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Allegiant Air

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Allegiant Air
IATA
G4		 ICAO
AAY		 Callsign
ALLEGIANT
Founded 1997 (as WestJet Express)[1]
Commenced operations June 1998[1]
Focus cities
Fleet size 80
Destinations 75
Company slogan Travel is our deal
Parent company Allegiant Travel Co.
Headquarters Enterprise, Nevada
Key people Maurice J. Gallagher, Jr. (President and CEO)
Revenue increase US$558 Million (FY 2009)[5]
Operating income increase US$150 Million (FY 2009)[5]
Net income increase US$76.3 Million (FY 2009)[5]
Total assets increase US$500 Million (FY 2009)[6]
Total equity increase US$292 Million (FY 2009)[6]
Website allegiantair.com

Allegiant Air is an American low-cost airline owned by Allegiant Travel Co. (NASDAQ: ALGT) that operates scheduled and charter flights. Allegiant Travel Company is a publicly traded company with 1,300 employees and one billion USD market capitalization.[7] The corporate headquarters is in Enterprise, Nevada, near Las Vegas.

The airline also offers international vacation packages through its Allegiant Vacations affiliate.

Grand Rapids, Michigan, became an Allegiant focus city at Gerald R. Ford International Airport on April 27, 2010.[3] However, on August 12, 2011, Allegiant announced it would discontinue the Grand Rapids base on October 31.[8]

Contents

[edit] History

An Allegiant Air McDonnell Douglas MD-80 at McCarran International Airport, Paradise, Nevada. (2009)

Allegiant was founded in 1997 under the name WestJet Express.[1] After a trademark dispute with West Jet Air Center of Rapid City, South Dakota, and with the name's similarity to WestJet Airlines of Canada, the airline adopted the name Allegiant Air and received its operating certificate for scheduled and charter domestic operations in 1998. The airline also has authority for charter service to Canada and Mexico. Wholly owned by Allegiant Travel, the airline now has over 1,300 employees.

Scheduled service began on October 15, 1999, between Las Vegas and the airline's initial hub in Fresno, California, at the Fresno Yosemite International Airport, with Douglas DC-9-21 and DC-9-51 aircraft. Shortly after the shutdown of WinAir Airlines, Allegiant Air opened a hub in Long Beach, California, mirroring WinAir's network. Allegiant was unable to bring in enough revenue to cover its costs and filed for Chapter 11 bankruptcy protection on December 13, 2000.

In June 2001, Maurice J. Gallagher, Jr. joined the airline and soon became its President and Chief Executive Officer. Having formerly worked with WestAir and ValuJet Airlines, Gallagher led the airline's transformation into its present form, moving the base to Las Vegas and focusing on smaller markets that larger airlines did not serve with mainline aircraft. From 2001, they have grown from 2 destinations to over 50 from Las Vegas, Orlando/Sanford, Florida, and St Petersburg, Florida.

In November 2006, Allegiant announced that it had filed a registration statement with the Securities and Exchange Commission in anticipation of a planned initial public offering of its Common Stock. It is listed on the NASDAQ Stock Market under the ticker symbol "ALGT".

In July 2007, the airline announced plans to open a fourth focus city and operations base at Phoenix-Mesa Gateway Airport in Mesa, Arizona, connecting the Phoenix metropolitan area to 13 destinations already served by Allegiant and one new destination. The airline began service out of its new focus city on October 25, 2007.[9] The airport announced a 10,000-square-foot (930 m2) expansion in August 2008 which will increase the number of gates from two to four and allow Allegiant to triple the number of flights from Phoenix. The expansion will be funded by a loan from Allegiant which will be repaid by passenger fees.[10]

In August 2007, Allegiant also announced plans to open its fifth focus city and make an operations base at Fort Lauderdale-Hollywood International Airport, connecting the South Florida area to destinations already served by Allegiant. The airline began service in this focus city November 14, 2007.

In January 2008, Allegiant opened its sixth base at Washington's Bellingham International Airport. The airline is basing two McDonnell Douglas MD-80 aircraft in Bellingham as part of the expansion.[11] Routes served exclusively from Bellingham include Las Vegas, Palm Springs, San Diego, San Francisco, and Phoenix. Expansion in Bellingham has been largely driven by its proximity to Vancouver, Canada.

Along with Southwest Airlines, the airline was the only major United States airline to make a profit in the first quarter of the oil-driven economic crisis of 2008.

Los Angeles International Airport became Allegiant's seventh base.

In February 2010, Orlando International Airport became Allegiant's eighth base. Just nine months later and after careful evaluation of the routes operating out of Orlando International Airport, Allegiant, citing an inability to achieve a fare premium at MCO as anticipated, a strong passenger preference for Orlando Sanford International Airport[citation needed], higher costs at MCO than expected and a more efficient operating environment at SFB[citation needed], announced the consolidation and return of its Orlando Area operations to Orlando Sanford International Airport.

In February 2010, Allegiant announced its ninth base at Grand Rapids' Gerald R. Ford International Airport. The airline is basing two McDonnell Douglas MD-80 aircraft in Grand Rapids as part of the expansion.[3]

Allegiant Air logo used from 2003-2010

In March 2010, Allegiant announced the purchase of six used Boeing 757s as part of plans to begin flights to Hawaii, with deliveries from spring of 2010 to the fourth quarter of 2011.[12] They gained the approval of the FAA and NTSB for ETOPS status for 757 Hawaii flights in July 2011.[13]

[edit] Corporate affairs

[edit] Headquarters

The corporate headquarters is in Enterprise, unincorporated Clark County, Nevada.[14][15] The building, in proximity to Downtown Las Vegas, is located in a business park that, as of 2010, is new. The building has no signage on the front stating that it is the headquarters of Allegiant, but the roof has the words "Allegiant" prominently visible from above. The facility's front desk is a replica of an MD-80 tail.[16]

[edit] Business model

Allegiant operates a business model based on:

[edit] Markets

Allegiant Air targets small cities with limited passenger airline service. Many of the airline's markets, such as Peoria, Illinois, are served only by commuter service requiring a connection at an airline hub.[17] Allegiant, as of October 2009, has competition on only five of its 136 routes.[18]

Other Allegiant destinations are secondary airports that are close to large metropolitan areas. For instance, Allegiant is the only carrier operating at Phoenix-Mesa Gateway Airport.

In February 2010, Allegiant announced it would begin service from Long Beach, California, but did not immediately disclose where it will fly.[19] On July 1, 2010 Allegiant flew its first flight into Long Beach Airport. It will fly from Bellingham International Airport and Stockton several times a week.[20] On September 28, 2010, Allegiant announced it would begin service from Bakersfield, California to McCarran starting November 17, 2010.[21]

[edit] Routes

An Allegiant Air McDonnell Douglas MD-83 at Hagerstown Regional Airport, Hagerstown, Maryland. (2009)

The airline's focus is on leisure travelers, particularly those in colder northern climates, going to warm-weather tourist destinations such as Tampa Bay, Las Vegas, Orlando, or Phoenix.[22] The airline offers a lower frequency of flights and no amenities such as frequent flier points or on-board entertainment. As a result, Allegiant carries few business passengers.[17][23]

[edit] Revenues

The airline, which attracted investment from the Ryan family of Ireland, owners of Ryanair, follows a similar model which seeks ancillary revenue in addition to ticket revenue.[24] Allegiant earns ancillary revenue through sales of food, beverages, and souvenirs on board as well as charges for checking luggage and advance seat assignments.[17][25] The airline also offers hotels, cars, show tickets, and tour packages on its website, which generates commissions. The airline sold 400,000 hotel room nights in 2008.[26] As of October 2009, the St. Petersburg Times reported that ancillary revenues were $33.35 per passenger.[27] The total contribution of hotel and rental car packages is up to one-third of the airline's revenue.[25][26]

Regarding the airline's reliance on additional revenue, Allegiant CEO Maurice Gallagher stated in an article that appeared September 2009 issue of the business journal, "Fast Company", that the advantages of this pricing structure was psychological. He went on to say, "We collect $110 from you at the end of your trip. If I tried to charge you $110 up front, you wouldn't pay it. But if I sell you a $75 ticket and you self-select the rest, you will."[26]

In February 2011, Allegiant announced that they have proposed a new idea for combating increasing ticket prices. The company made a proposal for selling two types of tickets to passengers. The first being a fixed fare at a higher rate and the second being one that is sold at a significantly lower price, but at the time of departure, fees can be added on based on the price of aviation fuel. Many passengers are in uproar about it, others are interested.[28]

[edit] Charter information

Allegiant also operates air charters which contribute 7% of its revenue.[29] The company has two contracts with Harrah's Entertainment with two aircraft based at Reno-Tahoe International Airport and Laughlin/Bullhead International Airport to ferry customers to Harrah's casinos. Additionally, Allegiant has two aircraft based at Tunica Municipal Airport to support a charter contract to transport gaming customers to Harrah's casinos including Tunica and New Orleans.[30] One additional aircraft is based in Wendover to support charters for Peppermill casinos.[31] It also transports firefighters for the United States Forest Service and college basketball players and staff.[29]

Allegiant had a contract to supply charter flights from Miami to four cities in Cuba. Flights began in June 2009. One aircraft was committed to the contract.[29] The contract was for fixed-fee flying, meaning all they have to do is provide the dry aircraft and the flight crew. The contractor is responsible for all other costs including fuel. Allegiant ended this service in August 2009.[32]

[edit] Costs

The airline tends to offer lower fares, which requires strict cost control.[17] Part of the airline's lower cost structure includes operation of MD-80 jets, which the airline can purchase and refurbish for as little as $4 million.[25] While the aircraft are less fuel-efficient than newer planes, Allegiant is able to purchase them outright for one-tenth the cost of a new Boeing 737.[24] Given the low cost of ownership, Allegiant is able to fly the planes less (seven hours per day versus 13 hours per day at JetBlue), which helps keep labor costs lower.[24] Overall, Allegiant operates with 35 full-time workers per plane compared to more than 50 at other carriers.[25]

The airline seeks to maintain a low permanent operating cost at the airport.[33] Allegiant rents ticket counters on an hourly basis and in Chattanooga, Tennessee, and Springfield, Missouri, while many duties are handled by airport employees contracted to Allegiant.[24][34]

The cost of ticket sales is reduced by selling tickets on its website and at airport ticket counters. The toll-free number was eliminated and Allegiant does not utilize internet travel agencies.[17]

[edit] Criticism of the business model

Some airport officials have criticized Allegiant for shutting down routes or leaving markets quickly if they are not immediately profitable. In Kinston, North Carolina, the airport authority invested $60,000 in advertising Allegiant's routes and asserted that the load factor was 90% or better. They contend that the airline left the market when they did not earn enough ancillary revenue after only one year.

In Columbia, South Carolina, the carrier departed in February 2007 after less than two months of daily flights to St. Petersburg, Florida as loads started at 3/4 full and then dropped to half full by February.[33] Allegiant returned to Columbia in February 2009, but pulled out again in late 2009.

The airport director in Worcester, Massachusetts, felt that Allegiant reneged on a commitment to serve the airport for five years given the use of federal grants to assist its startup. However, the airline replied that the market was immediately unprofitable and starting service there was a poor decision; flights were reported to be 80% full.[33] Allegiant's flights average 90% full.[26]

The US Department of Transportation also cited the airline in 2009 for not including their "convenience fee" in the initial price quote on the website.[18]

Flight attendants at the carrier voted to organize their workgroup under the Transport Workers Union of America in December 2010, citing scheduling concerns among other issues in their work rules.

[edit] Allegiant Vacations

Allegiant Vacations functions as an in-house package vacation vendor. The company has arrangements with 34 hotel properties in Las Vegas and 21 in the Orlando, and Daytona Beach, Florida, areas. The vacations division also has partnerships with several rental car agencies and show-ticket vendors. At least for some routes, air travel must be purchased along with hotel accommodations—a two-night minimum stay in the case of Champaign, IL, to Las Vegas, NV, for example.

[edit] Destinations

Main article: Allegiant Air destinations

Allegiant currently flies to 75 destinations throughout the United States. With a few exceptions, all bookings are considered "one way" and begin or end at one of the nine focus cities/operational bases; therefore, travel reservations between any of the other cities must be reserved through separate bookings and checked luggage claimed and re-checked in one of the nine focus cities.

The airline may provide new service from Pangborn Memorial Airport (EAT) in Wenatchee, Washington, according to the airport manager.[citation needed][when?] Allegiant Air is actively pursuing the opportunity to serve Paine Field (PAE) in Everett, Washington, (25 mi (40 km) north of Seattle). The company has filed a complaint with the FAA at the county's opposition to the plan.[35] Additionally, Allegiant Air is also very interested in serving Salem, Oregon -- conversations are continuing.[36]

On February 1, 2010, Allegiant began operations at Orlando International Airport (MCO). The company moved one half of its Orlando schedule to Orlando International Airport in order to test revenue streams at the higher cost airport. After evaluating the routes out of Orlando International, the carrier decided to consolidate and return its Orlando area operations at the original Orlando Sanford International Airport base citing an inability to achieve a fare premium at MCO as anticipated, a strong passenger preference for Orlando Sanford International Airport, higher costs at MCO than expected and a more efficient operating environment at SFB.

[edit] Fleet

An Allegiant Air McDonnell Douglas MD-83. (2007)

As of September 10, 2010 the Allegiant fleet consists of the following aircraft with an average age of 20.6 years,[37] all equipped with an all-economy seating:[38]

Allegiant Air fleet
Aircraft In Fleet Orders Passengers Notes
Boeing 757-200 4 2 217 1 in service, 3 leased out until mid-2012 to Jet2 Holidays and Air Finland

2 more to be delivered in late 2011.[39]
McDonnell Douglas MD-82 22 0 150
McDonnell Douglas MD-83 35 0 150
McDonnell Douglas MD-87 8 0 130
McDonnell Douglas MD-88 9 0 150
Total 80 2

At May 2010, the average age of the Allegiant Air fleet is 20.1 years. Allegiant Air is the only US-based carrier to operate all five subtypes of the MD-80 series. On January 4, 2010, the SAS Group announced the sales of 18 surplus MD-80 series aircraft to Allegiant Travel Company. The aircraft were built from 1985 to 1991.[40] Allegiant's smaller MD-87's are currently used almost exclusively for charters, meaning that all scheduled MD-80 flights have 150 seats.

On March 5, 2010, Allegiant announced the purchase of six Boeing 757-200 aircraft from Thomson Airways for flights to Hawaii with the delivery of the first two in the following months. As of September 1, 2011, Allegiant Air has introduced 757 service from their Vegas hub to both Rockford, IL, and McAllen, TX. The 757 will be used for service to Hawaii from yet unannounced cities. [41]

[edit] Awards/recognition

[edit] References

  1. ^ a b c Norwood, Tom; Wegg, John (2002). North American Airlines Handbook (3rd ed.). Sandpoint, ID: Airways International. p. 8. ISBN 0-9653993-8-9. http://www.airwaysnews.com. 
  2. ^ a b "Allegiant Route Map | Travel Is Our Deal™ | Airfare & Hotel Packages from Allegiant". Allegiantair.com. http://www.allegiantair.com/aaRouteMap.php. Retrieved March 11, 2011. 
  3. ^ a b c "February 2, 2010: LOW-COST CARRIER ANNOUNCES NEW BASE IN GRAND RAPIDS AND NEW, NONSTOP SERVICE TO MYRTLE BEACH WITH $58.88* FARES ANNOUNCES ALLEGIANT SCHOLARSHIP FOR WEST MICHIGAN STUDENTS | Travel Is Our Deal™ | Airfare & Hotel Packages from Allegiant". Allegiantair.com. http://www.allegiantair.com/aaNews/aaNews20100202a.php. Retrieved March 11, 2011. 
  4. ^ http://www.wwmt.com/articles/airport-1394607-mich-allegiant.html
  5. ^ a b c Allegiant Travel Company (ALGT) annual SEC income statement filing via Wikinvest
  6. ^ a b Allegiant Travel Company (ALGT) annual SEC balance sheet filing via Wikinvest
  7. ^ "Company Profile for Allegiant Travel Co (ALGT)". http://www.zenobank.com/index.php?symbol=ALGT&page=quotesearch. Retrieved April 27, 2010. 
  8. ^ Reister, Cami. Allegiant Airlines to close its Grand Rapids base, reduce destinations, The Grand Rapids Press. August 12, 2011
  9. ^ "ALLEGIANT AIR ANNOUNCES NEW BASE IN PHOENIX-MESA: Airline to Launch Low-Cost Service Oct. 25" (Press release). Allegiant Air. July 31, 2007. http://www.allegiantair.com/aaNews20070731b.php. Retrieved July 31, 2007. 
  10. ^ Art Thomason (August 26, 2008). "Allegiant funds Mesa airport expansion". Arizona Republic, archived at website.org. http://www.webcitation.org/5gqmyP8CR. Retrieved September 18, 2008. 
  11. ^ Allegiant to open base at Bellingham International Airport
  12. ^ "Allegiant to acquire 757s for service to Hawaii". Flightglobal.com. March 6, 2010. http://www.flightglobal.com/articles/2010/03/06/339152/allegiant-to-acquire-757s-for-service-to-hawaii.html. Retrieved March 6, 2010. 
  13. ^ http://www.businessweek.com/ap/financialnews/D9OB4NI04.htm
  14. ^ "Contact Us." Allegiant Air. Retrieved on January 2, 2011. "Allegiant Travel Company 8360 S. Durango Drive Las Vegas, NV 89113"
  15. ^ "Enterprise CDP, Nevada." U.S. Census Bureau. Retrieved on January 2, 2011.
  16. ^ Brown, David Parker. "Touring Allegiant Air's Headquarters in Las Vegas." Seattle Post-Intelligencer. December 30, 2010. Retrieved on January 2, 2011.
  17. ^ a b c d e Justin Bachman (May 14, 2008). "Allegiant: The Other Profitable U.S. Airline". Business Week, archived at webcite.org. http://www.webcitation.org/5gqn2zgky. Retrieved August 15, 2008. 
  18. ^ a b Charisse Jones (October 21, 2009). "Allegiant profits by catering to passengers in small areas". USA Today. http://www.webcitation.org/5kx0m0EWB. 
  19. ^ http://www.ocregister.com/articles/airport-232952-long-airlines.html
  20. ^ "Allegiant Air begins service to Long Beach". Press-Telegram. http://www.presstelegram.com/ci_15425234. Retrieved March 11, 2011. 
  21. ^ BY JOHN COX, Californian staff writer. "Flights to Las Vegas could be just the start". Bakersfield.com. http://www.bakersfield.com/news/local/x1970223273/Allegiant-Air-announces-flights-to-Las-Vegas-starting-Nov-17. Retrieved March 11, 2011. 
  22. ^ Donna Hogan (July 19, 2008). "Low-cost airline helps Gateway buck trends". East Valley Tribune, archived at webcite.org. http://www.webcitation.org/5gqnHJah6. Retrieved August 15, 2008. 
  23. ^ Donna Hogan (September 23, 2007). "Allegiant Air adds Mesa airport as a hub". East Valley Tribune, archived at webcite.org. http://www.webcitation.org/5gqnLyBAy. Retrieved August 15, 2008. 
  24. ^ a b c d Jeff Bailey (September 21, 2006). "Flying Where Big Airlines Aren’t". New York Times. http://www.nytimes.com/2006/09/21/business/21air.html?ex=1316491200&en=e1829521d9be57c9&ei=5088&partner=rssnyt&emc=rss. Retrieved August 15, 2008. 
  25. ^ a b c d Peter Pae (May 13, 2009). "Allegiant Air's prudent ways help it soar amid slump in travel". Los Angeles Times, archived at webcite.org. http://www.webcitation.org/5gqlD3yoh. Retrieved May 17, 2009. 
  26. ^ a b c d Greg Lindsay (September 1, 2009). "Heard of Allegiant Air? Why It's the Nation's Most Profitable Airline". Fast Company. http://www.webcitation.org/5oALRgwFf. Retrieved March 11, 2010. 
  27. ^ Steve Huettel (October 21, 2009). "Allegiant Air most profitable airline in the country". St. Petersburg Times. http://www.webcitation.org/5kx0VCgRf. 
  28. ^ Airline Proposes Fluctuating Ticket Prices. (2011, April 8). Retrieved April 12, 2011, from KSN 3 News: http://www.ksn.com/news/local/story/Airline-proposes-fluctuating-ticket-option/37ey6YvLoUCor7VHdNrWoQ.cspx
  29. ^ a b c Richard N. Velotta (May 15, 2009). "Las Vegas-based Allegiant sets sights on – no kidding – Cuba". Las Vegas Sun. http://www.lasvegassun.com/news/2009/may/15/lv-based-allegiant-sets-sights-no-kidding-cuba/. Retrieved May 17, 2009. 
  30. ^ Jane Roberts (December 20, 2007). "Tunica hopes for more flights". Memphis Commercial Appeal. http://www.commercialappeal.com/news/2007/dec/20/tunica-hopes-for-more-flights/. Retrieved May 17, 2009. 
  31. ^ http://elkodaily.com/news/local/article_cdc559d8-d358-11df-854c-001cc4c03286.html
  32. ^ "Allegiant Air Raises 3Q Capacity View, Trims 4Q Estimates". Wall Street Journal, Dow Jones Newswires. August 24, 2009. http://www.webcitation.org/5kwzmnsux. 
  33. ^ a b c Jerry Cornfield and David Chircop (August 5, 2008). "Allegiant loved in some cities, but not all". The Herald (Everett, Washington), archived at website.org. http://www.webcitation.org/5gqnVA14T. Retrieved August 15, 2008. 
  34. ^ Neil Nadel (September 16, 2006). "Chattanooga Airport Employees to Handle Baggage, Ticketing". WDEF-TV, Chattanooga. http://archives.californiaaviation.org/airport/msg38453.html. Retrieved August 15, 2008. 
  35. ^ Lynn Thompson (June 2, 2008). "FAA says county must talk to Allegiant Air". Seattle Times, archived at webcite.org. http://www.webcitation.org/5gqmiQcrj. 
  36. ^ Tim Hay (2009). "Return of Commercial Air Service". salem municipal airport, archived at flysalem.com. http://www.flysalem.com/airservice-return.htm. 
  37. ^ Allegiant Air fleet age at airfleets.net
  38. ^ Allegiant Air fleet list at airfleets.net
  39. ^ Allegiant Ok'd for 757 flights
  40. ^ SAS sells 18 MD-80 surplus aircraft to Allegiant Travel Company
  41. ^ http://ir.allegiantair.com/releasedetail.cfm?releaseid=449863

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