Avatar Airlines: Could this be the real deal?

"Low fares, big planes, no surprises". This is the slogan of Avatar Airlines, a "brand new" US low-cost air carrier that claims to operate ultra-low fare, non-stop flights to and from high-density markets within the United States, using only 747s, with potential profits also coming from advertising both inside and outside the cabin, like a giant flying billboard.

Avatar Airlines also intends to lease out the cargo space "in the belly of its 747-400s wholesale, which will hold around 70,000 pounds of containerized freight". This would provide cargo services for International flights into the US that can't fly internally on the same aircraft.

It‘s founder and CEO, Barry Michaels stated that "Boeing and Avatar can reinvent the 747, with its lowest cost per available seat mile, into a gold standard for low-cost mass transportation". Avatar Airlines is currently looking to acquire 14 used 747-400s to begin its initial service, but the 747-8 is considered to be the ideal aircraft to replace the older 400s. On 7th February 2020, Avatar Airlines sent a Letter of Intent to Boeing for the purchase of 30 new 747-8s (passenger version) to be delivered within 3-5 years. This deal could be worth over 10 billion US dollars. It’s important to note Boeing hasn’t publicly announced/confirmed the Letter or Intent. 

This big order could keep the 747 production alive after Boeing, on several occasions, during recent years, discussed the potential termination of 747 production due to insufficient demand and market for the aircraft because several of the orders are from airlines that no longer intend to take delivery. Deliveries for Avatar are scheduled through 2022.

The Family Airlines case

Unfortunately, though, that's not all gold that glitters. In the 1990s, Barry Michaels, the chief executive, proposed Family Airlines, an American low-cost airline, based on a very similar business plan to the Avatar Airlines' one. In March 1993 the Federal Aviation Administration announced that it would no longer process Family Airlines' application to begin service, and in April 1993, after the United States Department of Transportation reviewed lawsuits and judgments against founder Barry Michaels, the agency asked Michaels to relinquish control of the proposed airline. On June 24, 1996, the Securities and Exchange Commission filed a suit against Barry Michaels and his wife, Holly S. Michaels, for fraudulently offering unregistered stock for the airline and later a federal judge in California ordered Barry and Holly Michaels to return more than $350.000 to the investors and pay $181.000 per person in civil penalties.

In January 2008, Family Airlines reappeared when a new application was filed with the Department of Transportation, with Michaels as CEO, but observers noted there were no significant changes from the airline's 1990s business plan, and a year later the airline's application was denied. In 2010, the airline filed again, this time under the name Avatar Airlines, however, the application did not proceed. In March 2014, Avatar Airlines filed another application with the Department of Transportation, according to which Michaels no longer held a management position with the company. However, that same month, Michaels met with airport officials where he represented himself as the Chairman of the airline.

So, is this the right time to see the birth of a revolutionary airline or a big scam? Only time will tell.

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