Allegiant: America’s lowest cost airline?

An airline that operates a fleet of over 25 150-seat MD-83s (with an average age of 17 years), operating low frequency flights, with low aircraft utilisation, from mostly obscure US airports is not an obvious business model for a successful airline. But that’s what Las Vegas based Allegiant Air has rapidly become. The airline, which took to the air in its current guise in 2002, claims that in 2006 its ex-fuel unit costs were 27% lower than any other US airline at just 4.2 cents per ASM.

Allegiant Air, the self-proclaimed ‘Official Airline for Sunshine’, launched a new service from Stockton Metropolitan Airport to Phoenix-Mesa Gateway Airport in October 2007.

In 2007, the airline carried just over three million scheduled passengers (at an average load factor of 83%), which represents passenger growth of 50% and a 2.4 percentage point improvement in load factor. Critically, net profits were up 150% in the first three quarters of 2007.

Source: Allegiant Air website

The airline’s network focus is on offering flights from small communities across the US to major leisure destinations, primarily Las Vegas and Florida. This explains the highly unusual demand profile. Not many other airlines in the northern hemisphere can have December as their busiest month of the year.

A Rochester-Las Vegas service was launched in June 2007; a Rochester-Orlando service may be launched if the Las Vegas route is a success.

Serving almost as many airports as Southwest!

Although the airline serves a number of routes on a seasonal basis its current network consists of 103 scheduled routes involving 59 airports. In terms of airports served, that is not far off the number that Southwest serves with well over 400 aircraft. Over half of these routes involve serving either Las Vegas (36 routes) or Orlando/Sanford (26 routes).

However, the average frequency on each route is currently just 2.7 flights per week with all routes served at least twice per week to enable short holiday breaks to be taken. At present only the Las Vegas to Bellingham route is served daily. The top 10 airports served by Allegiant at present are shown in the graph below.

Source: OAG Max Online for w/c 14 January 2008

Focus on Florida

This winter has seen a massive expansion of routes into Fort Lauderdale, with the airline also operating to secondary airports such as Orlando/Sanford, and Tampa/St Petersburg.

By offering these flights to many communities right across America, Allegiant’s average sector length in 2007 was 906 miles, though the figure has been declining since 2005 when it was as high as 977 miles.

Arriving in Arizona

On 25 October 2007, Allegiant added a new focus city at Phoenix-Mesa Gateway Airport (AZA), which was until recently known as Williams Gateway Airport reflecting its previous existence as Williams Air Force Base until 1993. The first route was to Cedar Rapids in Iowa, but the network has grown rapidly to 13 destinations, all of which are served just twice weekly, already making it Allegiant’s fourth busiest airport.

The other 12 destinations are Sioux Falls (South Dakota), Stockton (California), Santa Maria (California), Missoula (Montana), Bellingham (Washington), Peoria (Illinois), Green Bay (Wisconsin), Fargo (North Dakota), Rockford (Illinois), Billings (Montana), Fort Wayne (Indiana) and Rapid City (South Dakota). Many of these places are pretty obscure, even to Americans!

Coming soon from a city you may never have heard of! Allegiant’s new focus city at Phoenix Mesa Gateway airport is attracting visitors from Fort Wayne, Missoula, Rapid City and Rockford (wasn’t he a detective?).