Just 16 months after its debut, the budget carrier Avelo Airlines has flown its 1 millionth passenger from Hollywood Burbank Airport.
The Houston-based airline celebrated its milestone by giving each of the 152 passengers flying from Burbank to Boise, Idaho, a pair of free roundtrip tickets to anywhere the airline flies.
The Friday, Aug. 12 milestone was reached on the 7:30 a.m. flight. Burbank airport’s newest carrier, Avelo launched in April 2021 serving 30 destinations in the U.S., including its three hubs at Hollywood Burbank Airport, Southern Connecticut’s Tweed-New Haven Airport and Orlando International Airport.
Andrew Levy, Avelo’s founder, chairman and CEO, was aboard the Burbank-to- Boise flight where he gave the passengers the good news.
“The reaction was surprise and delight,” Levy said. “Needless to say, it was a happy group of folks.”
The milestone comes amid tough times as airlines struggle to cope with high fuel costs.
Since the start of 2022, the price of jet fuel increased by about 90%, according to a recent McKinsey & Co. report, and fuel costs roughly 120% more, on average, than it did in 2021. Fuel costs account for roughly 25% of an airline’s total costs.
“Refining capacity has come down significantly post-COVID-19 as refineries, seeing less demand, have shifted capacity away from producing jet fuel towards other fuels,” the report said.
Russia’s invasion of Ukraine contributed to less crude oil and refined product exports, McKinsey said, and supply-chain constraints, coupled with a sudden increase in aviation demand, have caused additional price spikes.
“This has been the biggest challenge we’ve had since we started operations,” Levy said. “We went into the year thinking we were going to pay around $2.70 a gallon, but just last week the price was just a little under $4 a gallon — and during the second quarter were paying $4.50 a gallon.”
Levy said the rapid price spike derailed Avelo’s goal of reaching profitability.
“It’s had an enormous effect on our cash flow,” he said. “It has set us back a year in reaching that. All you can do is pass whatever is possible on to consumers … but you can’t just hike your fares by $30.”
Avelo’s current one-way airfares average $100, Levy said, which includes seat assignments and carry-on bags.
With a staff of nearly 500, Avelo celebrated its one-year anniversary April 28. The airline already expanded its fleet of three Boeing 737s to a fleet of 10 and the company expects to boost that to 14 by year’s end.
Avelo currently serves eight non-stop destinations from Hollywood Burbank Airport, including Eureka, Santa Rosa and Redding, California; Bend, Eugene and Medford, Oregon; Boise, Idaho; and Pasco, Washington.
Levy is no stranger to the industry. He was a co-founder and president of Allegiant Air and served as chief financial officer at United Airlines. He is also a board member of Copa Airlines, a Panama-based carrier.
“I believe there is room for more low-cost low airfare seats in the U.S.,” he said. “A lot of consolidation occurred in the industry after 9-11. That was good for airlines because it reduced competition and allowed them to raise prices. But it was bad for consumers.”
Avelo rose from the ashes of Houston-based Xtra Airways, which that was struggling to remain in operation. Levy acquired the company in 2018.
“I bought this airline that was small and had been stripped down to a bare minimum of about 10 individuals and one airplane,” he said. “The biggest issue I had was raising the capital to execute my business plan. That takes an enormous amount of money.”
With the help of investors, Levy managed to raise enough money by the end of 2019, just before the COVID-19 pandemic arrived. The global health crisis has impacted businesses across the board, but Levy said the airline industry has regained a lot of momentum.
“We’re trending up and we’re on a good path,” he said. “We just need to keep doing what we’re doing.”
Avelo is also running a promotion that will award one traveler 12 pairs of roundtrip tickets to any Avelo destination. The tickets are valid for one year. Travelers can enter at Avelo’s Instagram page (@AveloAir) or by visiting AveloAir.com/OneMillion through Sept. 12.
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