LONDON – As an aviation analyst specialized in route network development and airline business strategies, my job is to help customers with analyses and give them my suggestions. For this Christmas, I have decided to take a look at Avatar Airlines and its opportunities to become successful.
Avatar has a 30ish years old history; however, none of its planes have ever taken off. Avatar’s story begins with Barry Michaels, who founded Family Airlines in September 1992. The airlines targeted the leisure market by offering ultra-low-cost tickets.
Family Airlines never received permits to start operations, and in March 1993, the FAA announced it would not even process further applications. After a number of lawsuits, the DOT issued an ultimatum: Barry Michaels had to go, which he agreed to. Lawsuits ensued and obliged Barry to repay US$360k to investors and pay a penalty of US$180k.
A decade and a half later, Family reappeared with literally the same business plan as before. After another unsuccessful try, it redesigned itself as Avatar Airlines, but the DoT denied its application yet again. The airline became active again last year and they proposed another application. The DOT denied that application in April.
Full of Nonsense
As usual, I’ve made loads of research. I’ve read Avatar’s whole website, most of their DoT application, in addition to dozens of articles. Needless to say, I raised my eyebrows countless times. I thought that a 10-year-old without aviation knowledge had written what I was reading.
I will not contradict every nonsense I saw, as there are many articles and videos that do that. While I was writing this article, Nonstop Dan published a video about fake airlines, mentioning Avatar Airlines.
However, I would really like to address the biggest nonsensical thing I encountered, the “Why the 747” page on their website. This made it clear to me that Avatar Airlines’ Board had NO experience whatsoever when it comes to the aviation industry.
According to Avatar, having two more engines means that aircraft do not have to divert if the two other engines flame out, unlike the Boeing 737. This can give us a picture of how safe this airline would be.
Will Avatar ever Take off?
With Avatar’s current business model and most importantly with its Executive Board, I am certain it will never take off. So, why write this article?
Because there is a business model that could make Avatar’s concept profitable. Also, as an aviation enthusiast, I just cannot let an all-Boeing 747 airline project die. Moreover, it is Christmas, and this holiday is about giving and not deriding others.
Advantages of the Boeing 747
While most airlines are phasing out the jumbo jet, there are actually a few advantages of the Boeing 747.
- Cargo: The Boeing 747 can carry 28/30 LD1/3 ULDs or 5+4 pallets in the lower deck (below the main deck). Obviously, Avatar would carry bags too, so minus that. (see in the business model section).
- Capacity: Upon my ideal configuration, the Boeing 747 would carry 517 passengers (it could carry a little more, the emergency exit capacity is 550). How could Avatar fill all these seats? See below in the Destinations section.
- Slots: The Boeing 747 would only need one slot, which could be important when flying into major airports.
Disadvantages of the Boeing 747
While we all love the Jumbo jet, there is a reason why most airlines are getting rid of their Boeing 747s:
- Four engines: While Avatar thinks that the extra two engines is a huge advantage, it actually it isn’t. When you consider that Avatar would use the aircraft for shorter distances with a much heavier load, it would result in ~11kg per kilometre (40 lb/mi). Per passenger (counting with 517), it would be 2,13. While you may say that “Per passenger, it’s lower than the 787”, for that Avatar should actually fill up 517 seats.
- Longer turnaround: More passengers mean a longer turning process, especially in the US. While in an European remote stand, we can quickly board/deboard a Boeing 747 using three stairs, this would not be possible in the US. With a single jetway, I’d count about 2.5 hours to turn the Boeing 747 around. As such, longer turnaround makes shorter flights ineffective with bigger aircraft. I know that the Avatar Board loves using simple math, so I’ll put it this way. While an A321 can make five return 1-hour hops carrying 2000+ passengers, a Boeing 747 can barely do two carrying the same amount but burning significantly more fuel.
- Too big: There are only a very few markets on which you can fill 500 seats. We will take a look at those in the Destinations section.
- Weight: Avatar didn’t seem to care about airport fees even though it is usually the costliest part of the flight. As the Boeing 747 is pretty heavy, it would result in higher airport fees.
Based on the previous two paragraphs, I do not suggest Avatar buy the Boeing 747-8, especially not 30 of those.
Instead, there is the Boeing 777-9X, which can carry about the same number of passengers with only two engines. Also, if Avatar wants to serve smaller markets, it could also check out smaller aircraft like the Dreamliner.
The most important part when starting the airline is choosing the right business model. Avatar Airlines’ planned business model is, however, wrong on many levels. For example, you can’t be the most customer-friendly airline and give everything for free if your prices are low. Avatar Airlines obviously doesn’t know how European ULCCs work, so let me unfold their business model.
In 2019, Ryanair (FR) reported that ancillary revenues accounted for 32% of their total revenues. They charge for cabin bags, checked bags, seat selection and catering. Charging for that many things may not be rewarding in the US market and I do not believe Avatar should take that route. However, Avatar’s opposite route to offer two bags, seat choice and Wi-Fi access for free is suicide.
I will not publish my ideal business model for now, but I’ll leave a hint:
- Free checked-in luggage results in less cargo space. Most passengers travel with only a handbag, but would bring a carry-on. Having or not having a cabin bag included in the price is a deciding factor for many passengers. Avatar should allow one cabin bag with a low weight allowance for free, so passengers are motivated to buy the extra package if they need it.
- If you allow unlimited Wi-Fi access for everyone, it will be slow (500 passengers would use it!) and you won’t have extra revenue. If the Wi-Fi is too expensive, no one will use it. To solve this riddle, one should price this service reasonably.
- Offering free seating would be a huge mistake when flying only Boeing 747s. I wouldn’t like to publish my concept on the best seating option neither. Although, just as an FYI for Avatar, not offering free seating before check-in is also better for the airline to balance the aircraft and to deal with standbys.
- If your aircraft is able to offer lie-flat seats, do it because that generates more revenue and more passengers would choose a lie-flat business product than a recliner one. (So, more passengers would choose you instead of your competition). In my calculated payload, I included 12 lie-flat seats on the Upper Deck.
- There is a US$14 security fee for all tickets in the United States, in addition to higher airport fees (compared to Europe). I believe that US$20 should not be a minimum fare (as it would fail to bring revenue), but instead a promotional price. Also, do not guarantee a US$99 maximum fare if you book 30 days before, because you will miss out ALL peak travel.
I would kindly ask the Avatar board to junk the proposed route map which can be found in its Private Placement Memorandum.
It is a huge mistake to only look at carried passengers’ rate when planning a route map. On a short route, flight times are crucial. Let’s say 2,000 passengers travel between City A and City B and NONE of them transfers at either city.
You may put them on four jumbo jets or on ten A321 flights. If you choose the former option, each flight would have about 350 passengers, and 600 potential passengers could still not find a suitable option. Why? Because there is no flight that would fit its schedule.
So, Avatar should choose what I call ‘endless markets’, or city pairs which can always fit more capacity. There are plenty of them around North America, mostly comprised of holiday markets. As mentioned before, Avatar should choose medium-haul routes for its network.
It would also be beneficial for the airline to choose two or three bases to start said operations. I shall not provide a detailed route network but can suggest some opportunities.
Avatar Airlines can be successful if it wants to. However, if it sticks to its current 30-year-old vision, the airline will never take off. Avatar should start planning differently if it wants to change its success factor. Until then, it will not lift off the ground.
Featured image: Avatar Airlines Livery Concept by Miklós Budai / @aviationmike.hu. All rights reserved.