JetBlue’s founder thinks you need a vacation–and he’s launching a new airline to get you there
It’s late March and David Neeleman is holding court at a folding table littered with paper plates and the remains of a pasta lunch in a hangar at Long Island MacArthur Airport. The lanky 61-year-old is in a good mood, cracking jokes with the flight crew and operations staff he’s assembled to launch his fifth airline, Breeze Airways.
Neeleman is making his return to U.S. skies 14 years after he was ejected as CEO from the airline that made his name, JetBlue, and he’s brought in plenty of familiar faces from those days to help. After a frustrating year of Covid-related delays and remote work, they were finally together, working through a series of federal safety tests at this small airport 50 miles west of New York City, paving the way for Breeze to begin flying in late May.
Launching an airline is a huge risk in the best of times – and these are not the best of times. Last year was the worst ever for the aviation industry, with the six largest U.S. carriers collectively losing $35 billion, even after getting $25 billion in federal handouts to keep workers on the payroll. Breeze, which is funded with about $100 million from outside investors and Neeleman’s own fortune, is projecting to rack up over $200 million in costs by the end of 2021. headtopics.com
Borders remain closed to international travelers and doubts abound whether big-spending corporate road warriors will ever return in their former numbers, but Neeleman isn’t aiming for either of them: He believes Breeze is poised to capitalize on a pent-up desire among Americans to hit the beach and visit friends and family as rising vaccination rates wipe away worries about the coronavirus pandemic. Passenger numbers in the U.S. have already crept up over the last two months, climbing to within 31% of pre-pandemic levels on a recent spring break Saturday.
“Humans are meant to socialize,” says Neeleman, who over the past year has publicly argued that the pandemic wasn’t dangerous enough to justify broad lockdown measures. “They’re not meant to be cooped up in their houses and walking around with masks on.”
His plan is to play the airline equivalent of small ball, connecting second-tier cities that currently lack nonstop service, getting leisure travelers to their destination twice as fast and for half the money that Delta, United and American charge to route passengers through one of their big airport hubs.
Breeze’s launch map is a network of short, sub-2-hour routes that will expand to 15 cities by July. It’s focused on shuttling Americans to vacation destinations in the Southeast, bringing them in mostly from smaller cities in the region but also from a handful of places up north. headtopics.com
Breeze hopes cheap fares (“well under” $100 one-way this summer) and direct flights will convince many more people to fly these thinly traveled routes than before the pandemic, when most averaged fewer than 75 passengers a day.But with another new ultra-low-cost carrier spooling up to launch this spring — Avelo from former Allegiant President Andrew Levy — there will suddenly be six budget airlines in America, all competing for a price-sensitive market that’s shrunk. “There’s going to be a bloodbath,” says Henry Haarteveldt of Atmosphere Research. “I don’t expect airlines to give up market share to Breeze without a fight.”
“This is a technology company that just happens to fly airplanes,” says David Neeleman, who was inspired by Uber and Amazon to commission an app that will handle the vast majority of interactions with customers, which he says will help Breeze cut staff and overhead costs.
Aaron Kotowski for ForbesBreeze’s low fares will be enabled by low costs, partially courtesy of 15 dirt-cheap used Embraer E190 and 195 jets. Some of those jets are hand-me-downs from Azul, the Brazilian airline Neeleman founded after JetBlue. Others are being leased for a song out of the giant pile of pandemic-parked airliners worldwide. For the older jets Breeze is using, lease rates have fallen 23% during the pandemic to $88,000 to $100,000 a month, according to aviation data provider Cirium.
Neeleman says his small planes, which seat between 106 and 122 passengers, have trip costs 25% to 30% lower than the 150- to 180-seat Airbus A320s and Boeing 737s most budget airlines fly. He says Breeze can make money with as few as 60 passengers on a plane, and with their cut-rate leases, he can afford to fly them just around the weekends when it’s most profitable. headtopics.com
Eventually Breeze plans to start flying bigger planes cross-country and overseas. It has ordered 80 new fuel-efficient Airbus A220s, the first of which should be operational by the winter holidays. In a few years Neeleman plans for medium- and long-haul to be the bulk of the business.
Neeleman is also aiming to cut costs — and headcount — by designing the airline around new technology, chiefly a smartphone app that he intends to handle all interactions with customers until they board the plane. Bye-bye, big call center staff. (The risk, of course: that people won’t be able to reach anyone in times of crisis.)
That app, Neeleman says, is designed to convince customers to shell out for upgrades and extras, from food to rental cars, which Breeze is depending on to turn a profit. “[We’ll] flash someone a message, ‘Hey, we see you're flying today. Would you like to buy a filet mignon sandwich that we can hand deliver to you in your seat?’ Just add all these fun little add-ons where you can just click ‘yes, yes, yes.’ And we can just keep dinging the credit card.”
Extra fees are the wind beneath the wings of many airlines, but Breeze says it won’t gouge customers: Checked bags will cost $20 on flights under three hours, and it won’t charge change or cancellation fees. First-class seats on the A220s will be available for just $50 to $100 extra, a much smaller upcharge than other airlines.
On board, travelers will be greeted cheerfully — and controversially — by Utah college students Breeze has recruited to work as part-time flight attendants, a job Neeleman describes as essentially an internship. Underlying the program is a conviction that flight attendants don’t improve much with years of experience, and that they can get trapped in a dead-end job by the benefits of seniority. “It’s not something politically correct but it’s something David wholeheartedly believes in,” says Trey Urbahn, a Breeze board member who’s worked with Neeleman at several of his other airlines.
Neeleman demurs on whether the program will save Breeze money but clearly cycling flight attendants out after they earn a four-year degree will avoid pay raises that come with seniority. After 13 years, flight attendants can make upward of $70,000 a year at Delta, United and American. Breeze, on the other hand, will pay a fixed monthly wage of $1,200 for 15 days of work, provide company housing and cover $6,000 in tuition for online coursework.
The largest U.S. flight attendants union says it looks like an attempt to abuse federal work-study subsidies to hold down labor costs. “We’re going to work hard to make sure this doesn’t get off the ground,” says Sara Nelson, president of the Association of Flight Attendants-CWA.
Originally Neeleman had intended to mostly self-fund Breeze but that plan was dashed by the heavy blow the pandemic dealt to his fortune last year. A deal to cash out his 22.5% stake in TAP Air Portugal in a sale to Lufthansa fell through, leaving him with no choice but to take what he says was a much lower offer of roughly $50 million from the Portuguese government. His stake in Azul, once worth $290 million, is down to $85 million after he was forced to sell most of his preferred shares due to a margin call on a personal loan.
With his coffers dwindling, Neeleman turned to the VCs, raising $83 million last year in a round led by Utah’s Peterson Partners, which also invested in JetBlue and Azul. Neeleman threw in an additional $17 million and has the largest share of the voting stock at 36%.
That $100 million covers only half of Breeze’s startup costs — it expects to spend $57.5 million to get up and running and $149.6 million in first-year operating expenses, according to federal filings. Neeleman’s planning to conserve cash by immediately selling his new A220s to a leasing company and then leasing them back. He’s aiming to ramp quickly and turn a profit by 2022.
Insiders say the industry isn’t happy Neeleman is bringing more seats to the market. “The chatter is, ‘Oh no, more capacity,’ ” says a former airline executive who asked to remain anonymous. “People are nervous.”They’re wary also because it’s Neeleman, an ADHD-fueled idea machine who’s launched four successful airlines so far in three countries — an unheard of hit rate in an industry renowned for grinding down startups and legacy carriers alike. In 1984, at age 25, he cofounded Morris Air in Salt Lake City, where he earned a reputation for ingenuity – Morris was the first airline to use electronic tickets and at-home reservation agents – and nonstop energy – he spent long days at the airport troubleshooting and doing everything from boarding passengers to cleaning planes. Bought for $120 million in 1993 by Southwest Airlines, which coveted the wunderkind as well as the business, he was ejected five months later after rubbing executives raw by incessantly pushing for changes.
After helping launch Canada’s WestJet, Neeleman made a winning bet in 1998 with JetBlue that low fares and friendly service would lure Manhattanites to travel another 10 miles past delay-prone LaGuardia Airport to fly domestic out of JFK, which at the time was virtually dead midday. When an operational meltdown amid a Valentine’s Day ice storm in 2007 led the board to oust him as CEO, Neeleman looked to Brazil, where he was born to American parents.
There, Neeleman saw scores of smaller cities that lacked air service. With Azul, he employed a fleet of small Embraer E190s that could fly profitably where the dominant airlines Gol and TAM couldn’t go with their 737s and A320s. By 2019, 11 years after Neeleman started it, Azul had 27% of the domestic market and among the highest profit margins in the airline business.
Michael Lazarus, a venture capitalist who’s backed all of Neeleman’s airlines, says that at 61, he retains the same hyperactive energy and the core belief that making sure his workers are happy will lead to happy customers. “I’ve been in so many of his first classes for flight attendants or pilots. He says, ‘This is going to be the best job you’ve ever had — that’s my job.’ He cares.”
As he prepares Breeze for takeoff, Neeleman, in classic fashion, already has his eyes on another venture: he says he’s talking with flying car startups about applying Breeze’s new app and operational expertise to help them build the urban air taxi networks they’re envisioning.Read more: Forbes »
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I dont think so. This is the second article with a different headline about this guy. How much is he paying you? Why? To save humanity by flying even more airplanes? Or does he just want money? boycott JetBlue BiafraExit BiafraExit BiafraExit BiafraExit BiafraExit BiafraExit BiafraExit BiafraExit BiafraExit BiafraExit BiafraExit BiafraExit BiafraExit BiafraExit BiafraExit BiafraExit BiafraExit BiafraExit BiafraExit BiafraExit BiafraExit BiafraExit RT Aggressively
JetBlue’s Founder Thinks You Need A Vacation – And He’s Launching A New Airline To Get You There David Neeleman ’s new low-cost carrier Breeze is set to take off in May. It’s resting its hopes on leisure travel fueled by pandemic fatigue – and college student flight attendants.
JetBlue’s Founder Thinks You Need A Vacation – And He’s Launching A New Airline To Get You ThereJetBlue’s founder David Neeleman ’s new low-cost airline Breeze is set to take off in May. It’s resting its hopes on leisure travel fueled by pandemic fatigue – and college student flight attendants Will see Not May Would be nice Good to know
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