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.
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.
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.
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.
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.