A route network to beat the airline startup challenges: Moxy begins to take shape

Moxy Airlines won’t really be Moxy. But serial airline entrepreneur David Neeleman is definitely moving forward with plans to launch early next decade. And the carrier will fly the Airbus A220-300 (neé Bombardier CSeries CS300) when it begins flights in 2021. More notable than not knowing the carrier name (“Moxy” is an internal project reference, not the real deal) is just how different the operation will be from other US startup airlines through history. This is not just another smaller airports/secondary cities LCC. And that could prove interesting for passengers and competing airlines alike.

The A220-300 brings capacity similar to the A320s JetBlue started with, but also significantly lower operating costs and greater range. JetBlue is expected to use its A220 fleet to expand service on secondary transcon routes, for example. And Moxy can do similar things. But Neeleman wants more that that. He aims to create a network of air service spanning the USA, Europe, the Caribbean and South America, and Moxy is key to that plan.

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Neeleman’s plan is not a no-frills operation, the likes of which are rapidly expanding across the Atlantic among other markets. He describes the new carrier as part of “a new generation” of US-based airlines “focused on passenger service and satisfaction.” That’s mostly good news for passengers as the plans firm up.

Crossing the Atlantic

Also good news is the planned route networks and partnerships. Moxy is expected to link up with Neeleman’s other airlines, TAP and Azul, to flesh out the route map. This won’t be a joint venture arrangement (at least to start) but getting the onward connections sorted out is good for all parties involved. TAP uses JetBlue for many of those connections today; nearly 20 percent of TAP’s North Atlantic passengers use JetBlue for an onward connection. Headed south, United Airlines continues to expand its investment and partnership with Azul, first formed three years ago. Shifting some of that service into an airline where Neeleman has more control could significantly benefit the group of carriers as a whole. And, while a joint venture is not in the cards today that could evolve over time; JVs are far more powerful in managing fares and flights than simple codeshare operations.

Sending the A220-300 the Atlantic from the Mid-Atlantic or Northeastern US gives an airline range to reach Portugal, Spain, Ireland, the United Kingdom, Benelux and parts of Scandinavia. Whether chasing secondary or primary markets the operating costs of the aircraft start to make a number of historically thinner routes more reasonable. TAP is planning similar expansion with the A321LR, a type seating approximately 40% more than the A220-300, but blending those together to help feed markets could prove a compelling counter to the current split of ULCC point-to-point service and JV-immunized capacity from the major legacy carriers.

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Flying South…

Heading south, the Caribbean is wide open with the A220. Whether from the east coast or the midwest the range of the aircraft offers a performance profile that can handle some of the smaller airports in the region as well as deliver passengers to the more well-known destinations. Another Caribbean option could be to establish a base in Puerto Rico and deliver better connections among the islands and deeper into South America. The post-Maria economy in Puerto Rico continues to struggle, however. Competition is also growing in the market, with increased service from Silver Airways on its new fleet of ATR turboprops starting soon. Moxy will not be all things to all markets and that one seems a poor choice initially.

…But maybe not south enough?

Heading further south, to link up with Azul in Brazil, presents some challenges. The A220-300 range does not allow the planes to reach the largest Brazilian markets of Sao Paulo or Rio de Janeiro.

But the Brazilian market is ripe for new entrants and new routes thanks to the recently approved and implemented open skies agreement between the two countries. There are many markets further north in the country that see direct service from the USA come and go as the economics of those operations vary. The lower operating costs of the A220 and its lower seating capacity could turn some of those destinations into moneymakers. And Azul can provide additional connections for passengers once in Brazil. On the northern side of the pairing the opportunities are even greater, with Azul growing its service into the USA, bringing passengers looking for options to connect elsewhere from the gateways. JetBlue and United fill that role today.

But why the A220??

Perhaps most surprising is that Neeleman chose to pas on the A320 and E190-E2 families of aircraft, types he knows very well from his other airline ventures. Then again, his familiarity with them also likely explains the choice. The A320 family of planes are larger while the E-Jets are smaller. Getting the right balance of size and range while hitting operating cost targets is a tricky play, driven in large part by the planned route network. Azul is the launch customer for the E195-E2 and ordered more this week. Similarly, TAP is the launch operator of the A330neo and will take A321LRs into its fleet. It is not that Neeleman doesn’t like those planes, just that they aren’t the right fit for the new carrier.