JetBlue’s Founder is Starting a New US Airline With $100 Million and 60 Planes

Dave Neeleman founded JetBlue after his non-compete from Southwest’s acquisition of Morris Air where he was CEO expired. During that non-compete period he was involved in the launch of Canada’s WestJet.

A citizen of Brazil as well as the U.S. (and also now of Cyprus), Neeleman launched Brazilian carrier Azul after being forced out at JetBlue. He’s also a partner in Star Alliance carrier TAP Air Portugal.

Last summer he registered the name for a new airline and announced some hiring but it turned out just to be a plan for chartering regional jets. He said at the time he wasn’t planning a new U.S. airline.

And maybe that was even true then, but it appears to no longer be true. The new airline is tentatively called ‘Moxy’ according to Airline Weekly which broke the story (subscription) but that has to be a temporary name, it’s the Marriott brand of hotels that debuted boldly declaring millenials don’t need desks and can have tiny rooms.


Moxy New York City Downtown, Credit: Marriott

Investors ponying up $100 million to start the carrier include Neeleman himself and former Air Canada CEO and United Chairman Robert Milton.

The plan is to offer point-to-point service from smaller airports outside of large cities bypassing hubs, using low costs to offer lower fares. By avoiding connections they plan to “get you there twice as fast for half the price.”

  • Lower cost airports like Providence instead of Boston
  • Will promote ease of travel through less congested terminals
  • Point-to-point flying means filling up planes with low fares rather than connections
  • Scheduling flights to avoid overnighting crews
  • No seat back TV

They reportedly have orders for 60 Bombardier CS300s, accepting their first aircraft in early 2020 and planning to take the rest through 2024.

They plan to fly from secondary airports in the New York (Stewart), DC (Baltimore), Chicago (Gary, Indiana), San Francisco (Oakland, San Jose), and LA (Burbank, Ontario, Orange County) areas. They’ll fly to places like Orlando Sanford and St. Petersburg, Florida.

They want to fly to Mesa, Arizona rather than Phoenix, Concord not Charlotte, and Fort Worth Meacham. Even Cleveland would be served via Burke Lakefront Airport.

The Bombardier CS300 can fly transcons and also short transatlantics from the Northeast. So the long range plan includes Providence to Ireland the U.K. as well as Spain and France. They could offer four classes of service including a lie flat premium cabin.

While a low cost carrier they plan to offer free Wifi and the CS300 supports five-across seating (fewer middle seats) and 19 inch seat width (versus 18 on an Airbus narrowbody and 17 on a Boeing narrowbody).

The only major US airline that wasn’t around 20 years ago is JetBlue — founded by Neeleman. And he has the track record to do this. Will this work?

The new carrier won’t leverage connections and secondary airports provide few opportunities for partnerships with international airlines. They may succeed by being small “flying where they ain’t” and that’s useful to passengers in the way that Allegiant is useful flying Pasco, Washington to Mesa, Arizona non-stop with non-daily service. I don’t see this as a major disruptor in the industry for many years — certainly not the way that JetBlue itself was starting out (thanks to political muscle from Chuck Schumer) with gates and slots at New York JFK.

The biggest challenge starting a new airline – beyond credibility and capital – is access to congested airports where the major airlines collude with local governments to lock up gates. This strategy largely sidesteps that.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. This might work if they follow the Allegiant model of going after customers who are currently driving instead of flying. In this way they create customers instead of trying to compete for them with the majors.

  2. Depending on where they fly, I’d be thrilled. I live near Sanford Orlando (SFB) and won’t fly Allegiant. If there is an LCC that treats me as a human being, has wifi, and gets me where I want to go (HPN would be great) in relative comfort, I’m in.

  3. “the major airlines collude with local governments to lock up gates”.

    You mean how major airlines sign long term lease agreements for gates and support space where the LCCs like Allegiant refuse to sign long term deals (non-signatory)? What collusion nonsense are you talking about Gary?

  4. So, Independence Air with better planes?

    With that kind of money and Neeleman on board, it’ll at least be a few fun years.

  5. I could imagine a deal with TAP Air Portugal because who wants to really fly a Bombardier CS300 across the Atlantic even if it is technically possible?

  6. He’s also going to find a bidding war for scarce pilots already in progress. No crew overnights means crews will be required to move to whatever base they are assigned or to occupy a crashpad/hotel for every night of a sequence. That alone will likely lessen the attraction for many. Also lacking will be a flow through to a major airline, a big consideration for many new hires.

  7. Gary, a typo:

    They’ll fly to planes like Orlando Sanford and St. Petersburg, Florida.

    I think that you meant “to places”

  8. Stewart, being equidistant between New York City and Toronto, allows access to two major markets!

  9. SWF wont cover all the NY market at all, they would need to add ISP and/or maybe Trenton? This sounds alot like RyanAir.

  10. This could work. The better comparison is Southwest but routes that Southwest’s planes are too big for.

  11. I’d fly it, shoot, I’d work there.

    As for pilot issues, throw some sort of equity proposition at them as well, they’ll be available.

  12. I like the name Moxy and hope they stick with it. i don’t think it’s a conflict with the Marriott brand. As for the hotels, I must say the lack of a desk is the main reason that I won’t stay there. Frankly, I don’t believe millenials don’t want a desk. If you work, you want a desk, even if you have a tablet and like to have coffee in the lobby. The other thing I noticed about mellenials’ hotels – one trash can per unit. Mellenials don’t have trash I guess.

  13. Checked Neeleman’s wikipedia article and found this quote which certain CEOs should copy:

    “Neeleman has said that in the early years of JetBlue, he always sat in the last row in a seat that did not recline, to demonstrate that “pleasing the customer was more important than pleasing the chief executive.”[18][19]”

  14. JetBlue was so awesome in its first five years. I can imagine there will be tremendous enthusiasm for this airline that will cover major gaps in air service as well as devoting itself to NOT using ghastly B737’s.

  15. Just based on the guys track record: I’d bet this is a success.

    JetBlue is still my favourite domestic airline flying out of NY/NJ, and before the changes – Was the only economy flight I would fly when going to the West Coast. I don’t fly them as much now, due to their baggage fee’s (I get free bags with United) but it’s still easily the most comfortable, and best to deal with from a customer service perspective.

    As for secondary airports: I’m surrounded by Newark, Trenton, and Atlantic City. All an hour away in different directions. (Roughly) I’d happily fly out of a secondary airport, if it offered better flight options. Atlantic City, NJ is an absolute dream to fly out of, I remember parking my car, walking inside, and going through security and bag drop in under 20 minutes. Of course I then had to board a Spirit Airlines plane… and well…. I don’t go through ACY anymore. 🙂

  16. @ Steven M – Boeing 737’s have the smallest seat width of any commercial single airplane in widespread use. They had a chance to increase space in the mid 90’s when they revamped their product line and developed the “Next Gen” but chose instead to be cheap and maintain their class trailing, last place position.

  17. Jetblue seems frozen in time since he left. Their planes, tech, service, everything are showing age.

    The rest sounds like Allegiant so if he can do it better with newer planes it could work. I wanted to fly midwest to Sanford and take the new express train down to Orlando but canceled when I found out via 60 Minutes the Allegiant MD80 was one of the never-rebuilt 3rd world firetraps, got my money back (“Yes, we have many requests for refunds today, sir, and it’s approved”) paid $250 more to fly AA through Dallas to avoid them. I will fly several other routes on newer Ailingiant A320’s but the 319’s look beat. When 60 minutes exposes your planes catch on fire in flight and interview a belligerent Trumpanzee FAA chief flakking for unsafe operations, your goose is cooked.

  18. The model works in Europe
    Hard to see why it won’t work in USA., although trans-Atlantic sounds unrealistic

  19. I’m intrigued, should be fun to watch this play out. I’m content with my DL CVG-TPA flights quarterly to Siesta Key to drink on the beach for a week, that’s really all the flying I do. I don’t even mind old MD88s as long as I don’t get in row 35 like I did last time.

  20. Maybe a throwback to Wright Airlines, flying from DET (Detroit City Airport) to BKL (Cleveland Burke Lakefront) 6 times daily with Convair 440’s. Wright did reasonably well in the 70’s.

    Neeleman could do well by serving these niche markets, especially where they make sense for business travel.

  21. I don’t see how $100 million is nearly enough to start an airline. Don’t quite understand the four-class thing either.

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