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Avelo Airlines founder and CEO Andrew Levy said surging fuel prices have climbed back to “uncomfortably high” levels, creating cost pressures for the ultra-low-cost carrier and raising the prospect the airline will have to pass some of those costs on to travelers.
In an interview with FOX Business, Levy said higher fuel prices tied to the Iran conflict are “the latest issue” confronting the airline industry, with costs climbing sharply in recent weeks.
“We’ve been there before, earlier in the period of the year when this conflict began, and then things moderated,” Levy said. “Now we’re back up to levels that are, you know, I’ll just call them uncomfortably high.”
The global average jet fuel price rose 9% from the previous week to $171.01 per barrel last week, according to the International Air Transport Association, reflecting mounting supply concerns after attacks along Middle East shipping routes disrupted markets, Reuters reported.
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Levy, who previously co-founded Allegiant Air and later served as chief financial officer of United Airlines, said Avelo will ultimately have to pass at least some of those higher costs on to customers.
“At the end of the day, we have to be able to pass these costs onto our customers,” he said.
Levy is not alone in warning about rising fuel costs. Ryanair CEO Michael O’Leary said Thursday that airfares could rise “significantly” if oil prices remain elevated, according to Reuters.
However, despite the higher fuel bill, Levy said demand at Avelo has remained resilient.
“We had a very, very strong summer even with high fuel prices. We’ll see what fuel looks like in the fall,” Levy said. “Certainly there’s been a lot of other costs, inflation over the past few years, which has added to our challenges, but that’s really nothing new, and we’ll keep powering through that.
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“Fuel is what’s got our attention more than anything right now.”
Houston-based Avelo, which launched in April 2021, primarily serves what Levy described as the “personal traveler,” those paying for their own trips to visit friends and family, take vacations or attend special events, a customer base he said is especially sensitive to airfare increases.
“Everybody has a price at which they’re going to travel either more often or less often, and so we have to be mindful of that,” Levy said.
Avelo remains committed to the strategy that has fueled its growth by serving secondary airports near major metropolitan areas instead of larger hub airports, according to Levy.
“Our complete focus is targeting the residents that live near secondary airports of large metropolitan areas,” Levy said, adding that those smaller airports can provide travelers with a more convenient, less stressful experience.
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The airline recently extended its booking schedule through April 2027 and now serves more than 35 destinations.
It is also preparing to launch commercial service from McKinney National Airport in Texas on Nov. 11.
Looking ahead, Levy said Avelo plans to continue expanding its fleet with additional Boeing 737 aircraft before taking delivery of its first Embraer E195-E2 jets beginning in 2028.
“Lots of exciting things ahead of us, and we’re just looking forward to finishing the year strong,” Levy said.
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