Last Friday I posted how Breeze wants to be Allegiant Jr. That made the timing perfect for a post on Allegiant itself.
After some stops and starts in its early days, Allegiant found lightning in a bottle with its strategy of flying customers from small city to large desirable destinations. But over time, those markets have run out of opportunities, and that means Allegiant has had to look elsewhere. Recently, Allegiant added 44 new routes in one fell swoop, and that seemed like a good opportunity to analyze just where this growth was coming from.
Just take a look at the current map. Those big orange circles are “destinations” for Allegiant. The small blue spots are origin cities that feed into those big cities.
This is a far cry from the early days when Allegiant grew up around bringing people from around the west into its Las Vegas home. It then moved into big Florida cities, but since then, you can see that it has spread all over the country. (Ok, almost all over the country. Sorry Alabama and Wyoming.)
But these are all just dots on a map. What about the routes that connect them all?
To really understand this, I had to create some categories. I broke these down between (origin) Cities, Destinations, Canada, and VFR. Then I sorted by size. I’ll explain how I built this out below.
Destinations
These are cities that people are visiting primarily for vacation. Think of the traditional Allegiant markets like Las Vegas and Orlando. I classified these into two size categories.
- Small – less than 2.4 million residents in metro area
- Large – more than 2.4 million residents in metro area
That dividing line was set to make sure Las Vegas was included as a large destination. I understand the number of residents is an imperfect way to measure destination size, but this actually works well in this case. Small destinations include cities like Myrtle Beach and Savannah.
VFR
This is a newer kind of Allegiant destination where instead of being primarily for vacation, they are just big population centers that attract a great deal of travel by those visiting friends and relatives (VFR). These were also broken down into two categories.
- Small – less than 5 million residents in metro area
- Large – more than 5 million residents in metro area
Smaller cities include places like Austin and Nashville while bigger ones are Los Angeles, New York, Washington, Chicago, etc.
Cities
These are the places that are meant to be supplying the passengers to visit the Destinations and VFR locations. These were broken into three sizes.
- Small – less than 750,000 residents in metro area
- Mid – 750,000 to 2 million residents in metro area
- Large – more than 2 million residents in metro area
Small cities include the bread and butter of Allegiant’s original strategy. This can range from places like Sioux Falls and Fargo up to Syracuse and Lexington. The mid cities start around Stockton, Boise, and Des Moines and range up to Norfolk and Greensboro. Then big cities include Cincinnati, Raleigh/Durham, Indianapolis, and Pittsburgh, among others.
Canada
There is a small subset of markets — Bellingham, Ogdenburg, and Plattsburgh — that are small cities themselves but act as gateways to the Canadian cities of Vancouver, Ottawa, and Montreal respectively. These were early points of growth for Allegiant as travelers flocked across the border to get low fares for domestic US flights. This is a unique group that I figured was worth separating.
With my definitions set, it was time to pull routes. I dove into Diio by Cirium data and compared July 2010 schedules to July 2020 schedules. Note that these 2020 schedules didn’t include the new adds. I handled those separately as you’ll see below. Here’s the chart.
As you can see, in 2010, nearly 80 percent of flights connected a Small or Mid City to a Large Destination. Another 9 percent connected those Canada cities to a Large Destination. The only other big chunk was just over 6 percent flying from Small City to Large VFR. That last one was the Los Angeles base that the airline opened just the year prior. It could be argued that Los Angeles is a mix of VFR and Destination, so this isn’t really much of a stray from the original strategy.
Flash forward ten years and wow is it different. Now less than 50 percent of the network connects Small and Mid Cities to Large Destinations. That isn’t suggesting that Allegiant is cutting service but that it is just growing elsewhere.
What had changed by 2020 was the introduction of Large Cities and Small Destinations. This didn’t exist in 2010 for the airline, but by this summer, nearly a quarter of all flights will be from Large Cities to either Small or Large Destinations. Another 13 percent is connecting Small and Mid Cities to Small Destinations. In other words, Allegiant found that by going into Large Cities and Small Destinations, it still found the same dynamic as it found in its original market types.
But now, Allegiant is moving into new frontiers. If you look at the chart, you’ll see the numbers in boxes showing how the new routes break down by percentage. There is still some energy in adding Small and Mid Cities to Small Destinations, but what we really see is the rise in VFR travel.
More than half of the new adds involve VFR spots including the introduction of service into Boston, Chicago/Midway, and Houston/Hobby. Many of these adds are from Small and Mid Cities, and there’s good reason for that. These Small Cities are places where Allegiant already flies from traditional destinations. If these work, it’s good news for Allegiant. Let’s look at Knoxville as a great example of why.
Allegiant started flying from there to bigger Destinations. Last summer, it decided to base two airplanes at the airport. Now this summer, it’s adding five new Cities. The route map looks like this:
With this kind of critical mass, Allegiant can better utilize those airplanes, gates, terminal space, and personnel. I would expect we’ll see more of this. So the idea is that Allegiant wants more Destinations, but it has run out of obvious ones. So it has moved harder into the VFR world, and the airline hopes that’s an opportunity to add more lines from these smaller Cities.
So far, what Allegiant has done has worked. It seems promising that this new growth would have a similar result. This doesn’t suggest success or failure for Breeze, but it does indicate that Allegiant has a lot more places it can serve even with its larger fleet. The question is whether those smaller Breeze airplanes will overlap much with the A319s that Allegiant flies.
13 comments on “Allegiant Shifts Growth Into A Different Kind of Market”
One nice property of VFR travel is that it’s bidirectional: it’s not just small town people going to visit relatives in the big city, but also the other way around.
Funny you should say that living in NH that new Boston Knoxville flight makes visiting friends in the trip cities much more feasible.
Great post – this is really interesting, and is the sort of content no one else on the web really does well.
TYS is an interesting case – you could characterize the new routes as “Mid City -> Large VFR”, but you could also make a solid case that those routes are “Large City -> Small Destination”. TYS is the gateway to Great Smoky Mountains National Park and the cluster of surrounding resort towns, including Gatlinburg and Pigeon Forge (home of Dollyworld!) I flew the EWR-TYS route recently (as a tourist to Gatlinburg) and the passengers seemed to be a mix of NY/NJ and Tennessee folks, so it seems to be a mix.
ORF is similar, although probably less balanced – there may be some “Mid City -> Small VFR” traffic flying in either direction between ORF and CVG/LCK/CLE/PIT, but I think most of the expected traffic is “Large City -> Small Destination”: Vacationers from Ohio and Pittsburgh flying to summer beach destinations in the Outer Banks and Virginia Beach. This is supported by the fact that they only plan to run the LCK/CLE/PIT routes between May and August – no one wants to fly to the Outer Banks once it gets chilly out. I’m more surprised that they think they can make the ORF-CVG route work even into October, but CVG is large and growing so maybe they can make it work.
On a related note, one thing I would love to do if I ever find the time is make a month-to-month visualization of Allegiant’s route map, which would show the destinations shifting northward in the summer and shifting back south to Florida as fall begins. Without a time dimension, the route map doesn’t tell the full story.
Out of pure curiosity (I promise not to dispute every labeling decision!) do you have a spreadsheet of how you labeled each city in the network?
Alex – I looked at the route map and if it was an orange dot, then it was labeled as a Destination or VFR. Anything else was a City. So that’s why you see Knoxville listed the way it is. Other than that, I just looked at CSA/MSA populations and slotted them in that way. If you have specific questions I can tell you, but it’s pretty straightforward.
Makes sense!
It’s too early to make predictions regarding the seasonal vs. year-round state of ORF-LCK/CLE/PIT because G4 almost always starts a route as seasonal, then extends it year-round if traffic merits so beginning from the same season the following year. This pattern seems to be their MO.
I wouldn’t be too surprised with ORF-CVG going year round. In this context I am going to categorize CVG as a “midsized” market in the more traditional sense of the term – as a large but not huge metro area. When I say huge, think LA, SF, DC-Balt., S.Fl, C.Fl, ATL, Phx, Phl, Houston, DAL, etc. There is substantial VFR traffic between medium sized metros (i.e., size appx 1.5mil to 2.5mil POPs) that’s ignored by the majors who force passengers through hubs and do so at high prices (certainly compared to G4). G4 can make these routes work flying 2x-3x weekly. Thanks to this, routes like ORF-CVG, ORF-PIT and ORF-JAX have a chance of operating year-round, and I think this is an important growth area for G4 as a ULCC, especially since the other ULCCs (i.e., Spirit and Frontier) seem to really be concentrating on serving routes where at least one of the destination is a huge metro area – basically just trying to compete with the majors and leaving G4 alone. So basically in this market segment G4 is siphoning connecting traffic from the majors and there’s a lot of growth potential here given that G4 usually operated less than daily. It will be interesting to see how Breeze affects this market because it seems like they are interested in appealing to the same market segment.
Wow, I didn’t realize their network was that large. Unfortunately it’s all point to point flying. While WN claims they do the same they are setup for connections in places like BNA. Unfortunately for me I could get to BNA on Allegiant via a relatively close airport but if I wanted to connect on to PBG that’s impossible from what I gather. As someone who cares very little about spending a week in Florida (no offence) their model still isn’t of much use to me even though they service a LOT of the places I want to and need to visit.
A,
Although WN was a point to point airline in the past, as they grew they began to resemble the legacies in structure with such hubs as dal, LAS, PHX, MDW, & BWI. This is despite the fact they don’t call them hubs & yet that’s exactly what they are.
Great post. As a resident of Knoxville, I was pleased but curious about the expansion of service by Allegiant and this provides some insight. Thanks.
Memphis has seen healthy tourism growth the past few years plusnisnis a major start/stop point for the booming River cruise scene. Allegiant is seeing it as not only an origination point but destination as well. It is also .becoming a defacto regular service airline, see the LAS/MEM frequencies. I figure you very well.may see them making it a base once the work on B is done but now there’s more RON planes than gates available during the closure and possiby even after the reopening of B.
Under the Canada heading you missed GFK and FAR. Many Canadians from the prairie provinces drive to those cities for Allegient flights.
Alan – Hmm, you know, I definitely should have put Grand Forks under that category. I didn’t even realize it was only a couple hours from Winnipeg.
But Fargo seems like a stretch to me. I’m sure people do it, but there’s also more of a local market there, I’d assume.
A wonderful concept and with them using airbus equipment, bye bye southwest with their Boeing 737’s. If it’s Boeing, I ain’t going.