Sunday, October 10, 2010

Allegiant: An Alternative Air-Service Model

If you want to consider a growing niche in the future of air travel, in an era of diminished expectations and competition, consider Allegiant.

Allegiant's model is simple. It flies people mostly from small cities in the North and Midwest that have had major air-service cutbacks in recent years to bigger leisure-travel destinations in warmer climes. Its schedules are tight, fares are low and the airline does a lot of extra business packaging air travel with hotels and other services.

In short, a leisure-travel airline that operates just a little tiny bit like a charter airline: Its service and schedules are limited. Fares are low. Basically, you make your plans around the time the Allegiant flight is leaving, rather than expecting the plane to leave pretty much when you choose. A mid-sized city might have only three or five Allegiant flights a week.

Does this work? Yes it does, in a certain market segment that many of us are a part of from time to time, especially when traveling on leisure. The Allegiant model also has the effect of filling in service from small and mid-size cities that have been abandoned by the major airlines, to larger holiday-destination cities like Las Vegas, Orlando, Phoenix, etc. Allegiant flies a fleet of planes in the MD-80 line.

How well does it work as a business model?

Well, here's a look at Allegiant's September operating results for its scheduled service (Allegiant also does charters). Judge for yourself.

--Passengers in September, compared with Sept. 09 -- up 25 percent.

--Passenger revenue miles -- up 25 percent.

--Available seat miles (known also as capacity) -- up 22.1 percent.

--Load factor (percentage of seats sold on average on a flight) -- up 2.1 points, to 91.9 percent.


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