I’ve been hearing rumors for several months now that Allegiant Air is planning to begin service to Hawaii. We’ve also learned that they have been around the state scoping out potential business opportunities. I’m excited about the possibility, and find their approach very interesting. Here’s why.
An Airline where “air” is not their priority.
Allegiant, based in Las Vegas, has a business model that’s very different than most carriers. While Allegiant sells unbeatably priced air-only, they specialize in packaged vacations sold in conjunction with their air service. In that way, they are not completely reliant on filling seats the way traditional airlines are in order to make money. Allegiant’s focus is on bringing travelers from smaller cities to vacation areas that currently include Las Vegas, Phoenix and Florida.
How Allegiant makes money.
Allegiant derives profit by selling hotel rooms, activities, and car rentals with their air transportation. It is the sum of those items, together with nickel and diming on seats and baggage, and an on-board purchase menu that includes souvenirs, that helps them to be profitable.
Hawaii appears to be a natural, albeit obviously risky, expansion opportunity for Allegiant. I say risky because it will mean expensive new aircraft and flight crews.
Potential planes and routes.
It is believed that Allegiant Air would acquire Boeing 757-200 aircraft in the event they move forward to serve the Hawaii market. They might well begin with Las Vegas to Honolulu service, but could ultimately excel in the niche of bringing visitors to Oahu and Maui from places that presently have little or no direct service to Hawaii.
Allegiant Air stock closed at over $36 a share last Friday, while Hawaiian, Continental and United were at about $4, $14 and $9, respectively.
If you’ve flown Allegiant Air before, what was your experience?