Of all the posts I’ve written on this site, none has quite caught your attention like the 2009 post on Family Airlines. With more than 300 comments, we just couldn’t stop talking about it. Family changed its name to Avatar awhile ago, but it was the same airline on the inside. I hadn’t heard anything about this plan for awhile… until this week. On Monday, Avatar announced it was trying to raise money on Indiegogo. [Update: they’ve been kicked off Indiegogo but are doing this on their own now.] This is the gift that keeps on giving…
Avatar’s model hasn’t changed, and it goes against pretty much everything going on in the industry today. The airline wants to pick up some old 747-400s, fill them up with fares “50% or lower than current carriers,” and fly them back and forth across the country making a couple stops each way.
Sounds great, right? But, wait. It gets better. There will be no bag fees for the first two checked bags. Oh, and wifi will be free. If you’re wondering how this airline could possibly make any money, you’re not alone.
The basic premise is hugely flawed. The airline is going to work its airplanes hard, flying them a ton. Each 747 will have 539 coach seats and 42 “Office” class seats. The general plan is to work unit costs down as low as possible by spreading them out over a ton of people all day long. But there’s a huge problem here.
The airline’s first route will be a milk run: LA to Vegas to New York to Miami and back. One airplane will start the morning in LA and head east while the other starts in Miami and heads west. They’ll get to the other side and then turn around. This is a hilariously bad plan.
How many of those 581 seats do you think will be filled going from LA to Vegas early in the morning on a Wednesday? Not a lot. You can do the same thing throughout the network and find plenty of holes. Airlines that focus on low costs thrive on scarcity. Allegiant flies to small cities and creates demand with low fares. But it has only around 150 seats to fill and it flies only a few times a week on many routes. If the demand isn’t there during certain days of the week or different seasons, it just sits an airplane.
Avatar won’t have that. It will have far too many seats and will bleed out all too quickly unless it can start charging a lot more for those seats. So far its grand plan is to do all kinds of promotional stuff with advertisers to generate revenue. It’s just not going to happen for a small airline that nobody cares about.
Maybe travel agents can help generate demand? Nope. Avatar is actually going to charge travel agents for the right to book on the airline. But what that gets is the ability to reserve seats and not provide a name until 48 hours prior to departure. What the heck…
The route map only starts to look goofier as the airline grows. Take a look at the Indiegogo presentation. The airline will just keep running more airplanes on similar routes (Orlando instead of Miami, for instance). By year two, they run out of ideas. They want to fly a 747 from Vegas to Albuquerque and on to Orlando. This is amazing.
And how are the people of Avatar going to make all this happen? Well they aren’t, because they’ve been trying to do the same thing for years and nobody buys this plan. But now they’re hoping to tap into the kindness of the ignorant public. Do you want to help Avatar reach its $5 million goal?
At last check, there were 2 donors who had chipped in $5 each. The airline is almost there. It says it wants the money to market its $300 million equity offering. Though I find myself wondering if they’ll end up having to use the money to pay DOT fines instead.
Avatar isn’t an airline at this point, but it’s offering perks to people who pay, and that sounds like they’re selling a product. That’s not allowed. For example, if you donate $3,000 you become a Founders Club member. That includes access to early boarding, lounges, and upgrades when the airline is flying. Does that sound similar to when
California Pacific People Express got in trouble for selling frequent flier program membership before it started flying? Sounds like Avatar is walking quite the fine line here.
Some of the other things you can get are downright awesome.
- For $2,000 you can be Executive Vice President for a day. I’d pick any day I’d be able to get the airline shut down so that investors don’t lose any more money than they already had.
- For $9,750 you can be a Captain for a weekend in Miami. Fortunately, this doesn’t actually allow you to fly an airplane. You just get ground and simulator training.
- For $5,000, you can have the privilege of interviewing to be a Captain with the airline. This doesn’t mean you get the job. It just means you can interview. HAHAHAHAHAHAHA.
- For only $375, you can interview to be a flight attendant. I’m not sure these guys realize that there’s more of a pilot shortage than a flight attendant shortage.
In short, this Indigogo campaign is just awesome. I’m tempted to give $25 just to get the t-shirt. (I really want the model but there’s no way I’m paying $1,250 for that.) If anyone out there is giving more than $25, let’s hear why. I have a bridge I’d like to sell you.