subscribesubscriber servicescontact usabout ussite mapBuy a Classified
Sun, Jul 20 2008 

Published May 13, 2008 06:06 pm - Soaring fuel prices caused most airlines to lose money last quarter, but Allegiant Travel’s unusual business model helped it earn almost $10 million.

By serving smaller markets, Allegiant Air is flying high


Scripps Howard News Service

FRESNO, Calif.

Soaring fuel prices caused most airlines to lose money last quarter, but Allegiant Travel’s unusual business model helped it earn almost $10 million.

Allegiant Air strays from the industry norm in that it targets small to midsize cities without much air service and flies people to tourist hot spots such as Las Vegas and Orlando.

And then, because its corporate parent is a travel company, employees also book hotel rooms, arrange car rentals and sell tickets to them for parks and shows –– for a price, of course.

Other airlines offer similar services, but often they contract with an outside company. Allegiant representatives wouldn’t disclose their financial arrangements with Harrah’s Entertainment and others, but in 2007 the company generated revenue from companies with thousands of hotel rooms.

Such “ancillary revenue” added $27.1 million to Las Vegas-based Allegiant’s coffers last quarter, up from $12.7 million a year earlier. Put another way, the company got an extra $25.75 from every passenger, according to public filings.

“We are a one-stop shop,” said M. Ponder Harrison, director of marketing and sales.

That helped alleviate the impact of soaring fuel costs, which doubled year over year. Those costs have led to a torrent of red ink for many carriers. Merrill Lynch projects that the nation’s eight largest carriers will lose $1.9 billion this year.

Allegiant flies from 59 cities, including Billings, Mont., and Fargo, N.D., to Las Vegas, Orlando, Tampa Bay, Fort Lauderdale and Phoenix. The planes averaged 87 percent full last quarter, and the airline has been adding communities. All that helped expand revenue by $58 million from the first quarter of 2007 to the first quarter of 2008.

Allegiant also is adding destinations to spread risk.

“We diversified our operations considerably in the past year,” said Maurice J. Gallagher, Allegiant’s chief executive.

“New destinations Phoenix-Mesa and Fort Lauderdale combined for 17 percent of our scheduled departures in the first quarter, while Las Vegas accounted for 41 percent, a reduction from 57 percent a year earlier,” he said.

The overwhelming majority of flights are to resort cities, but Allegiant isn’t afraid to try something different. In June, it will start offering flights from Bellingham, Wash., to San Francisco and San Diego.

“This is an example of our first nonleisure destination city,” Harrison said.

If those combinations don’t work, Allegiant can adjust. It isn’t locked into multiple flights a day like a typical carrier that serves business travelers.

In some cities, it offers flights only on certain days.



print this story    email this story    comment on this story   

Click to discuss this story with other readers on our forums.




monster
wheels
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide

Have a question for The Herald?
You are only one click away

Premier Guide
Premium Jobs

Sunday, July 20
$500 Sign-On Bonus! Start Today, Seeking 5 Guys/Girls To Join Our Young-Minded Hip Hop Rock-n-Roll Blue Jean Environment...>MORE

See all ads

Premium Autos

See all ads

Premium Homes

See all ads

Premium Extras

See all ads


   

 

Community Newspaper Holdings, Inc.CNHI Classified Advertising NetworkCNHI News Service
Associated Press content © 2008. All rights reserved. AP content may not be published, broadcast, rewritten or redistributed.
Our site is powered by Zope and our Internet Yellow Pages site is powered by PremierGuide.
Some parts of our site may require you to download the Flash Player Plugin.
View our Privacy Policy
Advertiser index

rc