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- Allegiant Air, a Las Vegas-based ultra-low cost carrier, has achieved fame for its unusual but highly profitable strategy of operating cheap fuel-guzzling MD-80s in low-frequency service between small cities and popular leisure destinations and deploying Ryanair-style revenue strategies.
aviationstrategy.aero › newsletter › Apr-2015
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Sep 1, 2009 · You’ve probably never heard of the most successful airline in America. That’s because Allegiant Air is not for you. It eschews business travelers, daily flights, even service between...
For the past 15 years, Allegiant Air has had a simple strategy: It flies passengers from what it calls "underserved markets" like Appleton, Wisconsin; Bismarck, North Dakota; and...
Feb 3, 2022 · Allegiant Air is coming off a strong recovery year in 2021. The airline recorded a nearly $152 million profit on a year with marked capacity increases and big achievements that has set it up for an even stronger future.
Feb 16, 2021 · The Las Vegas-based airline is well equipped to handle the turmoil, analysts say: The airline is lean, focused on U.S. domestic travel with nonstop routes to beach and other outdoor...
- Leisure Passengers in Small Cities
- Allegiant Has A Very Low Cost Base
- Average Fleet Age of 22 Years
- Allegiant's Biggest Source of Cost Advantage Is Labour
- Allegiant Also Has Good Pricing Power and Strong Ancillary Revenues
- Strong Return on Capital and Cash Flow Generation
- Cost and Capital Discipline: The Lesson For The Airline Industry
Allegiant's network encompasses 86 small cities and 13 leisure destinations across the USand ranges from coast to coast and from north to south. Its origination cities are small: 86% of them had a population of less than 900,000 in 2013 and more than one third had a population of less than 300,000. Allegiantroute map Stars represent leisure destina...
Allegiant has managed to construct a cost base to give it one of the lowest levels of unit cost in the US industry, in spite of having an average daily utilisation rate of only 5.5 hours in 2013 (down from 5.7 hours in 2012). This compares with a range of around 11 to 13 hours for other USLCCs and an average of close to nine hours for the global ai...
According to the CAPA Fleet Database, Allegiant's fleet at 9-Apr-2014 consists of 53 MD-80 family aircraft, six Boeing 757s and 10 Airbus A320family aircraft. The average age of the MD-80s is 24 years, the 757s 21 years and the A320s almost 13 years, with an overall average age for the whole fleet of 22 years. Its strategy of acquiring old aircraft...
The biggest cost after fuel expenses is labour and here, too, Allegianthas structured its employee contracts to maximise the proportion of labour costs that are variable. Employees are guaranteed a minimum monthly payment, but then their compensation is variable in proportion to hours worked. Comparison with Southwest shows that labour is the most ...
Allegiant's other significant area of achievement is in its ancillary revenues, which formed one third of its total turnover in 2013. Its average fare was USD92 and total ancillary revenues per scheduled passenger were half as much again, USD46. Ancillary revenues make a significant contribution to profit margins as there is relatively little incre...
Allegiantreturn on capital employed 2010 to 2013 Source: Allegiantmanagement presentation Mar-2014 Allegiantgenerated a return on capital employed of 16.4% in 2013, very high by airline industry standards and certainly higher than its cost of capital. This high return on capital employed is the result both of a high margin and a superior asset turn...
There can be no doubt that Allegianthas developed a successful business model, built on niche markets with little competition, low costs (mainly labour-related) and a prudent approach to capital investment. While its business model could not be replicated in detail by the majority of airlines, the industry as a whole could certainly benefit from no...
Jan 27, 2022 · This TAC Analysis, divided into parts, dives deep into the misconceptions of Allegiant’s business model and the intrinsic value a next-generation airplane like the 737 Max brings to the airline.
May 11, 2021 · Allegiant Air is on track to be the first US airline to fully recover from the pandemic, with its market cap surpassing pre-pandemic levels and its cost structure and smaller footprint giving it an advantage over competitors.
