Sunday, March 7, 2010

Allegiant tries 757s - Aloha Hawaii

Late on Friday afternoon, Allegiant announced they would purchase six 757s. These 757s are Allegiant's first stray from the venerable MD-80s which now make up the fleet.

Allegiant plans to begin flying them later this year from West Coast cities to Hawaii which currently lack nonstop service to the islands. Don't expect to see Allegiant announcing LAX-HNL service - while LAX is a focus city for Allegiant, we expect them to enter the Hawaiian market from smaller cities with less than daily service as is their trademark. We'd expect new service from places like Bellingham, Fresno, Eugene and the like.

This is clearly wonderful news for the Hawaiian hotel market given the massive over-capacity that currently exists. And we expect Allegiant to do well - given the softness in the market, they will be able to negotiate significant discounts on hotels and attractions which will translate into better prices for their consumers and better margins for ALGT.

Clearly, a new market and fleet type is not without risk but this is a company that knows the leisure business better than anyway. It is more of the same formula, albeit with a new aircraft type, that has served them so well in Las Vegas, Orlando and other key leisure destinations.

Anyone who thinks of ALGT as an airline has it all wrong - this is a leisure powerhouse that just happens to be required to file monthly statistics with the DOT.....

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