Philip Pilosian/Shutterstock.com
- Avelo Airlines' competition is growing just weeks ahead of its first flight.
- Alaska Airlines just announced a new California route between Santa Rosa and Burbank, Avelo's flagship route.
- American Airlines will fly larger planes between Burbank and Phoenix, another Avelo route.
- See more stories on Insider's business page.
America's newest airline was already facing an uphill battle by launching during a pandemic, but now it has some of the country's largest airlines trying to extinguish its flame before the first flight has even departed.
Avelo Airlines is launching on April 28 with a whopping 11 initiation routes from Burbank, California near Los Angeles, and an ultra-low-cost business model where passengers pay as little as $19 for a ticket. The highly-anticipated debut comes with CEO Andrew Levy at the helm, a cofounder of Allegiant Air and former chief financial officer of United Airlines.
"We're trying to do something different and all 11 of these routes are unserved from Burbank," Levy told Insider the day the airline launched. But less than two weeks later, Alaska Airlines challenged that status.
Avelo's flagship Burbank-Santa Rosa, California route, a non-stop link to Sonoma County wine country, will also see Alaska offer competing flights starting June 1, with low introductory fares of $29 one-way to match. The Alaska flight departs Santa Rosa in the afternoon and returns from Burbank in the evening while Avelo's departs Burbank in the morning and returns from Santa Rosa in the late afternoon.
"We take competition seriously and want to make sure guests in Sonoma or on the West Coast more broadly always have the option of traveling on Alaska or one of our partners," an Alaska spokesperson told Insider.
Alaska is already striving to be the airline of the West Coast, as Insider found on a recent flight, and has a robust intra-California network. Santa Rosa is served from Los Angeles, Orange County, and San Diego in Southern California, which the airline says will help it keep customers despite Avelo's entrance into the market.
"We're confident that our value proposition and longstanding commitment to the communities we serve puts us in a position to compete for and to win guest loyalty," Alaska's spokesperson said, adding that its data indicated customers may prefer flying into Burbank instead of Los Angeles.
Many of Avelo's routes from Burbank are served by Alaska from Los Angeles so the new route is likely a show of strength but Levy told Insider that there should be plenty of passengers for both airlines.
"Our business model is built about stimulating demand with really low fares and if that's as successful as we expect it will be, then there'll be plenty of us traffic for us and our good friends up in Seattle," Levy said.
American Airlines took the more subtle approach and upgraded its Phoenix-Burbank route to larger aircraft. Starting in August, five daily flights between the two cities will see Airbus A319 aircraft, according to Cirium, nearly doubling the number of seats available compared to the Bombardier Canadair Regional Jet aircraft that frequent the route.
"We've been pleased with the performance of this route, even in the midst of last year's slowdown," an American spokesperson told Insider. "We'll continue using regional aircraft on this route for the summer months, but will move to the A319 in the fall when more mainline aircraft become available for flying to match the increased demand."
Avelo plans to fly between the smaller Phoenix-Mesa Gateway Airport preferred by ultra-low-cost carriers while American uses Phoenix's Sky Harbor Airport, offering connections to its greater route network. Both American and Alaska are members of the Oneworld airline alliance and the two are long-time partners on the West Coast.
There's one major advantage Avelo will always have over airlines like Alaska and American: price. An ultra-low-cost airline, travelers pay low fares for their seats and then are charged extra for things like advanced seat assignments and carry-on bags.
American and Avelo may try to compete on fares, and they have the capital to do so on some routes, But chief executives of ultra-low-costs frequently cite their lower cost structures as the way they're able to beat out major airlines in the long-term with consistently cheap fares.