This time is different: Avelo sees a strong future as it launches Wilmington, DE base

Wilmington, Delaware is on the air world map. Again. The airport has once again secured commercial service and brought passenger flights back to the state. Avelo launched operations on 1 February 2023, with five initial destinations planned and more on the horizon.

Speaking at the pre-flight celebratory press conference, Delaware River & Bay Authority Deputy Executive Director Stephen Williams alluded to the long and challenged history of passenger flights at Wilmington-New Castle Airport. “We keep trying, because we’re going to get it right,” Williams explained. With Avelo he believes it will be different because “We found the right partner this time to make it stick.”

Avelo certainly is committing more to its version of service at Wilmington than any of the recent predecessors. The carrier made New Castle Airport its fourth base of operations (Burbank, New Haven, Orlando). An aircraft will live in Wilmington, as will more than 50 employees. And the carrier will serve more destinations from day one than prior airlines, including several markets that haven’t seen service in decades, if ever.

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During the flight I sat down with CEO Andrew Levy to understand in more detail why he felt Wilmington was ready for long-term success with an airline, something that has eluded the airport and the state previously, and what other growth we can expect from Avelo in the years ahead. Here’s what Levy had to say, slightly cleaned up for clarity.

This is not the first time someone’s tried Wilmington. What’s different today? Why is it gonna work?

Without focusing on prior experiences, I can point out some differences. I think probably the biggest one
I can refer to, what’s compelling today, is that we’re having an airplane that lives [at Wilmington]. We have people that are there on our team. We are committing to the area in a way that others haven’t. When it’s the only thing you care about, you tend to really focus on it.

[Frontier] is a great company, but they’re really more focused on Philadelphia. And they’re also very focused on Trenton. Wilmington, at least from my perspective, seemed to be probably a little bit of an afterthought. Whereas for us, it’s the only airport we want to serve in the metro area.

Another more tangible point that’s different is we’re serving five different markets, including several that have not seen service in decades. And it turns out that turns out a couple of those airports are actually our best ones so far. We’re serving different markets than others have done. And so we feel really optimistic about what’s going to work. It will take time, but we think it’s going to work really well.

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Which of the five markets is performing best so far?

They’re all doing well, all are off to a good start. But Tampa, which has never had service, at least not in recent memory.

You mentioned potentially bringing in a second plane later in the year. What markets would you serve with that growth?

We’re definitely looking at opportunities. We really focus on taking people where they want to go. People obviously like Florida.

But a lot of people up in New Haven like Myrtle Beach and Savannah and Charleston and Nashville. So those are some examples of markets we could fly into Wilmington. As long as we believe that the demand is there.

What about Portsmouth, NH? (Look, I got an audience with the CEO; you better believe I’m going to try to get more local service for myself.)

<Laughs> Not anytime soon. I put us in there at Allegiant. Pease is a fantastic little airport. The only problem with Pease is there’s an ocean to the east, so there’s no people there. If you stuck that 20-30 miles west…

You’d be in Manchester (32 miles as the crow flies).

Well, we’ll be in Manchester, maybe as early as this summer from Raleigh.

We wanted to start the airline in Wilmington, but we couldn’t get the deal done, so we ended up in Burbank. We were looking at Burbank and Manchester. Manchester is an airport we really like. A great location, just a little more expensive than it should be.

Your business model depends on used 737s. There seem to be plenty of those on the market today. But how much can you really grow? Is there a cap on the market?

I think that we have a massive opportunity. The industry trend that has been blowing in the same direction for about 20 years, and I think it’s going to continue, is that more more smaller markets and secondary airports are losing service. That’s where we can come in and offer an alternative. Obviously it has to make money. We’re not building a network. We’re building a series of flights.

But I really believe that there’s so much opportunity out there. We are ready. I wish we had a bunch more airplanes to pursue the opportunities that we have right in front of us, that we are really excited about.

And as we look further into the future, there’s almost an endless amount of opportunity in our view. We’re still young and we’re still getting to where we need to be. But once we get there as far as generating cash, generating really consistent levels of profitability, a good balance sheet, good profits, you offer a good product to the customer. At that point, really, the opportunities never end as long as you keep that focus.

Where would that growth focus near-term?

I expect absolutely we will have more bases in Florida, which will allow us to serve even more flights into existing cities and add a lot more spokes along the way. And then of course, we have this big part of the country that we haven’t even touched, which is in the Midwest, from Texas up north. And we barely scratched the surface out west.

We’ve got a lot opportunities.

Any chance of shifting away from the used aircraft market?

Used airplanes are great. We prefer to get airplanes that have come from good operators with a good history. This airplane itself is a former Southwest Airlines airplane. This airplanes has 15 more years of life. Now, will we fly it for 15 years? Who knows. It depends on the other alternatives in the market.

But I like used aircraft because for the most part, they offer the exact same product, same economics, with one big exception: the purchase price is substantially lower. That enables you to not have to fly the airplane 12 hours a day to make your numbers work. I like that trade off an awful lot.

At some point you get too big, where you need the standardization of new airplanes. At some point maybe we will get there. But that’s a long time down the road, I expect.