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26 May 2022

Opinion from Adrian Leopard & Co

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Avatar Airlines’ fantastic plan for the future. Do you know about this?
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Avatar Airlines’ fantastic plan for the future. Do you know about this?

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An interesting plan. Can it possibly succeed?

A little while ago we reported the arrival of British Airways’ final 747 ‘Queen of the Skies’ at Cotswold Aerodrome where she, and her cohorts already awaiting their fate, would most likely be ‘parted out’ (scrapped). In fact that particular 747 has been acquired by the aerodrome authority for development as a (static) conference and learning facility, but the fact remains that there is simply no second hand market for these aeroplanes; long haul super-large four engine airliners have had their day. The long haul skies today belong to the new generation of twin-engined jets.

Enter Avatar Airlines Inc., an American start up, who want to disrupt this theory. You’ve heard of Avatar Airlines haven’t you? No? Allow me to explain.

The concept is simple enough. To use Boeing 747 Jumbos on US domestic services, some coast to coast, some, literally, short hops, on the basis of being an ULLC (Ultra Low Cost Carrier) competing with the likes of Southwest (upon whose model Ryanair is based), Jet Blue, Allegiant and Spirit et al, all of whom operate smaller, modern, narrow body jets. They plan to configure their aircraft with 581-seats, with most being economy places on the main deck, with a small business class cabin on the upper deck (ie: in the ‘hump’). In addition to fare revenues, Avatar perceive a significant income flow from the aircraft, inside and out, being a ‘flying billboard’ with third parties purchasing advertising, and also by selling cargo space in the huge underfloor hold (something narrow body operators cannot do).

Avatar first came to my attention in the second half of last year when it sought to buy British Airways’ entire fleet of redundant 747-436 aircraft (like those now at Cotswold). However, the deal proposed by Avatar envisaged no cash changing hands - BA (‘the world’s most experienced airline’ – do you remember the slogan?) would take an equity stake in Avatar (probably the world’s most inexperienced airline), which needless to say BA did not view as an especially attractive proposition!

Avatar then turned its attentions to the Thai International fleet of recently retired 747-4D7 aircraft. A similar offer is apparently on the table.

But if this was not ambitious enough, Avatar only perceive these aircraft as a stop-gap until they can purchase a brand new fleet from Boeing. The new 777-9 twin perhaps, offering almost 747 payloads but on two engines? No, Avatar want production slots for the passenger version 747-8. The 747 line is due to close in 2022 – all remaining orders to date of the -8 are for freighters, not passenger aircraft (save for two ‘specials’ for the US Presidential Flight – ‘Air Force One’). Avatar clearly need to secure their slots if they are to get these aircraft (view/download Avatar’s ‘letter of intent’ to Boeing at https://avatarairlines.com/boeing-letter-of-intent/).

Have Avatar noticed something about these aircraft that we’ve all missed? Avatar claim low operating costs per seat mile thanks to a high number of seats – but we know this is not the case. Lots of seats yes, but twice the number of engines, less efficient (older) engines to boot = much higher fuel burn. These aircraft were designed to get high, where the fuel burn is lower, and stay there for many hours, not continually climbing and descending! Things like landing fees, and handling charges, being a heavier aeroplane, will be higher.

Avatar then cite low acquisition costs of old aircraft as a mitigation. I could perhaps run with that in respect of the initial batch of used 747-400s. But they then destroy the whole argument by sending Boeing a letter of intent for some 30 (yes, thirty!) brand new aircraft!

They claim that “less aircraft moving more passengers” equates to cost savings compared with their competitors’ narrow body jets (source: their licence application to the US Department of Transport). True, one big aircraft carrying the load of four smaller ones prima facie represents a saving. But they seem to miss a critical point. Their competitors’ four or five smaller jets don’t all leave at the same time. Their departure times are staggered, and customers choose the one which best suits them. If just one 747 is leaving at an inconvenient time, no matter it be a few dollars cheaper, people will gravitate back to the multiple, frequent departure times of established carriers.

One must also consider the suitability of a 747 for short high frequency routes demanding fast turnaround times. Not only is a 747 a complex old bird that technically takes time to get ready for each sector (the only operator of short haul 747s are the Japanese – theirs are factory built with extensive modifications). In addition, most airports offer only a single ‘jet bridge’, meaning all 581 passengers have to board and deplane through the same door! Not so much of an issue on long haul services. But on short haul supposedly high frequency services………?

Avatar accept that this is an issue, and say they plan to build their own 1200-passenger capacity terminals, each with multiple ‘jet bridges’. These sorts of huge costs are what ULLCs usually avoid, like the proverbial plague! Ryanair, in Europe, won’t even use ‘jet bridges’ when they are available (the airport charges for their use) and passengers board via two sets of conventional steps having first braved the elements.

Avatar’s CEO is former Chiropractor Barry Michaels, who also has degrees in Political Science and Public Administration. His airline’s first incarnation was in 1992 as Family Airlines, which failed to achieve Part 121 status (required to offer commercial airline services).

Having since morphed into Avatar Airlines, the prospective start-up has since had numerous applications for Part 121 status declined. It needs to raise $300 million to begin operating its first 14 second hand 747-400s, something it claims to be confident of doing. In 2017 the US Department of Transport, speaking of its rejection that year of a Part 121 application by Avatar, told the highly respected British industry journal ‘Flight Global’ that Avatar’s application was “largely deficient”, adding that “we have no reason to expect that the applicant will be able to obtain the financing necessary to meet our financial fitness requirements in the foreseeable future”. Since then at least one more application has failed.

One further historical fact might be perceived as significant to the US DoT. In the early years of Family Airlines/Avatar, CEO Barry Michaels served 21 months in Federal Custody for securities and tax fraud in respect of a Part 121 application.

In my many years working in civil aviation, and subsequently as a total civil aviation enthusiast (of the armchair variety), I have seen lots of colourful characters come and go, each convinced that they can reinvent the wheel! Most fail, but indeed some like Sir Stelios Haji-Ioannou (easyJet), Michael O’Leary (Ryanair) and one of the first proponents of the LCC model Herb Kelleher (Southwest) have succeeded such as the ‘wheel’ as we know it has changed forever. It remains to be seen whether history will view Michaels’ Avatar Airlines in the same way. But whatever the outcome, you have to admire his sheer tenacity, persistence, and belief in his business model!

Would I like to see Avatar succeed? Hell yes! Having had the honour as a younger man to drive these fantastic ‘Queens of the Sky’, I would love to see them pressed back into passenger service, provided all the necessary financial and operational protocols are first in place to ensure their safe and reliable operation. And that, as many wannabe start-ups have discovered, is not, quite rightly, a straightforward undertaking!

Capt J W H Quayle 11-01-21

Photo Avatar Airlines

Editor’s note: The views expressed in this article are those of the author and not necessarily endorsed by Adrian Leopard & Co

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