Recorded at CAPA Global LCC Summit, 1-2 Mar 2018

World Airways Update

The newly resurrected World Airways aims to become the first US long haul low cost airline and commence operations in 1Q2019. Backed by a Miami-based private equity firm, World Airways plans to operate five aircraft within its first year and 20 aircraft with five years. The 787 is its target aircraft but the start-up is looking to initially launch with two A320s, potentially the new A321neoLR variant. In this interview, director of business development Adam Weiss discusses the fleet and network plan as well as branding, product positioning and the need to work with short-haul airlines to provide feed.


Adam WeissSo there's really three components to World Airways. We are a contextually digital airline focused on the consumer experience of the passenger journey from the time they're booking to the time they land. We want to be there for the passenger to provide them products, what they want at the times they want them, at all points during their journey.

Our second part of our thesis is really being opportunistic about our route network and the equipment that we use. We recognise that there're some underserved markets, particularly in the U.S., with latent demographics that haven't been activated. And being an ultra low cost U.S. flag carrier, we think that we have the opportunity to provide connectivity and access to parts of the world where people previously didn't fly to. U.S. citizens.

Third, there's a strategic marketing and social element to our airline. We think that for the longest period of time airlines haven't marketed to their customers in ways that really resonated, particularly with emerging millennials and the generation behind them. We're looking at making creative ways of engaging our potential customers.

So we have a private equity backer in Miami that's never ventured into aviation before. Part of our board previously participated in the launch and relaunch of the Eastern Airline and the relaunch of PANM as well as a few other projects over the history of their investments. So we do have some aviation insight, but most of us come from an external perspective and we think that's a good and a bad thing. We have some grey hairs that are operationally providing us [inaudible 00:01:53], but we also have a fresh external that we think differentiates us at and allows us to ideate in ways that haven't previously been done.

World really to us, it represents global connectivity, which we think we provide a large segment of the population that hasn't previously been able to access other parts of the world. You look at a lot of Americans. They don't think to travel internationally. North America represents almost half of the profitability in the airlines over the past year, but a lot of that is just domestic travel. Americans instinctually don't think to travel internationally and we think our name sort of evokes the aspiration of travel, which is really a redeemable aspiration and we're using our name to sort of market to those passengers to activate them and sort of message to them that they can see other parts of the world they haven't previously been to.

So we're in the process of certification. We're in the process of selecting our systems. Our rebranding is almost completely invested a significant amount of time and resources into creating a brand, creating messaging. We have a external consulting group that's almost internal at this point that's led most of those processes. We're still finalising our [inaudible 00:03:25] network and our equipment selection. But all of those prices are occurring concurrently. And we're on schedule to go commercial to schedule service in 2-1 of 2019.

787s are our target equipment. But we recognise that creating economies of scale are easier. It's a easier venture using equipment that's cheaper. 787's the unit economic cost of a 787 is prohibited for a startup. As you can see with [inaudible 00:03:59] struggles, it's almost three times the price to fly a 787 from London to Boston as it's projected to be to fly a 321 LR. So, as I said now, so we're trying to be really thoughtful about our equipment selection. Ultimately, we want to migrate most of the fleet to the 787. We anticipate having 20 or so plans within five years. 787, the Dash 8, Dash 9 would probably comprise most of them, but we're not set on any equipment yet. We're looking at different options and really want to be smart and thoughtful about the selections that we make.

To start, probably two and then scale to five within a year. Probably the 320s. We haven't identified anything specifically yet. But, to us, that's the entry point into the market.

So the 320 would obviously appropriate for certain theatres. We're looking at secondary and tertiary markets in the U.S. to go to Europe potentially and South America. The 330, obviously we need to go to Asia at the outside. Obviously migrate to 787s after that. But really, we haven't crystallised where we're flying at. We haven't finalised our network planning. But we are looking everywhere, essentially Europe, deep South America, and Asia.

It's secondary to primary, most likely. Again, it's really a function of a [inaudible 00:05:29] economics more expensive to fly out of LAX than it is to fly out of Las Vegas or Portland or Seattle. So we need it to make sense. We come from a private equity background where we model everything and we're ... It's going to be important to us that we are financially viable in the near term and in the long term. So, to answer your question, I would say if we fly to Europe secondary markets and tertiary markets to Europe to secondary markets in Europe. To Asia, probably secondary markets or primary markets in Asia. And South America, secondary, primary to primary.

A transatlantic become penetrated but not to a secondary airport. So a lot of the traffic is going transatlantic to New York, not to the Midwest, not to areas of the south. And population centres where a lot of the consolidation occurred and the Big Three left, those markets, there's opportunity there. So we see opportunity going from transatlantic to secondary and tertiary markets. I'd agree with you in saying that there's a opportunity in deep south and APAC certainly. And the South American market's interesting in that there's a lot of other considerations politically, economically. Brazil's emerging economy with Argentina. Just [inaudible 00:07:02] difficult and now sort of relaxing their amenability to carriers, front carriers coming in. Chile has seen recent interest.

So I think there's opportunity everywhere. It's really a matter of just identifying it. Markets are coming increasingly saturated. The secondary markets are becoming more normalised and more mainstream and a lot of times, they become primary markets but there's plenty of places to fly where people are that want to fly internationally that haven't.

So we'll probably have ... It'll be economy and be the premium economy. Two classes to start. We recognise the importance of the business traveller and we need to differentiate to some extent in order to engage them. The business traveller I refer to obviously is the small and medium business traveller. It just doesn't make sense for them to pay $10 to 15,000 to fly to Asia or to Europe when they have the opportunity to do so for cheaper. We think that's a really emerging demographic and we need to cater to them. So we're going to have to differentiate class to some extent, and [inaudible 00:08:17] to some extent, but we'll primarily be economy.

We recognise feed is essential for us. We need it on both ends and that's what Air Box provides. They give us the opportunity to gain access to the value alliance in Asia if that's where we choose to fly. They give us the platform to form other JVs around the world and we think that adds some of these JVs emerge their [inaudible 00:08:43] so disenfranchised airlines that need partnerships and Air Black Box give us the opportunity. From an e-commerce perspective, it's an easy choice. That's a huge part of our business model and their platform allows us to do the things in digital and the e-commerce that traditional [inaudible 00:08:59] don't. So working with them really is important for us to do what we say we're going to do. I think a lot of airlines pay lip service to buzz words digital and data driven, but Air Black Box is sort of our vehicle to ensure that we execute upon that.

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