JetBlue founder David Neeleman is launching another budget airline, this time offering more frills at airports with less traffic.
JetBlue Airways was founded in 1999 on an ambitious new concept. A former Southwest executive, Neeleman envisioned a budget airline that would set itself apart by including comforts, such as in-flight entertainment, that other low-cost carriers offered only for a fee, if at all. “We’re going to bring humanity back to air travel”, he said at the time. “Our low fares will bring passengers in, but our great service will bring them back.” JetBlue has since become one of America’s biggest airlines.
Today, the U.S. airline industry is ripe for new entrants – and not only because a certain lack of humanity has lingered. A wave of consolidation in the past decade or so has left the industry with relatively few major players. As Airline Weekly explains, all 11 of the country’s major carriers existed 10 years ago, and of these, 10 existed 20 years ago. JetBlue has been the only newcomer.
Further, optimum conditions for takeoff appear to be in place: The airline industry has not lost money in nearly a decade, and every major airline is currently profitable. In a presentation for Airline Weekly, Neeleman’s team also noted that while the U.S. economy grew by more than a third in the decade ending last year, the number of domestic airline seats was roughly unchanged.
The time could be ideal for Neeleman’s new low-cost carrier, called Moxy. And, he is well prepared for the challenges that come with getting a new airline off the ground, having previously founded or co-founded four commercial airlines: Morris Air and WestJet, followed by JetBlue Airways, and later, Azul Brazilian Airlines. He is also co-owner of TAP Air Portugal.
As The Economist points out, “The greatest challenges to launching a carrier are gaining financial credibility, raising capital, and securing access to good slots at major airports.” JetBlue’s success has earned Neeleman the respect of investors. He is raising $100 million in start-up capital, expected to come from his own coffers, those of another airline industry veteran, former Air Canada CEO Robert Milton, and Henri Courpron, former CEO of ILFC, a major aircraft leasing company.
Neeleman is also getting around the issue of competition at busy airports, as he plans for Moxy to offer low-cost direct service between smaller airports in secondary markets, such as Providence and Fort Worth. This will also help differentiate it from other budget carriers. In addition, Moxy will offer free wi-fi and wider seats than many of its American rivals. It has already ordered 60 CS300s aircraft from Canada’s Bombardier, set to take flight in 2020.