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The Honolulu Advertiser
Posted on: Thursday, March 18, 2010

Allegiant touts diversity


By Alan Yonan Jr.
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

Allegiant flies the MD-80 this one is parked at Las Vegas' McCarran Airport for its Mainland routes. For its yet-to-be-determined Island routes, the Vegas-based unit of Allegiant Travel Co. plans to use a fleet of Boeing 757-200s.

Allegiant Travel Company photo

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Allegiant Air executives say the budget carrier will have an advantage over its larger competitors when it launches service to Hawai'i later this year because as a full-service travel company its revenue stream is more diversified and less susceptible to shocks like rising jet fuel prices.

The Las Vegas-based unit of Allegiant Travel Co. is seeking Federal Aviation Administration approval to begin direct fights from small West Coast cities in the fourth quarter with a fleet of six Boeing 757-200s.

An Allegiant marketing official met with travel industry officials in Honolulu yesterday to outline the carrier's expansion plans.

"We provide vacation experiences to travelers in small cities that would otherwise have few options to world-class destinations," Chris Stacey, director of consumer marketing, told officials gathered for the Hawai'i Tourism Authority's spring marketing update. Allegiant's packages typically include nonstop air travel, lodging, rental cars and visitor attractions.

"One of the things we like to tell people kind of humorously is that the airline business is a terrible business," Stacey said. "It's capital intensive, you burn lots of fuel, there's lots of competition and it's hard to make money. So we do things a little bit different. We really don't consider ourselves to be an airline, we consider ourselves to be a travel company."

Allegiant currently flies from 63 small cities across the U.S. to about 10 vacation spots in California, Florida and the Southwest using 150-seat MD-80 aircraft.

Although Allegiant has not disclosed the exact routes for the Hawai'i flights, cities that the airline serves that are within the range of a 757-200 include Fresno, Santa Barbara and Stockton in California; Colorado Springs, Colo.; Eugene Ore.; and Bellingham, Wash. The airplanes and crews will be based in Hawai'i, Stacey said.

Allegiant has been successful with its low-fare, no-frills model on the Mainland, posting 28 straight quarterly profits. The airline charges an average of $70 to $80 each way for its Mainland flights and makes an additional $32 on average per ticket charging for things like baggage fees, seat assignments and food. Its flight attendants get commissions on sales made in the cabin, Stacey said.

The track record of budget carriers serving Hawai'i has not been great, said Steve Danishek, a Seattle-based airline analyst. The most notable case was ATA Airlines, which struggled to make money before going out of business in the spring of 2008, he said.

"Maybe Allegiant has a chance if they don't dilute the market," Danishek said. "But unfortunately Allegiant attracts low fare passengers and that means they are low spenders when they get to their destination."

Cliff Tai, whose Hawaii Beach Bum company provides baggage storage services to visitors in Waikīkī, said he was encouraged by Stacey's presentation.

"This will be great for business if Allegiant decides to fly to Honolulu instead of the Neighbor Islands. We'll have to wait and see."