Breeze blows inland, slow-rolls launch plans

The newest US airline, Breeze, is taking a delay in its launch plans. The company is also adjusting its fleet plan and service markets in response to changing market dynamics.

Rather than pursuing a new operating certificate from the FAA Breeze now intends to purchase the certificate of Compass Airlines. The regional jet operator halted services earlier this year as American Airlines slashed its regional services. But airline operating certificates rarely die; they’re too valuable an asset. By purchasing the Compass cert, but not the associated international route authorities, Breeze can expedite its transition from a theoretical airline to an operational one.

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Adjusted fleet and route network

Previously Breeze planned to lease 28 Embraer E-195 jets from Azul. Now the company intends to launch with a smaller fleet of 15 E-190 aircraft leased from Nordic Aviation Capital (NAC). The company claims the terms on the NAC leases are more favorable and the smaller fleet offers a more manageable growth path and expenses. The A220-300s are still coming as well, though now slated for deliveries starting in late 2021, not at the beginning of the year. That six month delay matches the planned slow-roll of the other service launch.

Breeze initially intended to run for three months as a charter carrier before adding scheduled flights to the mix. Now it intends a six month charter run, with scheduled flights not starting until May 2021.

Back in February Breeze intended to “introduce scheduled service on three north-south leisure routes in the Eastern United States.” That was to be followed by “more service east of the Mississippi river with flights from existing destinations to points in the Southeast and mid-Atlantic region.” Those routes are now scrapped. Instead the company will focus more on connections between 15 cities in “the Atlantic Coast, the South, Texas, and the Midwest.”

Read More: What we learned about Breeze in this week’s DOT filing

Indeed, with the Compass certificate and operations based in Minneapolis, it appears that the new plan will face Sun Country head-on. Or not. There’s no requirement to run flights from the base, though it can ease certain processes. And the proposed timetable suggests a much broader range of cities served rather than a single hub.

The revised launch schedule shows several routes crossing time zones, further emphasizing the company’s plans for more Midwest service. And while several of the same city pairs were in the initial details filed in February the revised version reduces weekly frequencies dropping in many markets.

Founder David Neeleman previously noted that the operating economics of the E190s offer great economics at a 2 hour stage length. But the costs quickly deteriorate from there. So the shorter hops are mostly what the company will run to start. Indeed, while the original plan anticipated 172 weekly departures and 7:15 of aircraft utilization with 7 active aircraft by month 8, the new plan anticipates 8 active aircraft operating just 164 routes and a 5:52 daily utilization at that same point in the company’s evolution.

The lower utilization can be partly ascribed to the shift in operational calendar, with peak travel months not lining up the same. But the overall impact is significant.

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Adopting the Allegiant model

Breeze is not shy about its expectations that  the business model will look a lot like that of Allegiant. The company will overfly traditional hubs and operate aircraft in thin markets on a very much less-than-daily basis. With the E190s that model is easy to justify; the capital costs are so low that running the planes less than 6 hours/day can still potentially be profitable.

Not only will the planes only fly on shorter routes, but the new theoretical schedule filed with the DOT shows the E190s operating at most 5 days/week. The company plans no service on Tuesdays or Wednesdays, and very little on Saturdays. The Saturday flights disappear in the later months of operation, another nod to the incredible flexibility the airline intends to exert on its schedule.

And the not-so-Allegiant model

The low utilization operations work well enough for planes that are cheap. That does not apply to the brand new A220s the company plans to purchase.

The A220s will spend a month operating on existing short-haul routes when they join the fleet. This presents a good opportunity for the company to grow into the new type and ensure operations remain smooth, while keeping an easy substitute aircraft on standby. But that only lasts a month. By Month 12 of operations (anticipated as October 2021) the company intends to be 50% larger than it was in months 7-10, including transcontinental service between California and the Atlantic Coast on its A220-300s.

But with the A220s the finances are a very different matter. For the new aircraft the block times will be much higher and they will fly daily, not just on peak days of the week. They will run a short (~2 hour) trip in the morning on the east coast before a transcontinental route out and back during the day. Indeed, the A220s will have about the same down-time on any given day as the E190s have operating time, based on the filings.