Allegiant Air
Allegiant Air is an American low-cost airline that operates scheduled and charter flights. As a major air carrier, it is the ninth-largest commercial airline in the United States.
Founded in 1997 as WestJet Express, it is wholly owned by Allegiant Travel Company, a publicly traded company with 4,000 employees and over US$2.6 billion market capitalization. The corporate headquarters are in Summerlin, Nevada, a suburb of Las Vegas.
History
Early years (1997–2000)
Allegiant Air was founded in January 1997 by Mitch Allee, Jim Patterson and Dave Beadle, under the name WestJet Express. After losing a trademark dispute with West Jet Air Center of Rapid City, South Dakota and recognizing the name's similarity to WestJet Airlines of Calgary, Alberta the airline adopted the name Allegiant Air and received FAA and US DOT certification for scheduled and charter domestic operations on June 19, 1998. The airline also has authority for charter service to Canada and Mexico.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. Shortly after WinAir Airlines closed in 1999, Allegiant Air opened a small hub in Long Beach, California and in 2000 was operating nonstop flights to Fresno and Las Vegas in addition to Fresno-Las Vegas nonstop service. Later in 2000, Allegiant continued to expand and was operating the only nonstop jet service between Lake Tahoe Airport from Long Beach Airport in addition to operating new flights into Portland, Oregon and Reno with Portland-Reno and Reno-Fresno nonstops and direct one-stop service between Portland and Fresno via Reno.
Citing higher fuel costs as a major factor, Allegiant filed for Chapter 11 bankruptcy protection in 2000.
Restructuring (2001–04)
The bankruptcy allowed Maurice J. Gallagher Jr., one of the airline's major creditors, to gain control of the business. A veteran leader of low-cost airlines, Gallagher had worked with WestAir and one of the founders of ValuJet Airlines. In June 2001, Gallagher restructured Allegiant to a low-cost model, focusing on smaller markets that larger airlines did not serve with mainline aircraft. Allegiant's headquarters and operations were also moved to Las Vegas.In the fall of 2001, Allegiant exited bankruptcy and the case was officially closed in early 2002. In March 2002, Allegiant entered into a long-term contract with Harrah's to provide charter services to its casinos in Laughlin and Reno, Nevada. At the same time, the airline acquired its first McDonnell Douglas MD-80 jetliner. From 2002 through 2004, the airline developed its scheduled-service business model. By 2004, Allegiant was flying from 13 small cities to Las Vegas offering bundled air and hotel packages.
IPO and expansion (2006–08)
In May 2005, the airline's holding company, Allegiant Travel, completed a private equity placement worth $39.5 million that was funded by the investment firms of ComVest and Irelandia II. 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 raised $94.5 million in equity capital with 5.75 million shares worth $18 each. It began trading on the NASDAQ Stock Market under the ticker symbol "ALGT" in December 2006.Also in 2006, the airline had a fleet of 21 MD-80s and was flying non-stop to and from 40 small cities, including Allentown, Pennsylvania, Duluth, Minnesota, and Idaho Falls, Idaho. Most of those flights went to and from the hubs of Las Vegas or Orlando Sanford International Airport, Florida. In October 2007, Allegiant 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. The Mesa airport joined Las Vegas, Orlando, and Tampa-St. Petersburg as major hubs for the airline. At the time, Allegiant maintained a fleet of 32 planes going to 53 destinations in total. The Mesa airport announced a 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.
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. 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 Greater Vancouver, British Columbia.
2010 to present
In January 2010, the airline celebrated its one-millionth passenger to fly out of Phoenix-Mesa Gateway Airport. Allegiant's parent company also announced that it had purchased 18 additional used MD-80 aircraft from Scandinavian Airlines. 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 in 2011. The airline continues to fly out of Grand Rapids in a reduced capacity.On July 1, 2010 Allegiant returned to Long Beach Airport in Long Beach, California, having previously served LGB with DC-9 jets with nonstop flights to Las Vegas and Lake Tahoe in 2000. 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. In November 2011, Allegiant closed its Long Beach facility and consolidated all Los Angeles area flights at Los Angeles International.
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. It gained the approval for type with the FAA in July 2011, and then worked with the FAA to obtain the appropriate ETOPS rating in order to be able to serve Hawaii. Allegiant no longer operates nonstop service to Honolulu from Las Vegas.
In summer 2015, a rash of midair breakdowns drew federal scrutiny. "Before the night was finished on June 25, 2015, five Allegiant flights had been interrupted in four hours, all because different planes had failed in midair," reported the Tampa Bay Times. Since October 2015, the Federal Aviation Administration has kept Allegiant under close supervision.
In July 2015, Allegiant Air announced bases would be established at the Asheville Regional Airport and Cincinnati/Northern Kentucky International Airport.
In August 2017, Allegiant announced a new base would be established at the Indianapolis International Airport. The base began operations in early 2018. Throughout 2017, the airline flew 12 million passengers on its 99 planes to 120 destinations from California to Florida. In February 2018, Allegiant also announced a new base would be established at the Destin–Fort Walton Beach Airport. In June 2018, Allegiant added another base at McGhee Tyson Airport in Knoxville, Tennessee. In January 2019, Allegiant announced they would be adding another base at Gerald R. Ford International Airport in Grand Rapids, Michigan. Allegiant announced they would be adding an additional base at Des Moines International Airport in Des Moines, Iowa as of November 2019.
Corporate affairs
Ownership and structure
Allegiant Air is a wholly owned subsidiary of its holding company, Allegiant Travel Company, which is publicly traded under NASDAQ: ALGT. Allegiant Travel Company is also the parent company of Allegiant Vacations.Business trends
The key trends for the Allegiant Travel Company are :| 2014 | 2015 | 2016 | 2017 | 2018 | |
| Turnover | 1,137 | 1,262 | 1,379 | 1,511 | 1,667 |
| Net profit after tax | 87 | 220 | 221 | 198 | 161.8 |
| Number of employees | 2,411 | 2,846 | 3,416 | 3,752 | 3,901 |
| Number of passengers | 8.2 | 9.5 | 11.1 | 12.3 | 13.8 |
| Passenger load factor | 87.5 | 85.0 | 83.1 | 81.6 | 82.6 |
| Number of aircraft | 84 | 89 | 76 | ||
| Notes/sources |
Headquarters
The corporate headquarters are in Summerlin, Nevada, a master-planned community in suburban Las Vegas, Nevada.Business model
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. Allegiant also serves smaller destinations that have 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. Allegiant tends to fly routes which avoid competition from other airlines, with only 18% of its 518 routes as of early 2020 also flown nonstop by other airlines.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. It also does not offer connecting service, with customers only able to purchase non-stop itineraries on its website.
It prefers to use smaller/secondary airports where landing fees are less expensive, such as Orlando Sanford International Airport. At Phoenix-Mesa Gateway Airport, Allegiant is now the only commercial carrier with year-round service. However, since 2015, Allegiant has been growing at major airports, such as Cincinnati, Denver, Indianapolis, Los Angeles, Memphis, Newark, Raleigh–Durham, and San Antonio.
Allegiant already flies into many major airports, including Las Vegas McCarran and Fort Lauderdale–Hollywood. 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-sized 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.
Although it does not fly to Canada, Allegiant advertises extensively there and flies from about a dozen small airports near the Canada–U.S. border. Many of its customers at airports such as Bellingham, Washington are Canadians, who save money on airfare by crossing the border to the U.S. and flying domestic routes from U.S. airports.
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 with lower prices but with additional fees based on the price of aviation fuel. 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 USDOT to overturn these new rules. The United States Court of Appeals for the District of Columbia Circuit ruled in favor of the USDOT on 24 July 2012 and the US Supreme Court denied certiorari on 1 April 2013.
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.These ancillary fees include those for checking luggage, carrying on luggage, buying food and drinks on board, obtaining advance seat assignments, and more. 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."
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. Commissions on hotel and rental car packages are up to one-third of the airline's revenue.
In 2009, ancillary revenues were $33.35 per passenger.
Charter flights
Allegiant's air charter operation contributed 7% of its revenue in 2009.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. Allegiant based one 150-seat, MD-80 series jet aircraft in Wendover and more than 20 employees, including maintenance, flight crews and stations personnel.
Allegiant also transports firefighters for the United States Forest Service as well as college basketball teams. 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. 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.
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. 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.
Sponsorships
In July 2018, Allegiant became the official airline of Minor League Baseball. In September of the same year, Allegiant partnered with the National Hockey League's Vegas Golden Knights as the "Official Domestic Airline Partner". On August 5, 2019, Allegiant inked a 20-year deal with the Las Vegas Raiders of the National Football League for the naming rights to the team's new home, Allegiant Stadium, in Paradise, Nevada. Allegiant is also a main sponsor with GMS Racing in the NASCAR Xfinity Series and the NASCAR Gander Outdoors Truck Series. In January 2020, Allegiant became the official airline of the Indianapolis Colts.Costs
The airline tends to offer lower fares, which requires strict cost control. Part of the airline's lower cost structure included operation of McDonnell Douglas MD-80 jets, which the airline could purchase and refurbish for as little as $4 million. While the aircraft were less fuel-efficient than newer planes, Allegiant was able to purchase used MD-80s outright for one-tenth the cost of a new Boeing 737 although Allegiant had subsequently purchased used Boeing 757-200s, Airbus A319s and Airbus A320s. As of November 2018, Allegiant no longer operates any MD-80 aircraft, relying instead on an all-Airbus fleet.Given the low cost of ownership, Allegiant is able to operate its aircraft less, which helps keep labor costs lower. 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.
The airline seeks to maintain a low permanent operating cost at the airport. 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.
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. The airline recently partnered up with UpLift to allow passengers to pay for their trips in small monthly fees.
Destinations
As of March 2020, Allegiant offers service to 117 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.Bases
As part of its point-to-point business model, Allegiant has aircraft based in Allentown, Asheville, Bellingham, Cincinnati, Fort Walton Beach, Fort Lauderdale, Destin-Fort Walton Beach, Grand Rapids, Indianapolis, Knoxville, Las Vegas, Los Angeles, Oakland, Orlando/Sanford, PhoenixMesa, Pittsburgh, Punta Gorda, Savannah/Hilton Head, Sarasota-Bradenton, and St. Petersburg/Clearwater.Top markets
Fleet
Current fleet
As of 2020, Allegiant has an all-Airbus A320 family fleet:Fleet strategy
Allegiant Air was known in the aviation industry to only acquire second-hand, used aircraft in order to save cash instead of ordering brand-new aircraft. On January 4, 2010, Allegiant bought 18 surplus MD-80 series aircraft, built in the 1980s, from the SAS Group, and was once the only U.S.-based carrier to have operated all five subtypes of the MD-80 series.In April 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. 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, Santa Maria, Spokane and Stockton. Nonstop service to Hawaii was also planned from Monterey, California, but was never implemented. Instead, Allegiant began reducing service to Hawaii after determining that it was more practical to retire the 757s servicing those routes rather than incur the expense of performing comprehensive D checks on the aging planes.
In September 2010, Allegiant began to reconfigure their MD-80 fleet from 150 seats to 166 seats per plane, removing galleys from the planes to add the 16 additional seats. All conversions were completed by September 2013.
In July 2012, Allegiant announced the future addition of Airbus A319-100 aircraft to its fleet; these formerly belonged to easyJet and Cebu Pacific. All of them were high-density A319s, fitted with four overwing exits, allowing 156 seats. Two former easyJet aircraft entered service in 2013, another in 2014 and an additional six in 2015. In December 2012, Allegiant cancelled the agreement with Cebu Pacific citing an inability to agree on economic provisions. On May 1, 2013, Allegiant purchased another A319 aircraft previously operated by easyJet which entered service in the third quarter of 2013. On February 23, 2015, Allegiant purchased six more A319s from Cebu Pacific.
In 2013, Allegiant acquired nine Airbus A320-200 aircraft from Spanish flag carrier Iberia.
Seven of the A320s were delivered in 2013 and were used for growth into new markets. On February 24, 2015, Allegiant announced the purchase of two additional A320s from Philippine Airlines, which entered into service in 2015.
Later in 2015, the airline announced a firm order for an Airbus A320 direct from Airbus, the first time it had purchased new aircraft from the supplier. In May 2017, Allegiant Air took delivery of its first brand-new A320. Allegiant took delivery of ten new A320s in 2017 and was scheduled to accept two in 2018. All new aircraft would have fuel-efficient sharklets, and be painted in Allegiant's new livery on delivery. Older Airbus aircraft were to be repainted during their C-checks. The new A320s seat 186 passengers, an increase over the 177 seats in the rest of the Allegiant A320 fleet. To fit the additional nine seats, Allegiant opted for the Airbus Space-Flex V2 Lavatory.
On October 31, 2017, the final 757 was retired from service, and in November 2018, the last MD-88s operated by Allegiant were retired. Allegiant now operates an all-Airbus fleet; the move to the newer all-Airbus fleet has allowed Allegiant to benefit from lower fuel and maintenance costs, and to operate in some airports which could not be served by the MD-80s.
Historical fleet
| Aircraft | Replacement | Year retired |
| Boeing 757-200 | - | 2017 |
| McDonnell Douglas DC-9-20 | McDonnell Douglas MD-80 Family | 2002 |
| McDonnell Douglas DC-9-50 | McDonnell Douglas MD-80 Family | 2002 |
| McDonnell Douglas MD-81 | Airbus A320 family | 2013 |
| McDonnell Douglas MD-82 | Airbus A320 family | 2013 |
| McDonnell Douglas MD-83 | Airbus A320 family | 2018 |
| McDonnell Douglas MD-87 | Airbus A320 family | 2013 |
| McDonnell Douglas MD-88 | Airbus A320 family | 2018 |
Livery
Allegiant Air's livery features a bright sunburst design on the tail, emphasizing the airline's "sun" destinations. A similar livery is used by Jet2.com on aircraft which carry the Jet2holidays livery, the only difference being the airline name on the aircraft. The livery was created for the airline by Tiami Designs, Atlanta, Georgia.Concerns and conflicts
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. In August 2012, the pilots voted to organize and joined the Teamsters. Allegiant's chairman and CEO, Maurice J. Gallagher Jr., has been critical of the unionization of airline employees, and has stated, "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."Safety concerns over MD-80 fleet
Allegiant Air has been closely monitored by the FAA due to many emergency landings and aborted takeoffs. 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." A survey found that 46 of the company's 86 aircraft had made emergency landings, all of which involved MD-80s. The average age of Allegiant's MD-80 fleet was 29 years, compared to less than 13 years for its Airbus fleet. many of the MD-80s have been replaced by newer Airbus A320 family aircraft.In May 2016, the FAA confirmed they moved up a regularly scheduled five-year inspection. Allegiant Air proclaims the FAA gave them a clean bill of health after the 2016 audit.
In November 2016 the Tampa Bay Times noted that Allegiant's planes were four times more likely to have in-flight failures than other major US airlines, and a 60 Minutes report by CBS News in 2018 continued to investigate the issues. Public records cited in the investigation found that the airline had more than 100 serious mechanical incidents between January 1, 2016, and October 31, 2017, including "mid-air engine failures, smoke and fumes in the cabin, rapid descents, flight control malfunctions, hydraulic leaks and aborted takeoffs." Other public records further revealed that Allegiant aircraft, on average, were nearly three and a half times more likely to have mid-air breakdowns than American, United, Delta, JetBlue and Spirit. Allegiant responded to the investigation stating that many of the issues occurred on their older MD-80 model aircraft which have since been replaced with Airbus A320, and also defended its safety record, citing the 2016 FAA audit, which found the company's safety issues "minor" and "non-systemic."