first article published 11/20/19 ATW Air Transport World
US startup Avatar Airlines considers ad-based ULCC model
A startup airline is looking to disrupt the low-cost domestic air travel market in the US through an innovative business model that would rely on advertising revenue to offset rock-bottom airfares.
Florida-based Avatar Airlines submitted an application with the US Department of Transportation (DOT) for a certificate of public convenience and necessity on Nov. 19, the first step in the process of becoming a Part 121 scheduled air carrier.
The startup plans to offer domestic fares as low as $19 on its shortest routes, while coast-to-coast flights would run $79 and flights between the mainland and Hawaii would reach $99. But, in a departure from typical ULCC practice, Avatar would offset its ultra-low fares by transforming its aircraft into flying billboards, selling ad space for everything from liveries to lavatory seats and tray tables.
“For most people, I don’t think the fact that they’re going to see a giant billboard on the outside of the plane is really going to bother them,” Avatar EVP and CLO Michael Zapin said in an interview. “Why wouldn’t it work when you have a captive audience of hundreds of passengers? This could be a huge profit center. We’re going to make money from folks other than ticketed passengers.”
Besides its unusual business model, Avatar plans to buck trends in the LCC market by flying on 581-seat Boeing 747-400 aircraft. By the end of its first year of operations, Avatar aims to have a fleet of 14 747s. The company hopes to launch a successful IPO within three to five years that would fund the purchase of 30 additional Boeing 747-8s, which are larger and more fuel-efficient than the -400s.
“People don’t understand when we tell them we want to go big and use the Boeing 747-400. The most common reaction is: ‘Why would you want to use that dinosaur when you could go for a much more fuel-efficient 737 or A320?’” Zapin said. “What they forget is that we’re not comparing one 747 to one 737. It almost has to be a 1:4 comparison because the 747 holds nearly four times as many passengers as those planes. We’re going to be able to fill up that aircraft, because we’re only going to be flying the most densely-populated routes.”
To supplement its revenue stream, Avatar intends to lease the belly of its 747s to cargo shippers while pursug interline cargo agreements with foreign airlines. Zapin estimates the 747s will be able to carry up to 60,000 lbs. of containerized or palletized freight, at no significant added cost to the company.
Avatar plans to promote its launch by selling fares as low as 99 cents per flight for the company’s inaugural revenue flights. It’s not certain how long it would take the company to realize its ambitious targets, although Zapin estimated it would take roughly 12 to 18 months for Avatar to obtain FAA certification to operate revenue services.
Ben Goldstein,
