Allegiant Air Tests Its Strategy Out West
It's not really a shift in strategy, so much, as it is an expansion. Allegiant has made a great business bringing tourists a couple of times a week from small towns to major leisure destinations. An announcement this week that the airline would begin flights from Bellingham (Washington) to San Francisco and San Diego shows that they aren't planning on being a one-trick pony for much longer.
Up until now, the model was pretty simple. It all started with a base in Vegas. The airline would fly extremely infrequent flights (couple times a week) to and from small cities that often had no other service. The idea was to bring people in from those small towns to party in Vegas and then send them back home. This has been wildly successful, and the company expanded beyond just a Vegas base to include three cities in Florida and one in Arizona.
The first sign of a change in this strategy was announced at the end of January when the airline said it would start basing a couple aircraft in Bellingham. Why Bellingham? Well, it's about 50 miles south of downtown Vancouver and 100 miles north of Seattle. International taxes, of course, can add extra money onto a ticket price. For example, a $450 ticket from Vancouver to Phoenix will see an additional $100 in taxes and fees piled on. That's about $40 more than you'll get on a similarly-priced ticket out of Seattle. Combine that with Allegiant's lower fares, and there's definitely enough reason for a price-sensitive family to cross the border to catch their flight.
Allegiant has apparently seen this, and this week they came out with those flights to San Francisco and San Diego. So while the company normally tries to get traffic from the small town spoke cities, now it's looking to get traffic from the area around its base and fly those passengers to large cities around the country. That's a different tactic, but one that can work.
Are they risking the wrath of competitors? How will Air Canada up in Vancouver and Alaska Airlines down in Seattle react to an attempt to grab local travelers? Though Allegiant may be using a slightly different strategy this time, it is keeping an infrequent flight schedule that targets solely the price-sensitive leisure traveler. That's not exactly a passenger type that most airlines are fighting over, but flying to busy airports like San Francisco and San Diego is likely to at least raise some eyebrows.
Even if larger airlines flying to the area do decide to pick a fight, Allegiant has shown in the past that it wastes no time pulling routes that it can't win (e.g. the on-again, off-again love affair with Greensboro), but this might be different. It's one thing to walk away from a spoke that has a couple flights a week, but would they be willing to walk away from a base? That's certainly something they won't want to do, and if they do, it'll give other airlines incentive to fight every move they make. This could get very interesting.