Right now, Avelo Airlines flies an 11-airplane strong fleet of Boeing 737 NG aircraft. It has six 737-700s with one more on the way soon, and five 737-800s. These are not new planes. The average fleet age is just over 15 years, according to ch-aviation, and while some of its -800s are as young as ten years old, a couple of the -700s are pushing 19 years in service.

Many a great airline has been built on a strategy of starting out with older, used planes. Take the great Ryanair, for example. Its very first plane was a five-year-old Embraer EMB-110P1 Bandeirante, followed by some aging BAC1-11s leased from Tarom. Even when it went to the 737 family, these were not new planes. It wasn’t until 1998, 14 years into its journey, that it placed its first ode for brand new aircraft.

Of course, the fleet has developed since then, and it now flies the latest generation Boeing 737 MAX – including a special variant dubbed the ‘MAX 8-200,’ allowing for greater passenger capacity. Could Avelo eventually follow the same path and order brand new MAXes for its fleet?

Simple Flying had the pleasure of sitting down with Avelo CEO and President Andrew Levy to discuss fleet plans. When asked about the potential inclusion of the Boeing 737 MAX in the future, Levy responded,

I think so. It's just a question of when; certainly not now.

The strategy of using older aircraft

Levy has launched his airline with a view to being ultra-low-cost, and that means starting out with the lowest costs available. He is a huge fan of the 737 NG, praising its reliability and noting that he has seen, from his vantage points as United’s CFO and board member at COPA, no difference in the reliability of good NGs and the 737 MAX. But not all NGs are equal, as he explained,

“They're just incredible machines, as long as you have a proper maintenance program, of course … I really like high quality used aircraft, and I say that very purposely, because not all used aircraft are the same. It matters a lot where they've been, who's been operating and maintaining them. And that's really important to us when we pick airplanes to bring into our fleet.”

At the present time, Levy anticipates growing his fleet with well-maintened, older 737 NGs. He notes that the sheer number of used NGs out there, and the ongoing devaluation of these older aircraft, puts Avelo in a really strong position to build its fleet rapidly and in an affordable way. But he hasn’t entirely written off the MAX.

The MAX will come, eventually

The issue with buying new airplanes is that, due to the high cost of acquisition, airlines are compelled to get maximum utilization out of their investment. That means flying 12 or more hours a day to enable low-cost services, something Ryanair is all too familiar with. But that model doesn’t work for Avelo – not yet anyway. Levy enjoys having the flexibility to fly less and to still have industry-leading costs, passing those savings on to the passenger in the shape of lower fares.

Nevertheless, he admitted that there would come a point where it’s just not possible to continue growing without new aircraft. He commented,

“Once you get to a certain size, it really starts to get overly complex to manage your used fleet, and the predictability of having an order stream is really valuable … We’ll get to a point where we'll have to go with new equipment just because the alternative is just simply unworkable. So that'd be a high-quality issue to have to deal with.”

I would not be shocked at all if in, whatever it may be, three, four, or five, seven years that we have some MAXs on the property. It's a great aircraft.

For now, Avelo’s immediate growth hinges on high-quality, well-maintained, older 737 NGs. Before it considers a move to the MAX or any new airplane order, Levy noted that the airline wants to ensure it owns all its airplane assets. At present, just two of its -800 are owned, and the rest are leased.

Nevertheless, there will come a point when we see a new aircraft order from Avelo. We’ll have to wait and see when that happens.

You can enjoy the full interview with Andrew in the video below: