Allegiant seeks to explain business model to customers

Allegiant Air MD-82 (49423/1283) N891GA rolls for takeoff on Rwy 30 at Long Beach Airport (LGB/KLGB) on March 11, 2011.

(Photo by Michael Carter)

As it expands to larger cities, including Pittsburgh, Cincinnati and Indianapolis, Allegiant Air is trying to improve how it communicates its business model to customers to make it more “transparent.”
                                                                         
Las Vegas-based Allegiant’s model has long been known by its core customers in tiny American cities, such as Grand Forks, North Dakota and Owensboro, Kentucky. But they have continued to book the airline partly because it has been the most convenient and reasonably priced option in markets with limited air service. In larger cities, however, customers typically have more options. 
 
“We have been very open that we want to do a better job of making sure that our customers know what they are buying before they buy it,” Allegiant spokeswoman Jessica Wheeler said. “We want them to know what to expect before they get to the airport.”
 
The strategy is similar to what Spirit Airlines is trying to accomplish with its “bare fares” advertising campaign. Both Spirit and Allegiant are seeking to realign customer expectations so passengers aren’t surprised at the no-frills product. To a lesser extent, Frontier Airlines is also trying to communicate its new model, though the carrier has had more trouble than its competitors, in part because it was known for its first 20 years as a customer-centric airline. 
 
One advantage Allegiant has over other ultra-low-cost carriers is that it rarely flies head-to-head against full-service network carriers. Frontier and Spirit often operate between two thick markets, trying to skim some low-yield traffic, so they must spend more time persuading customers why they might prefer a la carte pricing. But often, even from larger cities, Allegiant is the only carrier flying its routes, giving it a major advantage.
 
“You run the risk of a hub-and-spoke carrier in those markets underpricing you, but it will be via a hub connection,” aviation consultant George Hamlin said. “There is a perception of value for a nonstop product. Plus, they have a cost advantage to begin with.”
 
Allegiant would lose that edge if it expands into more major hub airports, such as Atlanta, Chicago O’Hare or New York LaGuardia. But despite the airline’s recent growth—it will pick up 10 used Airbus 320-family aircraft this year—Wheeler said adding those markets is not in the immediate plans. 
 
“They are not things we are looking at seriously right now,” she said. “But I’m not saying it is off the table. We are a ‘never, say never’ group around here.” 
 

(Brian Sumers - ATWOnline News)