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Interview: David Neeleman’s New Airline Breeze Is Taking Names
Airline industry titan David Neeleman is in his fifth decade tackling one of the most challenging tasks in the business world: starting airlines.
In the 1980s, it was charter carrier Morris Air, later purchased by Southwest Airlines. In the 1990s, Neeleman served at rising WestJet before going on to found JetBlue just before the turn of the century. And only a decade later, he moved to Brazil to start the company that would soon become Azul Brazilian Airlines.
And 11 years later — after a stint away from the industry and time spent leading a contingent of investors that purchased TAP Portugal away from the Portuguese government — his most recent venture is almost ready to take flight.
AirlineGeeks sat down with Neeleman in advance of the carrier’s hopeful entry into service later this year as the airline looks to get flying on the heels of a 12-month period that has seen travel demand plummet to near zero and slowly climb back to where it sits today.
Despite the trials and challenges, the past year has brought the airline industry and the world alike, Neeleman sees opportunity coming for a new player in the months ahead.
“Business traffic is obviously the big unknown right now, but we’re not after that market,” he said. “With just about everything we see, business is getting ready to explode. People are sick of being pent up, and they want to get back to their old lives. There’s a lot of pent-up demand that’s going to be out there for the taking. We’re excited about it.”
Neeleman believes the business travel market is where the biggest uncertainties lie, which he believes will cause fewer troubles for Breeze than for larger legacy carriers including United Airlines.
“It was a big portion of their businesses,” he said of the legacy carriers, “so I think that’s going to be the interesting thing to deal with is when are people going back to work. You heard [United CEO Scott] Kirby say, ‘The first time you lose a sale to someone who got there in person, you’re going to get on a plane and go make a sale.’ But it’s going to be interesting. I’m not all that concerned about it because it’s not really our business, but it’s anybody’s guess. If I told you I knew, I’d be lying to you.”
In 2019 and 2020, Neeleman had made it no secret that Breeze saw 500 routes with no competition — a key factor in most of the city pairs the carrier is targeting — where the airline thought it could be successful. Today, he says that number has jumped to 700, bolstered by other U.S. carriers trimming their schedules throughout 2020.
Perhaps more important though is Neeleman’s hope that Breeze will be able to create demand in places it hasn’t existed before, a business model he likens to Allegiant’s.
“The market doesn’t exist in a lot of these cases. If you’re living in Huntsville, Alabama — and I’m not saying that’s one of our cities — it’s a ten-and-a-half-hour drive and then you have to connect through a hub,” he said. “Though I think Frontier has a couple of flights a week there, it costs you a lot of money and more time. In order for our business to work, demand has to increase in some markets ten times, twenty times. That’s why nobody’s gone after Allegiant, because they’ve created more traffic than they stole from everyone else.”
In order to do that, one of the next hurdles the airline will face will be getting the Breeze name in front of potential travelers. But Neeleman thinks the airline will have an easier time than a larger airline might when launching new routes.
“You’ll be able to see what our fares are, you’ll be able to see what our schedules are and how convenient they are,” Neeleman said. “We’re going to launch a lot of cities in pretty short order, but they’re going to be peak days of the week. And our planes, we have low trip costs. We’re not going to have to fill a 150-, 160-, 170-seat airplane like people who have bigger airplanes.”
In that vein, Neeleman sees the airline’s fleet, which will feature both Embraer E190 and E195 aircraft in addition to the newer and larger Airbus A220, as almost two entirely separate airlines — or as he said, “Airline A and Airline B” — operating somewhat different strategies. “Airline A” will include the smaller aircraft and operate shorter routes with lower demand levels.
“Airline A is an airline flying the Embraers that has low, low capital cost airplanes,” Neeleman said. “We don’t have to fly every day. We don’t have to fly even at certain points if we don’t want to. We can move around, or we can move with peak season, so we’re very flexible. We’re very mobile. We have low capital cost airplanes. So we could not fly on Tuesdays and Wednesdays if we don’t want to.”
Conversely, “Airline B” will fly the Airbus A220, operating routes the Embraer E190 family aircraft can’t and serving any higher demand markets the airline may target.
“Airline B has got an amazing airplane that can fly long distances, that can fly transcon, it can fly eventually to Hawaii, and it can fly from the northeast to places in Europe,” Neeleman said. “It can fly from Florida to places in South America. It has a lot of capability to fly markets that really nobody else can fly.”
To hear Neeleman describe it, that combination of the two aircraft will be crucial to the airline’s success over a variety of different routes and cities.
“We have markets that we’ll be flying with the E190s and the 195s that we would never fly with the A220s, and vice versa,” he said. “The capability of the 220, the Embraers can’t do. So it’s good because we can really do more things and grow faster.”
Though the airline’s success is by no means guaranteed, Neeleman believes that, just like his most recent U.S. venture in JetBlue, Breeze can be profitable right away, despite the fact the airline won’t benefit from economies of scale early on.
“Travel is going to be suppressed for a while,” Neeleman said. “More people are unemployed. People don’t have money to travel in certain states that may have been more hard-hit by Covid than others. But there’s also pent-up demand of people who want to go. I don’t have a crystal ball, but what I do know is leisure travel is booming right now and people are just getting ready to go. We have a really good feeling about it.”
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