A look at Allegiant Air’s executives and you would think they are a bunch of journalists because of how they dress — khaki pants and a long-sleeve shirt. Not the typical airline executives and certainly not what one would expect from an airline that is on top of its game.
But that is unquestionably what is going on with Allegiant Air. For starters, the airline is currently beating every single airline by being the airline that has the highest in-stock market value. To be precise, Allegiant’s last stock price (February 6) was at US$36.43. That is way ahead of Southwest Airlines, which many in the aviation industry perceive to be the most profitable US airline. Southwest Airlines stock closed at US$7.33 at last sale.
What’s the secret? It is a simple business model, really. Fly from small airports to big cities that are in close proximity (about three and half hours maximum) to each other. Those big cities right now are very few, such as Las Vegas, Nevada; Orlando, Tampa, St. Petersburg (all in Florida); and Los, Angeles, California. The list goes on for small cities that the airline flies to.
Also, a key component to Allegiant’s successful business model is flying to airports where they do not have any competition and to cities that would roll out the red carpet for them.
For instance, Allegiant Air flies from Plattsburg, New York to Tampa Bay, Fort Lauderdale, and Orlando (all in Florida). By doing so, not only does the airline attract tourists from surrounding areas, but also it literally has no competition. It is the only airline that is flying these routes.
For a Montreal-based traveler who is on a tight budget and is looking to go to Orlando, Allegiant Air is exactly the airline he or she would fly with because by flying from New York, he or she does not have to pay for the astronomical Canadian aviation tax. On top of that, Plattsburg International Airport picks up the tab for the parking fee.
And once he or she is on board, expect Allegiant Air flight attendants to be coming down the aisles to sell them products that range from pillows to show tickets. Good for the airline’s flight attendants because they receive a commission for items they sell. This is another key ingredient in the Las Vegas-based, low-cost, low-profile airline.
Maurice J. Gallagher, Jr. certainly has the eye for spotting potentially-lucrative markets, which may be the reason why his company is very successful, adhering to a business model that works, while constantly tapping new markets. There is talk that the Allegiant Air CEO is eyeing the Hawaii market as one of those markets. There is a challenge, however. For Allegiant Air to begin service to the Hawaiian Islands, it would have to tweak its business model and purchase larger aircraft.
But in order to do so, a source, who spoke to eTN on condition of anonymity, admits Gallagher certainly knows how to play the game. When ATA Airlines folded, he could have bought the bankrupt airlines’ airplanes, but he opted not to because he did not get a good price. So, he waited and waited. And soon we can expect his camp to break from its mold and chart a new course with Hawaii.
The Las Vegas-based parent company of Allegiant Air, Allegiant Travel Company, is the first US-based, mainline, low-cost airline to successfully go public in the last five years.
eTN has tried to schedule an interview with Gallagher, but Tyri Squire, the airline’s communications manager, said it is against company policy to grant trade interviews. This would make these Allegiant Air guys not only khaki and shirt kind of guys, but they certainly fall under the category of “media shy” as well.