LONDON – The COVID-19 pandemic is beginning to produce a new trend in the airline industry. Start-up carriers. From the likes of flyPOP, Breeze Airways to many more new start-up carriers, the industry and those that know the insides of it are preparing for what could be a new boom post-pandemic.
Introducing Moov Airways, the newly rebranded Swiss start-up carrier which is looking to launch operations over the next few years. AviationSource sat down with its CEO, Alvaro Nogueira de Oliveira, to discuss what the airline has in store for the industry.
JF: Alvaro, thanks for speaking with AviationSource. What are the aims of Moov, especially as we begin to see the light at the end of the tunnel with the pandemic?
AO: We have a vision to make far away places be easily accessible. We want to provide aviation for everyone. The second interpretation can be seen as us wanting to provide low fares in order to allow people to fly.. We want to decentralize aviation. We want to serve point to point from secondary catchment areas to destinations overseas. That can be either primary or secondary destinations.
We see that we can use leading edge technology to provide a seamless, personalized service. We want to build a low-cost company but with an aim of having a high quality of service. If you assess this idea of serving secondary markets, you see that this will bring convenience for travelers. Once we are flying nonstop from those places, we can save three to four hours of trip time compared to a standard transatlantic flight.
This pandemic is a game changer. We believe that aviation will never be the same as before. The result of this pandemic will bring a market that is more consolidated due to some not being able to outlive this crisis. We have already seen a few airlines unfortunately go out of business, but the remaining companies are highly indebted. So, they tend to focus on the most profitable markets, consolidate services which means a reduction in capacity and consequently, less flight options for the travelling public.
What we want is to bring to the market, a new debt-free company able to grow the opportunity from connecting high value secondary catchment areas with decentralization being the keyword here.
JF: It was noted in an article produced by CH Aviation that the execution of the airline’s plans remained contingent on the airline securing sufficient financing, which under the Swiss Skies name originally, failed to do. How confident are you now in acquiring those funds?
AO: We are greatly confident in being able to acquire this funding. We will be launching a security token offering (STO) this year, and we believe that this investment model is very aligned and reinforces our overall disruptive business model. We also intend to use crypto tokens in our service offerings and reward plans to further support our strategic goals. With that in mind, it does not mean that we are not talking with the traditional investors. We are still doing that.
If you see the trends and media coverage regarding the digital economy, you see that the institutional investors and professional investors this year will be exposed to digital assets. As the digital asset ecosystem continues to expand and mature, industry analysts HashKey expect more than 50% of institutional and professional investors to have exposure to this emerging asset class in their portfolio by the end of 2021. which we consider to be a transformation. We are here to bring into the airline industry a real transformation in that respect.
JF: It is noted that the airline is aiming to kick-start regional operations out of Lugano, despite the airport not having any commercial traffic since 2019 after the Adria Airways bankruptcy. How is Moov aiming to regenerate Lugano’s commercial presence in the area?
AO: Lugano would be an opportunity to jumpstart our concept of a decentralized, low fare, low-cost, point-to-point airline. A regional operation out of Lugano would be to European main destinations like London, Munich, Rome, etc.
Lugano is a genuinely nice area. We have industries, we have tourism. We have the third main financial zone in Switzerland and it is near Como and Milan. There is a lot of activity here with no airline service. The airport here has had a bad reputation because of the Instrument Flight Procedures in the airport, which makes it difficult for aircraft to come and go. If the weather changes, and you do not need to have a huge weather change, this will cause disruption to the systems in place.
Such disruption costs a lot to the operators here, which causes the lack of credibility because of the lack of reliability. We want to change this. We can establish PBN (Performance Based Navigation) for both sides of the runway. This would enable a level of precision that would allow us to descend inside the valley as well as establishing close to ILS CAT I approach. If we can change this, then it will change the game and change the way the airport will be used here. This is a niche market. Whilst it is a small airport and its growth is limited, we have planned a nice operation here, and we are pretty sure that we can be successful here. If we can be successful here then we can copy and paste that model into operations elsewhere.
JF: It has been noted that the airline will be operating Airbus A321XLRs by 2023. Do you know already whether these aircraft will be purchased outright or will this be via lease agreements?
AO: These aircraft will be under lease agreements. In the first few years, we aim to be an asset-light company for obvious reasons. So, when we start operations, we need to aim for profitability and this will transition to what we call an “asset-right company”. We definitely don’t aim to be an asset heavy company, so leasing agreements is the right way forward for this.
JF: What airports do you have in mind, or does the airline have in mind for the utilization of the A321XLR?
AO: We aim to be a pan-European company. So we aim to operate from some points, all being secondary catchment areas in Europe to overseas destinations within the range of the aircraft. The starting point is Basel in Northern Switzerland, where with each route, we had already assessed and evaluated some routes, but this was of course pre-pandemic.
After the pandemic, we will reassess the routes. The pandemic has taught us that we need to have this dynamic of being able to identify opportunities and move quickly to change if the routes we operate do not perform well.
JF: So with the XLR in mind then, does that mean looking at the potential for Transatlantic operations then?
AO: Yeah. We aim to consider any destinations within the range of the A321XLR, offering ranges of up to 4,500 nautical miles. If you center your compass in one city like Basel, and you draw an arc of 4,500, any destination within that arc we consider to be a potential destination. We want to explore the maximum range of the aircraft as well as balance what loads can be carried etc.
JF: So with that in mind then, we have obviously seen the likes of Norwegian operating long-haul on a low-cost basis and their model has not worked. We are seeing the likes of JetBlue entering into the transatlantic market so why do you think Moov would be in a good position to operate transatlantic services?
AO: To answer this question, we must first look at how the low cost concept was brought to the market, especially through the perspective of Southwest Airlines, who developed, built and implemented their low cost, low fares principle, which encouraged this to be copied and pasted everywhere around the world with some adaptations.
This is the benchmark for the short haul. There is not much difference from one operator to the other using this concept for long-haul. However, with Moov, this is going to be different. There is not going to be a single model, especially because we can say there is no one size fits all. It ultimately depends on what markets you want to service. We have obviously seen a few players enter this market already. Some have remained and some have not. The fact that you mention JetBlue only proves that our idea is good, and that long haul on a low-cost basis is a step into the future.
JF: Coming back to the A321XLR again, the future of the industry is quite hard to predict at the moment. Over the next five, 10 or 15 years, do you anticipate Moov to operate an all-XLR fleet or are you considering upgrading to more wide-body aircraft?
AO: As you have said James, we do not know what the future is bringing, especially soon. Our concept is decentralized services. So, the A321XLR seems to be the right aircraft for this space, but we must permanently be aware of what is going on. If an opportunity arises that can fit the concept of low cost, secondary catchment point to point service, offering seamless, personalized experiences and be profitable, then of course we will evaluate that.
JF: Coming back to Lugano again. Would you be able to give more details as you can regarding the regional side of the business and how Moov aims to provide significant operations out of Lugano?
AO: The regional side of the business will again be using the same concept of decentralized, non-stop, point-to-point flights. There are some destinations that are natural destinations for business and leisure. There are other destinations that will be seasonal. As I mentioned before, Lugano is a small airport. There is limited space to base airplanes here and to operate airplanes out of here, we aim to be using close to the maximum capacity of the airport by year five of operations. We will grow in this airport as much as we can before the constraints limit us, and we will reach that limit very quick.
We believe that the only way to be successful in Lugano is to operate on low-cost, especially with the competitive environment within the rail industry where passengers can take the train to Milan Malpensa or to Bergamo to fly with the low-cost carriers. What we want to offer is not the same ticket price, but the same cost. It’s much more convenient that you take an airplane 20 minutes away from your home than driving an hour and a half by car, or you go by bus or train to take your flight. There are more costs aligned with that. We found in our business model that we can be competitive with that industry as we can offer pretty much the same cost but offer more convenience.
It is also key to note some more information about the bidding process at Lugano Airport that Moov sent to us:
“In November, Moov sent a formal expression of interest to The City of Lugano regarding taking over the management of Lugano airport, as did 6 other bidding groups. On Monday 4th January, Moov decided to partner with SKN Haryana City Gas Distribution Private Limited to bring a stronger, joint solution to the City for consideration. The partnership united a team at SKN with extensive experience in airport development, compliance and management with a team at Moov with a proven track record in aviation and airline management.
However, the Municipality of Lugano decided to continue discussions with just two bidders: the Friends of the airport (Owen-Jones and Bonomi) and the Marending-Artioli and Partners consortium, and so not with Moov/SKN. Moov/SKN have appealed against the decision.
Whoever now wins the bid to manage the airport, we could still potentially offer a service out of Lugano, as this does reflect our strategy of offering a low fare, low-cost, high tech, point-to-point airline connecting high value secondary catchment areas. Regardless, the expression of interest has no effect on our existing plans to build an airline flying from Basel, a low fare, low-cost, long-haul, point-to-point airline connecting high value secondary catchment areas.”
JF: Obviously with the operational constraints of Lugano being caused by mountains and other terrains, would Moov ever consider taking on aircraft in the eVTOL market, especially with that industry gaining significant momentum over in the United States?
AO: To plug an operation here in Lugano, you need to offer accessibility from the catchment area. So you need to work closely with the government, its agencies and also public transport authorities in order to get travellers to the airport. Of course, we need to consider eVTOL. However, as mentioned with the potential use of PBN, as seen in Queenstown in New Zealand, it would potentially open up Lugano to larger aircraft, and could make operations more reliable. But back to your question, we as an airline should be open to any means of future transport to and from the airport in order to facilitate easier accessibility to our users.
JF: In the meantime, what aircraft does Moov intend on using for such operations out of Lugano?
AO: The business model has been done based on the acquisition of Bombardier Dash 8 Q400 aircraft, but this doesn’t mean it’s the final decision on this. We are also assessing other players in the regional market. This will be based on what brings confidence for the company to operate PBN in order to perform safe flights in Lugano, especially with the fact that we cannot disregard the payload restrictions that some airplanes have because of the terrain. We are assessing all the possibilities.
Lugano is pretty restrictive in what we can do there, with there only being space for around four to five aircraft at a time
JF: Obviously Adria Airways went into bankruptcy in 2019, leaving no commercial operator out of Lugano. Do you feel that Moov is going to bolster Lugano up to an airport that the industry now has to look out for?
AO: Lugano’s history is a rich one, having drawn around 370,000 passengers a year by the late 90’s going into the early 2000’s, which was due to the Avro RJ-85 operations, which were able to serve many destinations within Europe. After September 11, 2001, this of course all changed. But from the movement of Alitalia from Rome to Milan to SWISS getting rid of its turboprops, this of course has reduced any market opportunity for the airport.
With trains taking anywhere between two to four hours to the likes of Zurich for example, it proves the point that air connectivity between the two cities would be beneficial for Moov and the market.
JF: Looking at an interview you did with RoutesOnline, you mentioned that you are happy to do partnerships with other airlines. Could you give any more detail about what you aim to achieve out of such partnerships going into the future?
AO: Convenience for the user. To use the example of Lugano, it’s natural to think about providing long-haul connectivity for our customers here. We aim to offer long haul connectivity from Lugano via Amsterdam. When we have our long haul operation, we will also have connectivity out of Basel but as we will not have all the destinations a big carrier has, . we need to consider partnerships in order to allow our customers to get what they want and what they need, especially when it comes to transiting onwards to another destination.
JF: Is there anything else you would like to say to our readers about Moov?
AO: We are a group of senior airline executives that has been complimented by three knowledgeable and experienced guys in the area of marketing, digital economy, technology and risk assessment. We have seen over the last 30 years is a rollercoaster of the industry and what we want to do here is to bring to the market, a fresh company with new ideas, with a new business model, aiming to bring convenience for the users. It is completely customer-oriented, aiming for seamless and personalized experiences.
We aim to do this through decreasing trip times serving point to point, secondary destinations. We are also aware that for this to work, we need to have very motivated people working for us. So we want to be recognized as the company where people actually want to work. So, we aim to have a very nice working environment and bring to the industry good service in a low-cost environment, which we see that this is something in some circumstances that people think is not possible. The concept of low cost is not linked to good service, and we want to change this perception. Moov wants to be part of the transformation of the industry and this is key to success.
It remains clear that Moov Airways is wanting to change the market and has a good opportunity to do so post-pandemic. Like with other start-up carriers that I have spoken to in the last year, it remains clear transformation is key to success nowadays.
And airlines like Moov are correct in thinking that. The pandemic, whilst producing a volatile time for this industry, is generating new innovative and creative ways of producing success going into the future. Another element where they are correct is through the utilization of the A321XLR. The industry is forecasted to see smaller aircraft flying longer routes, for less.
This is also the reason why some legacy carriers may begin to sweat, especially by operating larger and less cost-efficient aircraft. However, with Moov still in its early days, all we can do in the meantime is sit back, relax, and wait to see whether this new mode of flying will be one of the permanent post-pandemic motions within the industry.