me and all of us in central Wisconsin tho so the small airport knows they can charge a huge amount for the short flight.

  9. “Moxy also plans to launch flights to secondary markets, serving markets like Providence, Rhode Island, Fort Worth Texas, and Burbank, California.”

    How on earth is Fort Worth considered a secondary market when DFW is actually in Fort Worth?

  10. @JG – I believe Moxy is considering flying to Fort Worth Meacham instead of DFW. Meacham hasn’t had commercial flights since (IIRC) 1998. Skybus considered flying there, and even considered flying to both Meacham and Love to cover the entire Metroplex without the expense of DFW, but the Wright Amendment restrictions were still in place.

  11. Why are all these ULCC focussed on the west, we have some excellent and very underserved airports here in the mid Atlantic region like PHF but, it’s a chicken and egg problem, the smaller airports have little or no infrastructure like bus routes, you might get there but, unless there is a car rental desk how do you get away from there. My granddaughter is visiting her boyfriend in Fort Lauderdale outbound ORF to FLL via ATL (makes sense), Inbound FLLto ORF via JFK!

  12. @CraigTPA

    I get that, but to call it a secondary market to me, is misleading. “Underutilized airport” maybe, but it’s not a secondary market when you consider the area itself is home to one of the busiest airports in the country.

  13. Yeah… good luck with that
    The airline industry sucks the life out of both the employees and the passengers. Occasionally a carrier will come up and try to do better (Independence Air)
    But it usually rapidly spirals into bankruptcy. The cost to enter and actually keep people semi happy is exorbitant

  14. Interesting that they will have Hillary Clinton’s livery and website address. Talk about a doomed airline…..

  15. Usually I’d laugh, but I’d tend to think a former CFO from UA would have a very good handle on revenues and costs for a variety of markets and aircraft types.

    I’m curious, however, about what the definition of “high quality… basic service” is. Seems to be two conflicting objectives.

  16. Why the picture of Hillary’s plane? The most corrupt political candidate to date…. At least show Bernie’s or something!!

  17. >The Real Paul says:
    >April 3, 2019 at 7:35 pm
    >Why the picture of Hillary’s plane? The most corrupt political candidate to date…. At least show >Bernie’s or something!!

    You do know Trump is President??

  18. With an airline, you can have any two of these three options: 1) Great service and aircraft/seats, etc.; 2) Cheap fares; 3) Reliable, timely flights, routes and convenient schedules.

    You only can pick 2. Not all 3.

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