A tiny low-cost airline you may not have heard of is expanding to 10 new cities. We asked its CEO what to expect.

• Avelo Airlines continues to expand its fleet and routes, adding 10 new destinations on May 1.
• The newcomer emphasizes reliability, low fares, and unique routes connecting smaller cities.

When low-cost newcomer Avelo Airlines launched its first flight three years ago, it had just three Boeing 737 Next-Generation jetliners and served 11 West Coast destinations.

It's since grown to 52 airports coast-to-coast and 16 aircraft, with four more planes expected by the end of 2024.

The growing route map is helping Avelo rise in the ranks of US low-cost giants like Alaska Airlines as it chases its first full year of profitability after two high-earning quarters.

Business Insider spoke to Avelo CEO Andrew Levy about what makes the growing airline different from other low-costs and what customers can expect on board its planes.

New destinations and routes

Since the airline's first flight from Burbank, California, to Sonoma County in the state's northern wine country, it has expanded its network to 77 routes across 52 destinations, Avelo spokesperson Jim Olson said.

Over the next two months, Avelo will inaugurate 17 new routes connecting to new and existing destinations.

Sonoma County, for example, will see its destinations doubled when Avelo opens its sixth aircraft base on May 1, adding tiny markets like Boise Airport in Idaho and Glacier Park International Airport in Montana.

Among the 10 new destinations are Albany, Atlanta, Concord Airport near Charlotte, North Carolina, Destin, Houston Hobby, Knoxville, Lakeland in Central Florida, Miami, St. Louis, and Traverse City, Michigan.

Lakeland, which is just over an hour's drive to Orlando, will give travelers access to leisure hot spots like Walt Disney World or Universal Studios.

These additions align with Avelo's core network strategy: flying underserved nonstop routes to primarily secondary markets with little or no competition from other airlines.

"We still have the lowest cost structure in the US airline industry, and that is really because of how we've designed the company," Levy said. "We go to these secondary airports that are less expensive to operate in and out of."

For example, Avelo is the only airline serving New Haven, in southern Connecticut, giving nearby travelers more convenient options than driving to airports in New York City, Hartford, or Boston.

Reliability is 'in our DNA'

As an airline that launched in the middle of the pandemic, Avelo's CEO said it encountered countless challenges over the last three years that impacted travel, including increased oil prices, supply chain issues, and pilot shortages.

Throughout these struggles, Levy said the airline focused intensely on reliability, which was "top of mind" for everyone in the company.

"It's in our DNA," Levy said. "It's part of who we wanted to be when we launched the company, and it's part of who we are as we execute it."

Avelo finished 2023 as the No. 1 US carrier in cancellation rate and second for on-time performance, according to the market research firm Anuvu.

That trend continued in the first quarter of 2024, with Avelo ranking second in both categories. That puts Avelo ahead of low-cost competitors like JetBlue Airways in both metrics.

Its cancellation rate is 0.13%, with low-cost giants like Spirit at 1.79% and Frontier at over two percent. These budget competitors, each with fleets more than 100-strong, have larger and more complex operations than Avelo.

No-frills planes and unbundled fares

Avelo said it has the lowest cost structure in the US airline industry.

This is thanks to its out-and-back scheduling, direct distribution, and bare-bones aircraft structure, which means every add-on, like bags and snacks, comes at a fee.

The lighter seats and a-la-carte method mean Avelo doesn't have to pay for things it doesn't need, and neither does the customer — lowering costs and, therefore, ticket prices.

Avelo had the lowest average fare in the US airline industry last year, according to Avelo's assessment of other company reports shared with BI.

Its all-in average fare was $106, which is about $10 lower than the second lowest-fare airline, Frontier, and 53% lower than the US industry average of $227.

However, Levy said Avelo competes more with legacy carriers and Alaska rather than Spirit or Frontier, which go to larger airports with more competition than secondary markets.

But, in general, he said he's not worried about competition.

"I don't really pay any attention to these other airlines," Levy said. "We just focus on ourselves."

When it comes to baggage fees, though, Levy said he has "no doubt whatsoever" that some customers want to pay less.

Passengers have to pay $15 for priority boarding, between $11 and $64 for an advanced seat assignment with more legroom, $125 for a pet in the cabin, between $37 and $47 for checked bags, between $40 and $50 for a carry-on, and a $100 fee if the checked bag is over 50 lbs, according to Avelo.

"Everybody wants to pay less and get more," Levy said. "So, do some people wish that our bag fees were lower? I have no doubt that they do."