Midnight Mike
2009-08-16, 11:47 AM
But it's no accident that Allegiant's planes are full, profits soared 200% in the first quarter to $28.2 million, and the number of passengers is up 18% through May during the worst recession in recent memory.
While competitors furiously cut back, Allegiant has boosted capacity 30%. The more intriguing question, though, is whether its rock-bottom fares, bootstrap approach, and focus on the places abandoned by the hubs and spokes are the new blueprint for building an airline in tough times.
Certified to fly MD-80s, aging warhorses of the skies, Allegiant could acquire used ones for as little as $4 million, one-tenth of what it costs Southwest to buy a new 737. With no access to capital, Gallagher didn't have much choice. But the plane is a gas-guzzler -- fuel costs can be as much as half of expenses -- so Allegiant couldn't afford an empty seat; keeping the planes full spread the cost across more passengers. "We needed a strategy that was low cost and could make money from day one," Gallagher says. "Slowly, we figured it out: Go where they ain't."
http://www.fastcompany.com/magazine/138 ... rofit.html (http://www.fastcompany.com/magazine/138/flying-for-fun-and-profit.html)
While competitors furiously cut back, Allegiant has boosted capacity 30%. The more intriguing question, though, is whether its rock-bottom fares, bootstrap approach, and focus on the places abandoned by the hubs and spokes are the new blueprint for building an airline in tough times.
Certified to fly MD-80s, aging warhorses of the skies, Allegiant could acquire used ones for as little as $4 million, one-tenth of what it costs Southwest to buy a new 737. With no access to capital, Gallagher didn't have much choice. But the plane is a gas-guzzler -- fuel costs can be as much as half of expenses -- so Allegiant couldn't afford an empty seat; keeping the planes full spread the cost across more passengers. "We needed a strategy that was low cost and could make money from day one," Gallagher says. "Slowly, we figured it out: Go where they ain't."
http://www.fastcompany.com/magazine/138 ... rofit.html (http://www.fastcompany.com/magazine/138/flying-for-fun-and-profit.html)