Allegiant Air

For the Veronica Roth novel, see Allegiant (novel).
"WestJet Express" redirects here. For the Canadian regional airline, see WestJet Encore.
Allegiant Air
Allegiantairlogo.png
IATA ICAO Callsign
G4 AAY ALLEGIANT
Founded 1997 (as WestJet Express)[1]
Commenced operations June 1998[1]
Operating bases
Fleet size 84
Destinations 114
Company slogan Travel is our deal
Parent company Allegiant Travel Co.
Headquarters Summerlin, Nevada
Key people Maurice J. Gallagher, Jr. (Chairman and CEO)
Revenue Increase US$1.1 billion (FY 2014)[5]
Operating income Increase US$157.3 million (FY 2014)[5]
Net income Increase US$86.7 million (FY 2014)<[5]
Total assets Increase US$1.24 billion (FY 2014)[5]
Total equity Increase US$294 million (FY 2014)[5]
Employees 2,848
Website www.allegiantair.com

Allegiant Air is an American low-cost airline owned by Allegiant Travel Co. that operates scheduled and charter flights. Allegiant Travel Company (NASDAQALGT) is a publicly traded company with 2,848 employees and over $2.6 billion USD market capitalization.[6] The corporate headquarters are in Summerlin, Nevada, a suburban neighborhood in Las Vegas.[7]

History

Founding

Allegiant Air was founded in January 1997 by Mitch Allee (Owner, CEO), Jim Patterson (President) and Capt. Dave Beadle (Chief Pilot). The airline received FAA and DOT certification June 19, 1998. (Please note: Allegiant Airlines was originally founded as a "High End" charter airline and was a completely different airline from the airline currently operating out of Las Vegas, NV.)

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 has over 2848 employees.

Restructuring

Scheduled service began on October 15, 1998, between Las Vegas and the airline's original hub in Fresno, California, at the Fresno Yosemite International Airport, with Douglas DC-9-21 and McDonnell Douglas DC-9-51 jetliners. During the second half of 1999, the airline was operating nonstop flights between Fresno and Las Vegas, Burbank and Lake Tahoe, and Las Vegas and Lake Tahoe as well as flying one stop direct service between Fresno and Lake Tahoe via Las Vegas.[8] Shortly after the shutdown of WinAir Airlines in 1999, Allegiant Air opened a small hub in Long Beach, CA (LGB) and in 2000 was operating nonstop flights to Fresno and Las Vegas in addition to Fresno-Las Vegas nonstop service.[9] Later in 2000, Allegiant continued to expand and was operating the only nonstop jet service between Lake Tahoe Airport from Long Beach in addition to operating new flights into Portland, OR and Reno with Portland-Reno and Reno-Fresno nonstops in addition to direct one stop service being operated between Portland and Fresno via Reno.[10] However, 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 as of 2015. Having formerly worked with WestAir and presided over ValuJet Airlines as CEO preceding the Flight 592 tragedy and thereafter, 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, Nevada and Reno, Nevada. At the same time, the airline acquired its first McDonnell Douglas MD-80 jetliner. 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.

Increase of Focus Cities

In November 2006, Allegiant 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".

On October 25, 2007, the airline opened 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.[11] 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 allowed 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.[12]

On November 14, 2007, Allegiant opened its fifth focus city and operations base at Fort Lauderdale-Hollywood International Airport, connecting other Allegiant cities to South Florida.

In January 2008, Allegiant opened its sixth base at Washington's Bellingham International Airport. The airline bases two McDonnell Douglas MD-80 aircraft in Bellingham as part of the expansion.[13] 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, British Columbia.

2010s

On July 1, 2010 Allegiant flew its first flight into Long Beach Airport in Long Beach, California.[14] The airline also intended to fly from Bellingham International Airport and Stockton several times a week; however, there is no service at present flown between these two cities although Allegiant continues to serve Stockton with flights to Las Vegas, Phoenix/Mesa and San Diego.[15]

In February 2010, Allegiant opened its ninth base at Grand Rapids' Gerald R. Ford International Airport in Michigan. The airline based two McDonnell Douglas MD-80 aircraft in Grand Rapids, but ended their airport's status as a hub in 2011. The airline continues to fly out of Grand Rapids in a reduced capacity.[16]

In March 2010, Allegiant purchased six used Boeing 757-200 jetliners as part of plans to begin flights to Hawaii, with deliveries from early 2010 to the fourth quarter of 2011.[17] It gained the approval for type with the FAA in July 2011,[18] and then worked with the FAA to obtain the appropriate ETOPS rating in order to be able to serve Hawaii. Allegiant currently operates nonstop Boeing 757 service to Honolulu from Las Vegas, NV and Los Angeles, CA.[19] Allegiant has since announced it will end its Hawaii service in 2016 and will also remove all 757 aircraft from its fleet.[20]

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

In 2014, Cincinnati became Allegiant's largest O&D (Origination & Destination) city, with over 11 destinations and 40 weekly departures.

In July, 2015, Allegiant Air announced a base would be established at Cincinnati/Northern Kentucky International Airport, becoming the first base at a non-vacation destination, and would bring further expansion to the airport.

Since October 2015, Allegiant has been closely supervised by the FAA due to several safety issues over the past year.[21][22][23]

In May 2016, Allegiant place an order for one Boeing 787-8 for use on charter services to Latin America.[citation needed]

Corporate affairs

Allegiant Air logo used from 2003 to 2010

Headquarters

The corporate headquarters are in Summerlin, Nevada, a master-planned community in suburban Las Vegas, Nevada.[7]

Business model

An Allegiant Air McDonnell Douglas MD-83 in old livery at Hagerstown Regional Airport

Allegiant aims primarily to serve leisure travelers, particularly those in colder northern climates, going to warm-weather tourist destinations such as Punta Gorda, Tampa Bay, Las Vegas, Orlando, Los Angeles and Phoenix.[24] It also serves smaller destinations that see few direct flights by major carriers. Many of the airline's markets, such as Peoria, Illinois, are served only by commuter service requiring a connection at an airline hub.[25] In October 2009, Allegiant had competition on just five of its 136 routes.[26]

Although it does not fly to Canada, Allegiant advertises extensively there and flies from about a dozen small airports near the Canada–US border. Many of its customers at airports such as Bellingham, Washington (BLI), Niagara Falls, New York (IAG), Syracuse, New York (SYR), Grand Forks, North Dakota (GFK) and Plattsburgh, New York (PBG) are Canadians, who can save money by flying from U.S. airports.[27]

To keep ticket prices relatively low, Allegiant offers a lower frequency of flights and no amenities such as frequent flier points or on-board entertainment.[25][28]

It prefers to use smaller/secondary airports where landing fees cost less, such as Orlando Sanford International Airport. At Phoenix-Mesa Gateway Airport, Allegiant is now the only carrier. However, since 2015, Allegiant has been growing at major airports, such as Cincinnati, Memphis, Raleigh/Durham, and San Antonio.

Allegiant already flies into many major airports, including McCarran International (Las Vegas) and Fort Lauderdale-Hollywood International Airport. In June 2013, Allegiant deviated from this strategy with plans to compete with Southwest Airlines by offering direct flights between Las Vegas and Austin, a medium hub served by 10 carriers with non-stop routes to over 40 destinations. The airline also flies less frequently compared to the major airlines, operating routes two or three times per week. That requires fewer crews and allows less time-pressured aircraft maintenance.

In February 2011, Allegiant proposed to sell two types of tickets to passengers: advance tickets at a fixed higher rate and time-of-departure tickets that cost less but may have fees added based on the price of aviation fuel.[29] In 2012, the U.S. Department of Transportation banned the practice as part of wider regulations that also require taxes and fees to be included in airfares. Allegiant, along with Spirit Airlines and Southwest Airlines, sued the DOT to overturn these new rules. The United States Court of Appeals for the District of Columbia Circuit ruled in favor of the DOT on 24 July 2012[30] and the US Supreme Court denied certiorari on 1 April 2013.[31]

Ancillary revenue

Like Ryanair, the low-cost airline founded by the Ryan family of Ireland, who also have invested in Allegiant, the airline seeks ancillary revenue to supplement ticket revenue.[32] These ancillary fees include those for checking luggage, carrying on luggage (other than a small personal item), buying food and drinks on board, obtaining advance seat assignments, paying by credit card, and more.[25][33][34] Allegiant CEO Maurice Gallagher said in 2009, "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."[35]

Allegiant also earns commissions by offering hotel rooms, car rentals and admission to tourist attractions on its website. It sells package vacations under the brand name Allegiant Vacations. The company has arrangements with 34 hotels in Las Vegas and 21 in the Orlando and Daytona Beach, Florida, areas. In 2008, the airline sold 400,000 hotel room nights.[35] Commissions on hotel and rental car packages are up to one-third of the airline's revenue.[33][35]

In 2009, ancillary revenues were $33.35 per passenger.[36]

Charter flights

Allegiant's air charter operation contributed 7% of its revenue in 2009.[37]

In March 2011, Allegiant took over charter service to Wendover Airport for Peppermill Casinos, Inc. to shuttle customers to Peppermill's three casinos in West Wendover, Nevada; the Montego Bay Resort, the Rainbow Wendover and the Peppermill Wendover.[38] Allegiant based one 150-seat, MD-80 series jet aircraft in Wendover and more than 20 employees, including maintenance, flight crews and stations personnel.[39]

Allegiant also transports firefighters for the United States Forest Service as well as college basketball teams.[37]

An Allegiant Air Boeing 757–200 at McCarran International Airport

Allegiant had a contract to supply charter flights from Miami to four cities in Cuba beginning June 2009. One aircraft was committed to the contract.[37] The contract was for fixed-fee flying, meaning all the airline was required to do was provide the dry aircraft and the flight crew. The contractor was responsible for all other costs including fuel. However, Allegiant ended this service in August 2009.[40]

The company had charter contracts with Caesars Entertainment to ferry customers to Caesars casino properties through Reno-Tahoe International Airport, Laughlin/Bullhead International Airport and Tunica Municipal Airport.[41] These contracts ended in December 2012 when Caesars Entertainment signed a new contract with Republic Airways to provide the charter service to Caesars properties in Atlantic City, New Jersey, Tunica, Mississippi and Laughlin, Nevada.[42]

Costs

The airline tends to offer lower fares, which requires strict cost control.[25] Part of the airline's lower cost structure includes operation of McDonnell Douglas MD-80 jets, which the airline can purchase and refurbish for as little as $4 million.[33] While the aircraft are less fuel-efficient than newer planes, Allegiant is able to purchase used MD-80s outright for one-tenth the cost of a new Boeing 737 although Allegiant has subsequently purchased used Boeing 757-200s, Airbus A319s and Airbus A320s.[32] (the 757s were acquired for its Hawaii service while the Airbus jets are beginning to replace MD-80 aircraft). Given the low cost of ownership, Allegiant is able to operate its aircraft less (seven flight hours per day on average versus 13 hours per day at JetBlue Airways), which helps keep labor costs lower.[32] 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 expense for airlines.[33]

The airline seeks to maintain a low permanent operating cost at the airport.[43] Allegiant rents ticket counters on an hourly basis and in Chattanooga, Tennessee and Springfield, Missouri, many duties are handled by airport employees contracted to Allegiant.[32][44]

Allegiant maintains control over pricing by offering flights exclusively through its website, which also sells these ancillary products. It has no toll-free phone number and does not use Internet travel agencies.[25]

Criticism of the business model

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.[43] Allegiant's flights average 90% full.[35]

The United States Department of Transportation cited the airline in 2009 for not including the "convenience fee" in the initial price quote on the website.[26]

Criticism of workers' right to organize

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 and the airline's pilots elected to vote on whether to join the International Brotherhood of Teamsters in July 2012.[45] In August 2012, the pilots voted to organize and joined the Teamsters.[46] Allegiant's chairman and CEO, Maurice J. Gallagher Jr., has been critical of the unionization of airline employees and has stated that "Unionization is one of those things that clogs the arteries and makes you less quick and not as nimble as you need to be on top of your game... In this industry and others that are heavily unionized, you ultimately end up with bankruptcy as the primary driver" [45]

Safety concerns

Allegiant Air has been closely monitored by the FAA due to many emergency landings and aborted takeoffs.[47] ABC interviewed a former Allegiant mechanic, who said "Dedicated steps were not being performed with maintenance manuals or even with general practices, before an aircraft is released.".[48] Many of these incidents have involved Allegiant's MD80 aircraft, which is expected to be replaced by Airbus A320 family aircraft, however in March 2016 an Allegiant Air Airbus A320 was forced to make an emergency landing at Jacksonville.[49]

Destinations

As of December 2015, Allegiant offers service to 114 destinations throughout the United States, mostly to smaller non-hub regional airports and all usually only a few times each week. It chooses its routes after calculating expected costs and revenue and adds or ends service to particular destinations as demand warrants.

Top markets

Rank Airport Destinations Served Weekly Departures
1 Orlando (SFB) 66 155
2 Las Vegas (LAS) 52 144
3 St. Petersburg/Clearwater (PIE) 49 109
4 Phoenix/Mesa (AZA) 38 79
5 Los Angeles (LAX) 26 60
6 Cincinnati (CVG) 14 58
7 Punta Gorda/Fort Myers (PGD) 31 57
8 Myrtle Beach (MYR) 13 35
9 Fort Lauderdale (FLL) 16 32
10 Bellingham (BLI) 6 32

Fleet

Allegiant Air Airbus A319 at LAX

As of October 2015, the Allegiant Air fleet consists of the following aircraft:[50][51]

Aircraft Active Orders Passengers Notes
Airbus A319-100 15 19[52] 156 Replacing MD80 Aircraft[53]
Airbus A320-200 16 3 177 Replacing MD80 Aircraft[53]
Boeing 757–200 5 217 To be retired by early 2017
McDonnell Douglas MD-83 44 166 To be replaced by 2020 with Airbus A320 Family aircraft[53]
McDonnell Douglas MD-88 6 166 To be replaced by 2020 with Airbus A320 Family aircraft[53]
Total 84 20  

Allegiant Air is the only US-based carrier to have operated all five subtypes of the MD-80 series. On January 4, 2010, the SAS Group sold 18 surplus MD-80 series aircraft, built in the 1980s, to Allegiant Travel Company.[54]

In March 2010, Allegiant purchased six Boeing 757-200 aircraft from Thomson Airways for flights to Hawaii with the delivery of the first two in the following months. In September 2011, Allegiant Air introduced the 757 into service from their main hub in Las Vegas. Allegiant later began using the ETOPS configured 757s for service to Hawaii.[55] Fresno and Las Vegas were the inaugural destinations with nonstop service to Honolulu, Hawaii. Nonstop service to Honolulu was then added from Bellingham, Boise, Eugene, Phoenix (via Mesa Gateway Airport), Santa Maria, Spokane and Stockton.[56] Nonstop service to Hawaii was also planned from Monterey, CA but was not actually operated. Allegiant then began to reduce its Hawaii service and currently only operates Las Vegas-Honolulu and Los Angeles-Honolulu nonstops with all Honolulu service scheduled to end in 2016.

In September 2010, Allegiant began to reconfigure their MD-80 fleet from 150 seats to 166 seats per plane. The project would involve removing galleys from the planes to add the 16 additional seats. All of the MD-80 conversions were completed by the end of September 2013.[57][58]

In July 2012, Allegiant announced the future addition of the Airbus A319-100 aircraft to its fleet. The aircraft are used and formerly belonged to easyJet and Cebu Pacific. Two former easyJet aircraft entered service in 2013, with another in 2014 and 6 in 2015.[59] In December 2012, Allegiant cancelled the agreement with Cebu Pacific citing an inability to agree on economic provisions.[60] On May 1, 2013, Allegiant purchased another A319 aircraft previously operated by easyJet and would enter service in the third quarter of 2013.[61] On February 23, 2015, Allegiant purchased 6 more A319s from Cebu Pacific which will be delivered starting this year until 2016.[62]

In 2013, Allegiant acquired 9 Airbus A320-200 aircraft from Spanish flag carrier Iberia.[63][64] Seven of the A320s were delivered in 2013 and were used for growth into new markets, including destinations in Mexico, the Rocky Mountains as well as airfields such as Charlottesville and Shenandoah Valley in Virginia and Trenton, New Jersey.[60] On February 24, 2015, Allegiant announced the purchase of 2 additional A320s from Philippine Airlines which will enter into service by 2015.[65] Later in 2015 the airline announced a firm order for an Airbus A320 direct from Airbus, the first time it has directly purchased new aircraft from the supplier.[66]

Termination of Hawaii service

On November 17, 2015 Allegiant Air announced the termination of all flights between the U.S. mainland and Hawaii effective in August 2016 as well as the retirement of their Boeing 757 fleet by early 2017.[67] The ETOPS configured Boeing 757-200 aircraft were acquired for the airline's Hawaii service.

Livery

Allegiant Air's livery features a bright sunburst design on the tail, emphasizing the airline's "sun" destinations. The livery has a bold, contemporary look that was created for the airline by Tiami Designs, Atlanta, Georgia.[68]

Special liveries

Allegiant Air Special Liveries
Name Year Description Registration(s)
Make-A-Wish Foundation 2013 Celebrating the painting of Allegiant's newly acquired Airbus A320 with a special Make-A-Wish Foundation branded livery.[69] N218NV
Blue Man Group 2009 Two McDonnell Douglas MD-83 aircraft, one based in Las Vegas and one at Orlando-Sanford, are painted in this special livery to show its partnership with the Blue Man Group and their discounted ticket prices on board Allegiant Air flights.[70] N405NV, N408NV
Bodog 2006 Several McDonnell Douglas MD-80 aircraft briefly featured ads for Bodog, an online casino. The ads, including plane wraps and onboard announcements, were originally scheduled to last three months. However, the ads lasted less than three months after Allegiant discovered that online gambling is illegal in the United States.[71] N868GA, N871GA, N879GA

Awards and recognition

References

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External links