The only thing I’d heard surrounding Allegiant’s Hawai’i flying recently was regarding mechanical problems impacting half the 757 fleet. That caused a bunch of cancellations but it didn’t indicate anything about how well or how poorly the flights were performing from a revenue perspective. Now we know, however, that Allegiant is cutting a lot of Hawai’i service this Fall. With most airlines, that would be an admission of failure, but that’s not always the case with Allegiant.
This summer, Allegiant is flying from a bunch of different places to Honolulu. In traditional fashion, it’s spreading around its service with just a flight or two each week per destination. So while Allegiant serves Honolulu from nine cities, it only has 17 flights a week. Here’s how it looks:
But starting mid-August, Allegiant cancels all service through the Fall except for 4 weekly flights split between Vegas and Bellingham. Here’s how that looks:
That’s a really big cut. But does it mean the service is failing? With some airlines, it would mean that. But it’s not necessarily the case with Allegiant. The truth is that after mid-August, summer travel demand starts to tail off. After Labor Day, pretty much all the kids are back in school and that means that leisure travel demand really tanks. Business travel picks up, but remember, Allegiant isn’t attracting any kind of business traveler with such infrequent flying.
This isn’t all that different from the strategy employed by Allegiant in other markets. Take a look at the operations in Florida in September. Allegiant has several bases in Florida that account for a huge chunk of the airline’s network. But the airline literally operates half the capacity in September that it operates during a peak week in July. Flights are cut way back because demand is less. Granted, the percentage cut in Hawai’i is greater, but there also just aren’t that many flights in the first place.
Another thing to consider is that this doesn’t appear to be a last minute decision. Allegiant just extended its schedule for booking through October 28 and that’s when people noticed that many of those Hawai’i flights had disappeared. It’s not like they were originally for sale and Allegiant canceled them. This was part of the plan.
Where I think people get nervous is that Allegiant, via spokesperson Jessica Wheeler, told me that they “anticipate the flights coming back for the holidays, but no dates [are] set.” That might seem strange, but remember, Allegiant isn’t taking bookings past October anyway. So it’s no surprise that the dates aren’t set, because flights aren’t for sale yet.
Just because that isn’t a surprise doesn’t mean it’s a good plan. People always like to book holiday travel further in advance than usual, and this is especially true for Hawai’i. So you have a lot of people now sitting here wondering whether they might be able to fly Allegiant or whether they’ll have to connect on someone else. Since the schedule just opened through October, I imagine they’ll have to sit and wait for awhile, unless they decide to just jump on a connection because they don’t want to take a chance. Allegiant might want to sell a little further out in the future.
At this point, it’s hard to speculate how well the routes have done, but we’ll know more eventually. Depending upon which markets come back, when they come back, and how many flights they see, we can start to get an idea of which routes might be doing better than others. But just the fact that they made it through the summer means that they’re probably doing ok or they would have been cut sooner. After all, the Monterey flight was canceled before it even started.
[Maps via Great Circle Mapper]
This may not be a last minute decision, but this was not part of their Hawaii strategy as of late 2012. G4 was planning to open a crew base in HNL last November. Did that fall through? I cannot think of any examples of crew bases in seasonal destinations.
http://www.twu.org/blog/tabid/84/vw/1/itemid/403/default.aspx
That’s a great point. It certainly indicates that their Hawaii plans have changed pretty significantly from launch.
Joseph – All of Allegiant’s destinations are seasonal destinations. They have crew bases wherever they base airplanes. Even places like Bellingham have a crew base, as far as I know. And they all flex capacity tremendously by season.
Sorry, I should have been more clear. I didn’t mean “seasonal” in the context of a destination that has high and low demand periods (i.e. WN having a crew base in MCO). I meant “seasonal” in the context of the amount of airline service to an airport (although both definitions are closely related). I have not seen any examples of crew bases in less than daily stations. BLI is seasonal, but at least G4 has daily service year round.
Stockton and Santa Maria and Eugene to Honolulu? As Mr. Hand would say in “Fast Times”…..”Are you on dope?”
What were they thinking? Maybe Southwest will learn from this before they decide to go off the deep edge with Hawaii flights…
Plenty of good carriers go to Hawaii, we don’t need any more.
They were thinking that it’s not that hard to fill one 757 a week. Don’t underestimate how important a non-stop to Hawaii is to people in smaller communities. Those of us based at MFR would kill for a once a week flight to Oahu.
Problem is…once a week when you are running an ETOPS plane and you only have 6 in your fleet all spread out..and you are in a city where you can’t just re-book them on another nonstop from a major airline…
ATA knew what they were doing with their service, PHX and LAX and SFO.
ATA also had the tie in with Pleasant Holidays that filled many of their seats. They also flew from ONT and OAK to Hawaii.
I know that G4 usually re-allocates their flights significantly based on season and destination. However, do they normally sit their aircraft for an extended period of time or are they always put on other runs? Given that this is a different type of aircraft for the airline, it seems even more of an issue here especially given the depth of the cuts (17 weekly flights down to 4).
Allegiant has been known to allow aircraft to sit underutilized. Part of acquiring old, used planes at dirt cheap prices means they can afford to do it without a huge cost (cost is primarily fuel, not equipment). Also, many of their planes have fewer utilized hours each day due to maintenance cushion. Similiarly, with higher variable costs (fuel), “utilization flying” isn’t as easy as other airlines as break-even load factor is higher.
Bill from DC – As Noah says, they are happy to park their airplanes during low seasons. That’s the beauty of their model of acquiring used aircraft with low acquisition values. That makes nearly all their costs variable, so they don’t mind parking airplanes.
Airplanes can be parked but what about the crews, how does that work?
Other airlines do this as well. Overall, weekly flights from Hawaii to the mainland decrease from 751 in July to 580 in September, a decrease of 171 flights per week. Only 13 of these are due to Allegiant. United’s decrease from 228 weekly flights in July to 165 in September dwarfs Allegiant’s reduction. Hawaiian decreases from 132 to 115. The difference with Allegiant is that they don’t have an underlying base schedule in the off season because of their customer base. Other cities without a local business base show Allegiant stlye reductions for other airlines, for example Cancun drops from 98 weekly Delta flights in March to 22 by September.
I’m curious how this works from an employee perspective. I can see keeping folks would be a bit of a problem when you can only work over the summer, or have they found a segment of the population for which this works well? (College Kids?)
Several target market carriers similar to Allegiant (Canadian carriers?) employ their cabin crews on a seasonal basis and the juniors expect to spend several months on the ground. For pilots, I don’t know. Allegiant may be employing the wet lease method where sufficient flight crews come with the airplane – or some variation on that theme. I don’t know, but stranger arrangements have been made.
Nick – I think part of it has to be the ability to flex where people go. I think a place like Vegas might be counter-seasonal with, say, Myrtle Beach. So they probably try to move things around as much as they can. But in a month like September, people are just going to be idle, or at least fly less.
Very interesting point about the HI health care law Joseph. Things that make you go hmmmmm.
I wonder if there is a lack of traction on the ground side of their package program. Hawaii is a hyper-competitive market on the hotel/resort/rental car front. Since 59& of their income derives from the land side of their packages (see 2012 earnings statement), one can speculate they were not hitting the necessary numbers..
So where do those 757s go when Hawaii is off the schedule? And perhaps more generally, does Allegiant just park it’s old cheap aircraft during the low season for Florida?
Oliver – I know that they have some flights from Vegas to Plattsburgh, McAllen, and Bellingham so they do fly them in the Continental US today. But I don’t know if that will increase in the Fall.
I haven’t seen the data- but I would think that the Bellingham route would do pretty well and maybe even warrant a 5X a week, given the proximity to the lucrative Vancouver BC market.
Bobsmith – Well, Alaska already runs it daily.
Ah right, thanks Cranky.
An interesting post Bret and thanks. As you carefully point out several times, Allegiant is not just another carrier, moving a wide variety of passengers. They are nitch-focused and I suspect that their plans are well considered. As for those 13 weekly departures from all over the West coast, they represent one of the best aircraft utilization rates possible within their market segment – and that certainly helps their bottom line. However, coping with the logistics of a single flight cancelled for mechanical issues would be horrendous. And I guess they have had some mechanical issues – not taken lightly on ETOPS routes. WTF do they do with a planeload of pax when the affected route has only one or two flights per week? Lastly, while I have no knowledge of Allegiant’s load factors on these seasonal routes, I’m surprised that they don’t combine a couple of the less populated routes. (let’s also mention that their crew logistics must be difficult, unless they are wet-leasing their 757s.) In the end Allegiant is a highly specialized carrier and as such they cannot be measured by the standards used to evaluate other, broad based carriers. When Allegiant’s several models work, they work well and can be profitable. When things go other than as planned, they’ve got huge problems and almost no backup resources. Allegiant’s target market may be willing to take more schedule risks than say the average business flyer, but even that family taking a vacation trip to Hawaii has its limits. I have to wonder how your Concierge arm would (our could) deal with a cancellation by Allegiant. Complicated stuff and a stimulating post. Thanks, -C.
Cook – If a flight cancels, as far as I know, Allegiant will either put you on the next available flight or give you a refund. If you’re already at your destination, you can either wait or get your money back and buy a flight home on someone else. I’m not sure if they make exceptions there or not.
If someone signed up for us to help them with Allegiant, the only thing we could do is find another way home, buy the ticket using their credit card, and then work with Allegiant to get the refund.
So next flight might be a week later, all the while the hotel room in Hawaii is empty. I don’t think the potential savings are worth the risk that I would try them.
As a former Bellingham resident I’ve flown Allegiant out of BLI a handful of times up and down the west coast. Sometimes the fares were cheaper but usually in line with Alaska, Virgin, United out of Seattle…however not having to drive or shuttle the I-5 and go through SEA-TAC usually swayed me over to a nonstop out of BLI, despite the incidents of a couple emergency landings at Paine Field or SEA. In a city like Bellingham, going out to the airport to purchase my tickets (to avoid Allegiant’s ridiculous fee for purchasing online or over the phone) wasn’t a big hassle…and I did it every time.
My question: What will happen with the 757’s now? I remember when purchased everyone knew that Hawaii service was coming…upon Allegiant announcing the purchase of the 757’s Alaska swooped in and started offering Hawaii service out of B’ham, to preempt Allegiant I suspect. Even though BLI is better served by Allegiant than most small cities, I was often frustrated that despite their extensive route network I was handcuffed to 7-9 destinations in Cali and the SW. Allegiant doesn’t offer any connecting service.
Now I live in Central America but return 2-3 times/year to Bellingham. I don’t know if it’s viable from a revenue standpoint but I’d love to see the 757’s pushed into some sort of trans-con work…considering their heavy presence in Florida is there any chance of this happening? Now I fly AA through Miami and have considered Spirit and FLL. I think if the price were right many of the Canadiens using BLI as their home airport would vacation and golf in Orlando or Fort Lauderdale instead of California. Unless I’m mistaken there are only two non-stops to/from Florida to the NW (SEA)…a red-eye on AA southbound with a daytime return northbound and another on Alaska, not sure of the schedule there.
So what happens with the 757’s, any chance of a BLI-FLL nonstop or maybe Rockland, Illinois? The Northeast? I try not to fly with luggage, is there any chance of a two stop, inexpensive, connection on Spirit/Allegiant from MGA to BLI via FLL?
On an semi-related topic? It seems to me that there is more demand than service between Washington State and Montana and Oregon. Lots and lots of people drive between Bellingham and Eugene or Bellingham and Missoula or Bozeman or Great Falls. Not work for the 757’s i know but maybe Allegiant could make a MD-80 work on these routes? While not exactly a “sun destination” people I know living in Montana vacation at the Washington coast and Bellinghamsters ski, hike and visit national parks in Montana, Canadiens would as well I reckon. Horizon is the only one offering any such service and only from Seattle with high fares and full planes (at least when I’ve flown)…granted Horizon offers this service only on turbo-props, maybe there isn’t as much demand as I think?
Anyway, where will Allegiant relocate their 757 fleet?
Great Blog you’ve got here Brett, I enjoy reading every post!!
razzle – They are doing some Continental US flying already. One that might be of greatest interest to you is Vegas to Plattsburgh. Plattsburgh is to Montreal as Bellingham is to Vancouver. So, if that can work, maybe they would look at Bellingham to Florida. I have no clue if it would work, but the MD-80s definitely wouldn’t make it, so only the 757s would be able to go. But it’s a lot of seats – Allegiant packs ’em in.
Looks like a standard seasonal drawdown to me. I keep getting emails from Sun Country that seasonal destinations in the south are ending soon so I’d better book my last minute vacation. Happens every year. I recon most regulars here are business travelers and still use legacy carriers for leisure travel due to miles/loyalty rewards, etc. I do, but do occasionally find myself on these leisure travel airlines. Haven’t flown Allegiant but on SY I’m always reminded how a plane flight is a “big event” to many, if not most, of their passengers.
I have to partially agree with Cranky. I’ve seen people get all panicked about Allegiant leaving when in reality it is a seasonal adjustment. However we’re not just talking about Gary, Ind. HNL was supposed to be a hub for Allegiant.
I think questions about the profitability of Hawaii are warranted and I would even question whether Allegiant needs to rethink its strategy. I wonder if it would be better to run a daily flight from LAS and/or AZA (even 5x weekly) so it can use its mainland route network to feed the Hawaii flights.
In reality, Allegiant won’t do connections because the frequency of which planes break down means they’d shell out thousands in hotels and other items during misconnects. Still, with frequent service to the islands it may be a way to fill planes, sell packages and spur growth. We already know when Southwest starts Hawaii service it will use its vast network to connect passengers.
Even if demand does go down during times of the year, west coast to Hawaii is a year round market so with only a few flights a week from these cities seems like it would be a year round service. At least from some cities like Fresno which is a large metro area.
Could come down to the 757 being used elsewhere during this time in markets they know could bring in more money then if they leave them in the Hawaii market.
When it comes to Allegiant, you’re almost always left with: “I’m scratching my head.”
They are a niche, as was said. My guess is that they serve the most unsophisicated group of airline customers in America, people they know, if anything goes wrong, won’t know how or to whom they can complain.
They are what they are. I’m sure they make money, but it would be interesting to look at every city they’ve gone into, compare how much of their own money they put into the service, with what the locals, ofter very desperate for any service, put up. See how long the service lasted and under what circumstances the service ended.
To each their own!
In Lansing, Michigan we had Allegiant for a few years until Grand Rapids lured
them away with higher financial incentives, Lansing then recruited Sun Country for winter seasonal flights to Florida but Lansing decided they wanted year round (or close to it) and managed to lure Allegiant back so now they are competing against Sun Country. Lansing flyers are the winners with two discount airlines flying from
a medium size airport. Allegiant is still flying out of Grand Rapids as well.
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