Building a startup airline seem like an impossible challenge. Former United CFO Andrew Levy explains his formula with Avelo
In the aviation industry, where behemoths dominate the skies and the gates, launching a new airline might seem like an act of sheer audacity. Yet, Andrew Levy , the founder and CEO of Avelo Airlines , has done just that — not once, but twice.
On this week’s This is Working, I talk to Andrew about what makes want to compete against heavyweights, the niche space he sees Avelo filling, and how he overcomes the unique challenges that involve not just being a startup, but a startup in a mature industry.
Andrew’s aviation career started in 1994 when he helped launch ValueJet, which later became Allegiant Air, where he served as president for 14 years. In 2016, Andrew joined United Airlines as their CFO. He surprised a lot of people when he resigned not quite two years into his tenure to start building a budget airline, launching Avelo Airlines in the middle of the pandemic. Andrew is fueled by “being a part of a team that can create something from nothing and leave a lasting mark," he explained to me. He said his goal is to be the better airline, not the biggest.
Where has that drive taken him? Today, the profitable Avelo, while still small at not even a fourth the size of most North American airlines, has 19 planes, flies to over 50 destinations, and employs 1,000 crew members.
Here are my top takeaways from Andrew's attempts to fly with the giants:
Know your niche
For Andrew, the idea that you need scale to succeed in the airline industry is a blindspot worth exploiting. As he sees it, “bigger is usually not better, and bigger typically is slower, has more costs, has more complexity, which drives expense. And it creates opportunities for small companies that know what they're doing.”
Not only is Avelo able to be more agile, but in zeroing in on underserved markets, they’re demonstrating that you don’t need to be the biggest to make a big impact. “By going into these smaller, secondary airports of large metro areas, we do offer a better experience for a large number of people.” Their New Haven route is a perfect example —?giving Connecticut residents a more convenient, closer alternative to trekking all the way to and from either Hartford or New York City airports.
But he also knows his niche has to be attractive, and that means staying low cost. “We're not going to win competing on breadth of service or schedule. We are going to win by having a very good cost structure, which enables us to offer a very competitive fare.”
Make your customers your marketing channel
No matter what you do, word of mouth is always going to be your best advantage. Andrew talked about “competing against companies that have household brands that have been around for, in some cases, over a hundred years,” pointing out Avelo’s biggest challenge: “How do you get people to know that you exist? And then, how do you get them to actually try you?”
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He candidly admitted, “It's really hard… I probably underestimated how difficult it would be or how long it would take. Certainly we have all kinds of marketing tactics that we use, whether it's public relations, billboards, traditional radio, TV, digital – you name it, we do a lot there. But by far and away, that word of mouth is so important for our kind of business and it takes time to build that because it takes time for people to actually try you.”
You have to keep your team excited and bought-in
People are not joining you because they know it’s safe; they’re signing on for a mission. That means you have to keep them in-the-known and excited.
“[When there were ] ten people that were employed, we would have a weekly call… Now we have over a thousand crew members around the country and we still do that.” Andrew also holds regular town halls, during which, he said, “There's always the opportunity for people to either raise their hand, write a question through email, if they prefer to do it anonymously, or, send a chat message.”
And when they do he responds. His belief is that you have to have open debate to get buy-in. He expects his team to speak their minds and challenge each other’s ideas. ”We are not a consensus-driven company. I don't like consensus driven cultures because I think that kind of lends itself to a risk averse environment, where you go to the lowest common denominator, the one thing everybody can agree on, which is usually the safest thing. And that's not the right answer.”
I’m fascinated by the topic of how you compete against massive, entrenched players. Are you or have you been in an business where you’ve had to do so? What worked and what didn’t? Let me know in the comments!
And be sure to tune into the latest This is Working podcast for an extended cut of this conversation. Find it wherever you listen to podcasts.
?? Spotify: https://bit.ly/ThisisWorkingAndrewLevySpotify
On LinkedIn’s video series, This is Working , I sit down with top figures from the world of business and beyond to surface what they've learned about solving difficult problems. See more from JP Morgan CEO Jamie Dimon , CVS CEO Karen Lynch , PwC’s Bob Moritz , Merck KGaA CEO Belén Garijo , Athletic Brewing CEO Bill Shufelt, AI leader Fei-Fei Li, former US President Barack Obama , filmmaker Spike Lee , Virgin founder Sir Richard Branson , IMF chief Kristalina Georgieva , cosmetics legend Bobbi Brown , F1’s Toto Wolff , and many more.
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3 个月Awesome insights. Well structured strategies to scale up any business. Although in our country India, most of the brands focus only on the middle class audience, i can hardly pick one brand that i can gravitate to. However, some top brands do exist in food businesses, which the price is pretty high, yet has to be a priority, for it's hygiene & taste. I would always, be inclined much towards car industry, like Maruthi Suzuki & Hyundai for it's best car modals, at fairly affordable pricing.
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3 个月I believed in your talent from Almighty God with courage, patience and endurance you will be successful in your dream. Thank you for sharing this brilliant mindset.
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3 个月Terrific Andrew Levy ?? Avelo Airlines ?? Thanks for sharing ?? Daniel Roth
Very informative
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3 个月Hats off to Andrew Levy of Avelo Airlines! This is no small feat and requires courage. Competing amongst beefier providers means that operations must be lean but of good quality. Your staff is your boots-on-the-ground so remaining open and accessible to them is critical. Andrew's approach challenges the prevailing business thinking that growth = scaling in size. My administrative experience at a small exclusive private school showed that expansion often results in sacrificing quality and the kind of personalized experience that many look for in a service provider. Instead, it's a fantastic idea for a business to glow up (rather than grow up) and offer a boutique-style experience. Though it remained small, the school's waiting list was long and parents enrolled their children from as early as birth. By force, I once had to fly on a well-known budget airline. Seated at the back, they ran out of sandwiches before reaching me and offered me the vegetarian option. To my disgust, it was a dinner roll with a slice of limp lettuce. That's not what I'm talking about. Though it may have fewer frills, a reliable, low cost alternative to New York is great. I know people who would jump at the chance. I, for one, will be checking out Avelo!