Skift Take

Utah has always been a fine place to base a regional airline. But it's an unusual spot to build what is almost certainly going to be a nationwide carrier. But with technology, founder David Neeleman is betting that where an airline is headquartered no longer matters.

America’s newest and perhaps most innovative airline does not yet have a name, or any airplanes. But it now has a headquarters.

David Neeleman’s startup will be based in Salt Lake City, where it plans to spend a capital investment of $3.2 million and create nearly 400 jobs over the next five years, according to local authorities. In return, the state offered tax rebates worth as much as about $1.1 million over five years.

“There’s a super strong technology base, and lower cost of living than California and some of the coastal areas,” Lukas Johnson, the airline’s chief commericial said in an interview. “We want to focus more on the technology aspect of the transportation side, and it makes a lot of sense. The tech sector is booming out here.”

In putting his startup in Salt Lake City, Neeleman, who also founded JetBlue Airways, may have sought to correct one issue that once plagued his former employer. When Neeleman started JetBlue, he created a satellite office in Utah, but based it in New York City, near its largest hub at John F. Kennedy International Airport. (Neeleman had run a much smaller airline, Morris Air, from Salt Lake before selling it to Southwest in 1993.)

New York has been expensive, and Neeleman’s successors have complained about high costs. JetBlue nearly moved to Florida in 2010, but stayed put after winning new incentives from New York.

This time, putting the airline in Utah was an easy decision, Johnson said, even though the local airport is not expected to be a focus city, perhaps because it is dominated by Delta Air Lines.

“People can be working and living everywhere,” he said. “It doesn’t make sense to be trying to hire in the highest cost of living places. It doesn’t make a ton of sense for a competitive business.”

There is, however, one outstanding issue with basing an airline in Utah. There are fewer executives with airline operations experience, so Neeleman’s startup is expected to keep an East Coast base for its operational team. That group will work on certifying the carrier with the Federal Aviation Administration.

The Plan

The startup has begun hiring for jobs in Salt Lake, and Johnson has moved there. But the airline is not yet sharing many more details about its plans.

Here’s what we know so far. Neeleman is planning a new low-cost airline that will focus on secondary airports, such as Burbank or Oakland, California, and should offer above-average service at competitive fares. The airline has made few public filings, but in August, the airport in New Haven, Connecticut said it was under consideration as an East Coast focus city.

“They are specifically looking at secondary airports in large metro areas with access to highly qualified labor pools and sufficient land around the airport for future terminal expansion and a potential development of maintenance and crew training facilities,” officials in New Haven said about the airline in their public report.

Long-term, the airline plans to use Airbus A220 aircraft capable of flying coast-to-coast or even across the Atlantic from the Northeast United States. The first of the 60 new aircraft on order is supposed to come in 2021. But Neeleman has hinted he could start the airline sooner by launching with used Embraer airplanes.

He also wats to focus heavily on the digital experience, and has said he expects few customers will need to speak with airline agents on the phone. Instead, the airline will help solve problems via mobile or computer.

More news about the airline’s plans should be made public next year, Johnson said, including the name. At first, Neeleman suggested he might want to use Moxy, but Marriott uses the name for one of its hotel brands. The company is now using the name, Breeze Aviation, though that probably will not be the name of the carrier.

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Tags: david neeleman, lukas johnson, moxy, Salt Lake City

Photo credit: David Neeleman speaks in October 2018 about his new U.S. airline startup. It will be based in Salt Lake City. BMF Media Group

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