Who the F*** is Allegiant Air?
If I went up to 100 people in the US asked them about Allegiant Air, my guess is almost all of them would pose the question asked in the title of this post. I’ve mentioned some of their seemingly random route announcements before, and you’ve probably asked the same question. So, who the f*** IS Allegiant Air?
You might wonder how an airline could fly to all those cities with only 21 planes. Well, it’s because they fly to most of them only 2 to 4 days a week. Most airlines wouldn’t dare fly a schedule like that because it doesn’t help you attract the business traveler, but Allegiant isn’t looking for the business traveler.
Start with their hubs. Vegas, Orlando, and Tampa are all big leisure destinations, so there should be decent traffic from just about anywhere in the country if you fly it twice a week. Think about it from the perspective of a local. If I live in Topeka, Kansas, I can fly to Vegas on Monday or Friday. Well, going out Friday night and coming back Monday afternoon is the perfect gambling weekend. And what are my alternatives?
Well, you have no choices locally - nobody else even flies to Topeka. So you can drive 75 miles to Kansas City and fly out or you can fly Allegiant. Plenty of people are willing to drive 75 miles though, so the key is also making sure you have low fares. Allegiant has extremely competitive low fares and that combined with convenience make them hard to beat in these smaller markets.
The obvious caveat to having low fares is making sure your costs are lower than that. Allegiant has done an excellent job of keeping costs down. While those MD80s burn a lot of fuel, they are downright cheap to acquire on the used market. And who do you think will charge more for landing fees - Topeka or Kansas City? There are some serious cost advantages to flying from these smaller airports. According to the NYT, they also keep crew costs down by having out-and-back routings so that they don’t have to pay for crew hotels or meals on the road. Crew wages are also lower. A 10 year captain will make $105 an hour whereas a 10 year captain for American makes $154 per hour on the same plane.
In addition, they’ve embraced the Ryanair model and have boosted ancillary revenues onboard. Want an assigned seat? That’ll cost you. How about a drink onboard? Fork over the cash. Oh and by the way, if you need a hotel or car rental at your destination, Allegiant will be happy to help and take a commission from the sale.
These guys are doing things right and they’re making it work profitably. If you live in a small town, they either fly there already or they’re thinking about it.
Its been fascinating watching Allegiant grow. Major airlines have been casting off smaller routes in an effort to control costs and conslidate leaving some nice markets unserved. All Allegiant needed was someone to point them in the right direction. That happened when Maurice Gallagher Jr(West-Air, Valujet)came on board in 2001. Since then they seem to have grown steadily. The question remains…what happens if (or when) the majors stabilize and want to step back into these markets?
It’s a good question. For the most part, the big guys haven’t ever been in these markets directly (at least not in recent memory). Sure, Topeka probably had hub service from the legacy carriers at some point, but I don’t know if anyone ever served Vegas.
Meanwhile, Northwest tried to jump into the market with nonstops to Vegas from some of their upper Midwestern strongholds. They’ve announced they’re pulling out, so that clearly didn’t work, even in this booming market the last year.
[...] serves as sort of a regular charter service to Florida. Great if you want to go to Ft Lauderdale, sucks otherwise. Their business model is also based on buying aged equipment which other carriers no longer [...]
Many years ago, in the heyday of McDonnell Douglas, orders from American used to go something like this: “We think the MD80 is terrible. Can you cut the price? Ok, then we’ll take another 30.” Now AA has 300 of them. They average 12 to 14 years old. Designed and built when fuel was much cheaper, they are no longer that cheap to fly. Block hour costs for the plane used to be around $1200/hr. This made them much cheaper to run than other planes, and even though they flew a bit slower than any other in AA’s fleet, they were cheap. Nowadays fuel is expensive. Older planes grow heavier (kind of like us humans) and cost more in maintenance. But, there is no apparent replacement in the market for the MD80. Word is with winglets a 737 burns less fuel than an MD80, but not much. Adding winglets to a 737 drives fuel burn down 5% but only half that when compared to an MD80. So why replace the MD80 with more 737s if the saving is marginal? Turns out the MD80 was really a very well designed airplane.
Speaking only for the Bellingham Washington route, they are able to siphon a significant number of travelers from Vancouver BC (city of 2 million). I for one live in a suburb of Vancouver and the drive to Bellingham (minus border waits) is about 45 minutes which is what it would take to drive to Vancouver airport. The price, as everyone has raved about, makes the decision easy.