Avatar Airlines Issues Letter Of Intent For Purchase Of 30 747-8is

Just this week I was having a chat with a friend, and he expressed his interest in starting a low cost airline, but then five minutes after we just laughed at the pipe dream and switched to a different topic. However, it seems that one Florida-based company wants to achieve this dream with a rather radical business plan.

Say hello to Avatar Airlines. First registered in Nevada and now operating out of Boca Raton, Florida, the “airline” seeks to operate ultra low-cost flights between cities including Los Angeles, Las Vegas, Orlando, Dallas, New York, Chicago, Philadelphia, Tampa, Dallas, San Francisco and Phoenix. According to their November 2019 DOT filing, they initially plan to operate up to 14 used Boeing 747-400s, and intend to purchase 30 Boeing 747-8 Intercontinental aircraft within the next 3 to 5 years to eventually replace the aging -400s.

The company has since issued a letter of intent which was sent to Boeing’s CEO for consideration.

“Avatar is interested in purchasing 30 new 747-8s, (passenger-version) to be delivered within 3-5 years, a deal that could be worth over $10 billion dollars to Boeing. The Company intends to release its IPO during this time which would be dedicated for this specific purpose. The timing is right for keeping the 747 alive. Rather than zeroing in on long-haul luxury, we believe Boeing should rethink the aircraft on a cost per available seat mile (ASM) which would result in more people that fly with less airplanes in the sky.”

Avatar filed for a Part 121 certificate with the Federal Aviation Administration, and for a Certificate of Public Convenience and Necessity with the the Department of Transportation on November 19, 2019, which would allow them to operate scheduled flights between various U.S. cities including Hawaii.

The company is also seeking to put out an IPO of 20 million Series A preferred stock shares on February 19, 2020 in the hopes of raising $300 million in funding to assist with its start-up costs and aircraft acquisitions.

A radical way of making money?

Even though the airline wants to offer low fares (ranging from $19 to $99 plus taxes), they don’t want to place too much of the burden solely on passengers.

Based on their 747-400 seat map, they intend to offer 581 seats per aircraft (539 in economy and 42 in business class). The hope is that spreading the cost over many more passengers per flight would result in a lowered cost per passenger, but surprisingly they are hoping for close to 100% load capacity, even though an 84% load factor was used in their projection model based on NTSB industry standards.

Rather than offering a traditional mileage program, passengers can join their “Fly Free” club with a initial sign-up cost of $49 and an annual membership fee of $249. This membership will allow you to book available seats within the last 48 hours for “free” before departure time. You will only be required to pay additional taxes. Should the airline ever get off the ground, I wouldn’t be surprised to see this feature being abused to the point where it would cost the airline more to operate the program than make money of it.

Instead of have a standardized livery throughout its fleet, the airline intends to offer their aircraft surfaces as huge flying billboard. Advertising agencies can also rent interior real estate spots, including placing ads on tray tables and overhead bin covers.

The airline also intends to charge for additions such as meals, in-flight entertainment, and also wants to offer membership packages for travel agencies. They also plan to offer cargo services.

Strange routing

One of the already off-putting points is the airline’s intent to operate a sort of a milk run, with flights starting from Los Angeles (LAX) and then continuing on to Las Vegas (LAS), New York (JFK) and Miami (MIA), with the return flight traveling to those destinations in reverse order.

With so many airlines (both low cost and legacy) already offering direct routes to any combination of cities in that list, I find it hard to believe anyone would purchase tickets for a flight with multiple stops just to save a few bucks. The only real advantage would be hopping on one of the legs of those flights (e.g. JFK to MIA) if the price were right.

However this only appears to be an interim measure, and if ever the airline does progress, they would move towards offering non-stop routing to a wider range of cities.

A long and doubtful history

Avatar Airlines is not a new concept, as the company is a rebrand of Family Airlines which was founded in September 1992. Family Airlines filed a number of times, but their applications were never processed. The company filed again in 2010 and 2014 under the new name Avatar Airlines, but still were still declined.

Even though there have been some amendments to the filing, including changes to the management team, the business plan by in large remains the same.

It’s hard to say whether or not the filing will make any headway this time given the updated changes, but in an already crowded market, with legacy and low-cost carriers already firmly holding market share, it’s hard to see how Avatar Airlines plans to stay profitable with these large jets which all other airlines are looking to get rid off.

[Featured Photo: Avatar Airlines]

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