MIAMI — On February 7, four days ahead of JetBlue’s 20th anniversary, David Neeleman unveiled the name and corporate identity of its fifth airline startup: Breeze Airways.
The new airline is currently applying for its Air Operating Certificate with the FAA and the DOT, hoping to launch its first flight by the end of 2020 with an initial fleet of 30 Embraer E195 jets, all leased from Neeleman’s successful Brazilian airline, Azul.
Breeze’s initial markets will be “mid-size city pairs that currently have no nonstop service,” all served with low-fare, high-quality nonstop flights that will bring “new consumer technology innovations,” according to the airline.
Breeze Airways will begin operations with a fleet of 30 E195 jets—all leased from Azul—until the first of 60 Airbus A220-300s that the airline ordered at the Farnborough Air Show in 2018 begin to arrive.
The first A220-300s are set to be delivered by April 2021, equipped with new technology innovations that will “improve the flying experience,” according to Breeze Airways. Presumably, the airline will revolutionize the industry as much JetBlue did in 2000 when it introduced Live TV and other amenities that were inexistent at the time.
David Neeleman successfully launched and developed Morris Air, WestJet, JetBlue, Azul, and transformed TAP Portugal into a healthy carrier, becoming one of the world’s most prolific and successful airline moguls.
Now, with Breeze Airways, he re-enters the highly competitive US market and tells Chris Sloan, Airways Senior Correspondent all about it.
Congratulations on unveiling your airline’s new brand, Breeze. You’ve said, “an airline makes the name, a name doesn’t make the airline.” But now you have a name. Does this name tie into the idea of a very digital seamless travel experience? Can you elaborate on that and does it have anything to do with the way you’re branding the airline?
We want to have a super-app that does everything. We want to make it’s as functional as possible, you can cancel, change, get and use credit. We want to make sure you never have to pick up a phone call.
We have a team of developers that are working hard to make it as close to that as possible.
When you say this is “the world’s nicest airline,” beyond customer service. Are there things you are planning to introduce to make it customer-friendly?
We want our people to know we are nice. It never costs anything to be nice. If you’re not nice you’re not working here.
We are going to take that mantle and let our customers know this and hold the people that work for us accountable.
Does “being nice” go beyond personalities, flight crew engagement, to being customer friendly in fares, pricing, fees and some of those conditions in being nice?
Absolutely, even if its technology, even if you ever talk to a nice person and have nice friendly policies and things that don’t get you irritated.
We are just trying to be as nice as we possibly can, not just face-to-face but also the way we handle our policies, our fares, how we charge fees and what the fees are.
I think the airlines make less money by charging more and tick people off, so I think it can actually be revenue positive.
That’s actually a reasonable price as opposed to you’re trying to rip me off. I think there is a bit of ground there.
This is DeJaBlue, 20 years ago you launched, JetBlue—an impressive airline with all-new aircraft, invented all new technology and you launched with an absurdly high initial capital backing behind it. What are the capitalization and ownership structures behind Breeze?
I’m funding it myself, the people that work for the company are also participating. Other than that, we have no outside investors. We certainly have more capital (than with the JetBlue launch).
I’ve been blessed with really good people that have helped me make a lot of money.
By doing it yourself, it makes it a lot easier, you don’t spend a lot of time talking to shareholders and trying to make them happy. You just do what you think is best for the company and you can focus on that a lot more.
We are enjoying that portion of it.
This is a company that you foresee will remain private for the foreseeable future?
Yes, it doesn’t need to go public ever I don’t think. For now, we intend on keeping it private.
You’re not going to reveal any routes or city pairs, but I just want you to speak a little bit about the network and route-stimulation strategy.
I think what’s important is we have a low capital cost airplane that burns less fuel and is a larger airplane. So, we have a low capital cost airplane with a lower trip cost, which allows us to be able to things that maybe some of the others didn’t.
It’s not like an Embraer E175 or maybe an Embraer E145 or CRJ200 where you only have 50 passengers. It’s not like where you have maintenance and crew costs where we are paying equal or more for the airplane.
We can actually put out low fares because of the low capital cost nature of the airplane and we can fly in markets where we don’t have non-stop competition. That doesn’t mean you have a lower clientele; you can appeal to everyone. You can appeal to people who own a home or second home in that place.
I have a home in Arizona and my next-door neighbor there has a couple of million-dollar houses. He comes from Wisconsin 12 times a year via Allegiant and he won’t fly with anyone else besides Allegiant because it’s so convenient and works perfectly for him.
If you can give customers a fare that’s half of what they would pay if they were connecting through a hub and you can get them there twice as fast, so they don’t have to make a connection, they don’t have to wait on the ground and they don’t have to deal with the variability of going through a hub.
Our Chief Commercial Officer came from Allegiant and nobody knows these types of fares as well as he does, and he is very excited about having a plane with a lower trip cost and a lower seat per mile cost.
Is this very much like the Allegiant model with low fleet utilization and flying to secondary airports in underserved airports to leisure cities?
Would you see yourself serving major markets, connecting the LA’s, New York’s and Chicago’s beyond just the ignored hubs and things of that nature?
We could go small to big, or medium to medium, or small to medium. We can do all of the above and have more flexibility. We have a plane that has a 15% to 20% lower trip cost and a similar seat cost. It allows you to do more city pairs than it would if you had a higher costing airplane.
Can you do that with the A220 due to its lower cost per seat mile?
It has a similar seat cost to an A320neo as it has the new engine option, I think the capital cost per seat is very similar. Maintenance costs are pretty similar although they are not exactly the same.
We fly the E2 in Brazil and also the A320neo, the seat costs are the same although one has a 20% lower trip cost. Those planes will fly long-haul and I’d expect those planes to fly 10, 12 or 14 hours per day and we think there is a market for that. Not necessarily daily out of an area but we can do it a couple of times per week.
We can fly the Northeast to Europe, The Southeast to South America. We can do a lot of things with that airplane.
We also have a quick-change capability to swap out the business or first class seats for coach seats in a 24 hour period. Which is something that no airline has ever tried to do before, and it gives us an edge.
You can switch the seats out almost overnight?
Does the E195s and E190s reputation for being very maintenance-heavy give you any concerns?
Two things on that, the engine has been a concern in the past. Azul is a smart company, and they don’t want to see these planes getting parted out. We have been able to work out a deal with them which makes the plane much more competitive.
The planes we are getting are six to eight years old and because the plane is starting to get swapped out for the E2s, we can find parts at a fraction of the cost. A lot like Allegiant was doing with the MD80s but instead of the planes being 25 years old, they are six or eight years old.
Those two factors are going to really help get the cost down where we need them to be for us to be competitive and charge low fares.
The last time we talked you were planning to launch sometime in 2021 but you’ve now pulled that forward. Is that because opportunistically, the E195s from Azul and other airlines will become available that allow you to launch earlier?
Yes. I’m the controlling shareholder of Azul and I have a lot of my wealth tied up in Azul. When I did the numbers, I said: “When we swap out these E1s for E2s we are going to make 100 to a couple hundred million dollars a year more.”
They asked, “What are you going to do with the E1s?” And they suggested, “Let’s place them with LOT Poland.”
But I said no as I wanted to take the rest of them as I think I could make money from them, flying them three, four or five hours a day with a lower capital cost and there is a lot of opportunity in the U.S. for these jets.
Are these aircraft going to have modern cabins fitted in line with your A220 product?
I don’t know if the seats will be new from day one, but we are going to a lot of ACMI flying for the first six to eight months, and during that time we are going to put all brand-new interiors in the airplanes which will look really great.
We are not competing wingtip to wingtip with airlines that have all the amenities like JetBlue or Delta. The internet is going to be available on our A220s, and it could be free.
It doesn’t make economic sense to install Wi-Fi on these (short-haul) E195s but passengers will have something where they can watch movies or download them to their iPads, and the aircraft will have new interiors and we’ll be flying to places for half the price and much quicker, so there are always trade-offs.
Will you have seatback power on the E195s even though the flight lengths will be two hours and under?
We will have seatback power in the E195s but it’s not as necessary as it will be on the A220s.
Can you give me a sense of how you scale up to scheduled service? You talk about starting with ACMI, but do you have an idea of when you would start Part 121 scheduled service?
It’s up to the FAA, so I don’t want to get ahead of those people and start promising dates as that would be fair to the FAA and their process.
We have a deal with Azul where we don’t have to pay for them until they start flying and if it takes a few months longer. That’s great. We’ll be ready to go when we get our approvals.
Scheduled service is planned for this year (2020) sometime?
Maybe, but it is not essential.
I asked you last time about the biggest concern you had with launching a new airline, you said it was addressing the pilot shortage. How do you solve this with Breeze?
We are hiring pilots and we are going to create a great bunch of work, so people are going to love flying for us.
It’s always going to be a battle, but we have our own unique plans to create our own pilots as well.
There’s a lot of pilots out there that are great but need to accumulate up to 1500 hours and we are going to help them do that.
You are going to raid the regional airlines out there for pilots and American Airlines, who is getting rid of its Embraer E190s?
A lot of the regional pilots already have the type rating on the airplane, we can create attractive schedules for their quality of life which is what they care about. After you get to captain and seniority, they will be able to go to the A220s.
We have a lot of attractive procedures that we believe will attract a lot of pilots.
How does ancillary revenue and unbundling your product look like? Is it similar to Allegiant and Spirit or is it a middle ground between where JetBlue is?
I think probably midway. We are not going to be irritating and we are going to try and be as fair as we possibly can. I think the change fees tick everybody off and we are going to experiment with lowering those.
The media pick on the fees and talk about how obnoxious they are. A lot of people find a low fare and make accommodations like taking a smaller bag.
Are food and drink charges going to be fair since you are a nice airline?
We will have fares where you won’t have to pay for any of the amenities which will be a cheaper fare and we will also have fares that will cover them if required.
Between Azul, WestJet, Morris Air, and now Breeze, you are the most prolific airline creator in history. Next Tuesday (February 11th) marks the 20th anniversary of the inaugural flight for JetBlue and you have one of their aircraft named after you. Can you reflect on what you created in JetBlue and the airline that it is now?
I really couldn’t be more proud of JetBlue and all we have accomplished, I couldn’t be more proud to be the guy that created it. The people who work for the airline deserve all the credit and it still is a special place to work.