Avelo and Breeze Airlines have defied the odds by gearing up for a lucrative year, just three years after their launch during the Covid-19 pandemic. Despite the challenges faced by the airline industry during this time, both low-cost carriers have rapidly grown their operations and found success in linking cities with less competition from major carriers.
Avelo Airlines, led by CEO Andrew Levy, has flown 2.3 million customers in 2023 and achieved an average passenger occupancy rate of over 80%. While these numbers may seem small compared to industry giants like Southwest Airlines, Avelo reported its first profitable quarter in the last three months of 2023 and is expected to turn an annual profit in 2024. The airline generated $265 million in revenue for the full year 2023, representing a significant increase of 74% compared to the previous year.
Breeze Airways, founded by CEO David Neeleman, has also experienced growth and success. The airline flew over 2.8 million travelers last year with a passenger occupancy rate of 77%. Breeze is on track for its first profitable year in 2024. Neeleman, who previously started JetBlue Airways and Brazilian carrier Azul, has positioned Breeze as a low-cost carrier that avoids major hubs and operates out of smaller airports. The airline currently serves about 50 airports and hopes to expand to international destinations by 2025.
Both Avelo and Breeze have adopted a strategy of offering base fares with additional charges for services such as checked luggage and advanced seat assignments. This approach has become common not only among budget airlines but also among larger carriers. By keeping base fares low, the airlines have been able to attract customers while navigating industry-wide cost increases. Challenges such as a shortage of pilots and rising labor costs have affected the entire airline industry, but Avelo and Breeze have managed to overcome these obstacles.
Operational costs have also presented challenges for the two carriers. Avelo has faced delays in aircraft deliveries due to disruptions in the aviation supply chain caused by the pandemic. However, the airline remains optimistic and plans to expand its fleet from the current 16 planes to 21. Breeze, on the other hand, has announced plans to exercise options on 10 more Airbus A220 aircraft, bringing its total fleet to 32 by the end of 2024.
Both Avelo and Breeze have been able to thrive in the low-cost carrier segment, which includes airlines like Frontier and Allegiant. Their success demonstrates that there is room for multiple players in this space. According to industry experts, competition in the U.S. airline industry is beneficial for travelers, and the presence of these low-cost carriers adds to that competition.
While Avelo and Breeze may still be considered small players compared to industry giants, their rapid growth and profitability within just a few years of their launch is impressive. As they continue to expand their operations and explore new routes, these upstart airlines are poised for a lucrative year ahead.
