Issue No. 746

Allegiant: More Than Just an Airline

Allegiant is not an airline. No, says its management. Allegiant is a travel company.

Whatever the appropriate label, Allegiant is phenomenally successful, sporting one of the airline industry’s most unique business models. Many aspects of that business model — direct distribution, heavy reliance on ancillary revenues, highly-variable flight scheduling by season and day-of-week — are here to stay. But as management made clear at an investor day event last month, Allegiant is also changing in many ways.

One of the most visible changes: The airline’s fleet. Allegiant for much of its existence was almost synonymous with MD-80s. The old planes worked perfectly for its model. Most importantly, they were cheap. No monthly lease payments. No monthly mortgage payments. Just fly the aging planes when demand merited. But nothing lasts forever. At a point, the old workhorses were becoming too difficult to maintain, with spare parts harder and harder to find.

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