Allegiant Air

192px
IATA G4 ICAO AAY Callsign ALLEGIANT
Founded	1997 (as WestJet Express)[1]
Commenced operations	June 1998[1]
Focus cities	Bellingham International Airport Charlotte County Airport (Punta Gorda)[2] Fort Lauderdale-Hollywood International Airport Los Angeles International Airport McCarran International Airport (Las Vegas) Myrtle Beach International Airport[2] Oakland International Airport[3] Orlando Sanford International Airport Phoenix-Mesa Gateway Airport St. Petersburg-Clearwater International Airport
Fleet size	83
Destinations	79
Company slogan	Travel is our deal
Parent company	Allegiant Travel Co.
Headquarters	Enterprise, Nevada, USA
Key people	Maurice J. Gallagher, Jr. (President and CEO)
Revenue	US$558 Million (FY 2009)[4]
Operating income	US$150 Million (FY 2009)[4]
Net income	US$76.3 Million (FY 2009)[4]
Total assets	US$500 Million (FY 2009)[5]
Total equity	US$292 Million (FY 2009)[5]
Website	www.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.^[6] The corporate headquarters is in Enterprise, Nevada, near Las Vegas.

History[link]

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

Allegiant Air was founded in January of 1997 by Mitch Allee (Owner, CEO), Jim Patterson (President), and Capt. Dave Beadle (Chief Pilot). The airline received FAA and DOT Certification in June of 1998.

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 1,800 employees.

Scheduled service began on October 15, 1998, 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 on December 13, 2000, Allegiant filed for Chapter 11 bankruptcy protection and Maurice J. Gallagher, Jr., the major creditor of the airline, gained control of the business during reorganization.

In June 2001, Gallagher restructured the airline to a low-cost model and moved the headquarters and operations to Las Vegas, where they remain today. Having formerly worked with WestAir and ValuJet Airlines, Gallagher led the airline's transformation into its present form, focusing on smaller markets that larger airlines did not serve with mainline aircraft. Gallagher remains Chief Executive Officer and Chairman of Allegiant.

In March 2002, Allegiant successfully exited bankruptcy and entered into a long-term contract with Harrah’s to provide charter services to its casinos in Laughlin, Nev., and Reno, Nev. At the same time, the airline acquired its first MD-80 aircraft. From 2002 through 2004, the scheduled service business model was developed and, by 2004, Allegiant was flying from 13 small cities to Las Vegas offering bundled air and hotel packages.

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 13 cities already served by Allegiant and one new city to the Phoenix metropolitan area. The airline began service out of its new focus city on October 25, 2007.^[7] The airport announced a 10,000-square-foot (930 m²) expansion in August 2008 which increased the number of gates from two to four and allow Allegiant to triple the number of flights from Phoenix. The expansion was funded by a loan from Allegiant which will be repaid by passenger fees.^[8]

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 cities already served by Allegiant to the South Florida area. 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.^[9] 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^{[citation needed]}. Allegiant’s unique strategy has allowed the company to remain profitable every quarter since 2003 - 35 consecutive quarters - despite industry challenges that include fluctuating fuel costs and an unstable economy^{[citation needed]}.

Los Angeles International Airport became Allegiant's seventh base^{[citation needed]}.

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. However, on August 12, 2011, Allegiant announced it would discontinue the Grand Rapids base on October 31.^[10]

In November 2011, Allegiant closed its Long Beach facility and consolidated all Los Angeles area flights to Los Angeles International (LAX).

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.^[11] They gained the approval for type with the FAA in July 2011,^[12] and are currently working to obtain the appropriate ETOPS rating in order to be able to serve Hawaii.

Corporate affairs[link]

Headquarters[link]

The corporate headquarters is in Enterprise, unincorporated Clark County, Nevada.^[13][14] The building 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.^[15]

Business model[link]

Allegiant operates a business model based on:

• Flights from airports which have limited or no service from mainline carriers to leisure destinations
• Use of smaller/secondary airports, with the exceptions of McCarran International (Las Vegas, NV), Los Angeles International, Gerald R. Ford International Airport (Grand Rapids, MI), and Fort Lauderdale-Hollywood International Airport
• Marketing to leisure passengers traveling to seasonal warm-weather destinations
• Generating ancillary revenues in addition to ticket revenue
• Maintaining low operational costs

Markets[link]

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.^[16] Allegiant, as of October 2009, has competition on only five of its 136 routes.^[17]

Other Allegiant destinations are secondary airports that are close to large metropolitan areas. For instance, Allegiant and Spirit Airlines are the only carriers 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.^[18] 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.^[19] Long Beach service was abandoned in November 2011. On September 28, 2010, Allegiant announced it would begin service from Bakersfield, California to McCarran starting November 17, 2010.^[20] This service has since been discontinued by the airline.

Routes[link]

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.^[21] 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.^[16][22]

Revenues[link]

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.^[23] Allegiant earns ancillary revenue through sales of food, beverages, and souvenirs on board as well as charges for checking luggage and advance seat assignments.^[16][24] 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.^[25] As of October 2009, the St. Petersburg Times reported that ancillary revenues were $33.35 per passenger.^[26] The total contribution of hotel and rental car packages is up to one-third of the airline's revenue.^[24][25]

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."^[25]

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.^[27]

Charter information[link]

Allegiant also operates air charters which contribute 7% of its revenue.^[28] 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.^[29] One additional aircraft is based in Wendover to support charters for Peppermill casinos.^[30] It also transports firefighters for the United States Forest Service and college basketball players and staff.^[28]

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.^[28] 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.^[31]

Costs[link]

The airline tends to offer lower fares, which requires strict cost control.^[16] 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.^[24] 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.^[23] 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.^[23] Overall, Allegiant operates with 35 full-time workers per plane compared to more than 50 at other carriers. Allegiant schedules their crew members so that they always return to their domicile at the end of the day, thus avoiding the need for hotel rooms which can be a costly expence for airlines.^[24]

The airline seeks to maintain a low permanent operating cost at the airport.^[32] 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.^[23][33]

The cost of ticket sales is reduced by selling tickets on its website. The toll-free number was eliminated and Allegiant does not utilize Internet travel agencies.^[16]

Criticism of the business model[link]

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.^[32] 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 responded that the market was immediately unprofitable and starting service there was a poor decision; flights were reported to be 80% full.^[32] Allegiant's flights average 90% full.^[25]

The U.S. Department of Transportation also cited the airline in 2009 for not including their "convenience fee" in the initial price quote on the website.^[17]

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.

Allegiant Vacations[link]

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.

Destinations[link]

Allegiant currently flies from 71 small cities to one of 8 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.

Fleet[link]

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 22.5 years,^[34] all equipped with an all-economy seating:^[35]

At March 2012, the average age of the Allegiant Air fleet is 22.5 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.^[39] 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 Las Vegas hub to both Rockford, IL, and McAllen, TX. Announced in April 2012,The 757's will be used for service to Hawaii from Fresno, CA and Las Vegas, NV.^[40]

Accidents and Incidents[link]

On January 2, 2012, an Allegiant McDonnell Douglas MD-82, flying from St. Petersburg, Florida, to Youngstown, Ohio, with 144 passengers and 2 crew aboard, skidded off taxiway H1 after landing, coming to a stop with its nose and left main gear in the grass. No injuries were reported.^[41]

Awards/recognition[link]

• Forbes Magazine: America’s 100 Best Small Companies: Listed at 33
• Federal Aviation Administration's (FAA) Aviation Maintenance Technician (AMT) Diamond Award of Excellence: 2009 and August 2010
• Fortune 100's Fastest Growing Companies: Listed at 25
• Aviation Week: Top Performing Low Cost Carrier

References[link]

External links[link]

	Las Vegas portal
	Companies portal
	Aviation portal

Wikimedia Commons has media related to: Allegiant Air

• Allegiant Travel
• Franklin, John (November/December 2005). "Allegiant Air: Finding a Niche in Las Vegas and Orlando". Airliners: The World's Airline Magazine (World Transport Press): pp. 35–39.