Allegiant Air may not be the biggest or the best, but the Nevada-based airline is proving to be a soaring financial success.
The tiny airline at the Niagara Falls International Airport flies just eight flights per week to Fort Myers, Orlando and Tampa, Florida. It has handled 4,251 outbound passengers from January to May of this year, according to C. Douglas Hartmayer, a spokesman for the Niagara Frontier Transportation Authority.
But while other U.S. airlines have struggled over the past decade from the ups and downs of the economy and the price of jet fuel, Allegiant has been profitable for 10 straight years.
The airline focuses on a niche ignored by other airlines: It only flies from small cities to sunny vacation spots.
Its biggest hub is in Bellingham, Washington, where Canadian travelers regularly trek to take advantage of cheaper fares to U.S. vacation destinations. The same thing has begun happening in Niagara Falls, as Allegiant lands on the radar of travelers from Toronto and beyond.
“We think there’s huge potential and a major opportunity that we haven’t quite tapped yet,” said Jessica Wheeler, a spokeswoman for Allegiant.
The company has ramped up marketing efforts throughout Ontario and is continuing to look for additional flight destinations that can be serviced out of Niagara Falls.
Allegiant entices people who otherwise wouldn’t fly with low fares and non-stop flights. Then it aggressively pitches them hotels, rental cars, show tickets and other entertainment, earning millions in commissions.
Passengers face fees for almost every service and amenity imaginable. At Allegiant, fees for checked baggage and changing an itinerary — which are common on many airlines — are just the beginning.
The Las Vegas-based airline charges extra to book flights online, or to use a credit card. Selecting a seat in advance costs $5 to $75 each way, depending on the length of a flight. Even a bottle of water costs $2.
Flying Allegiant isn’t glamorous. While other airlines tout new aircraft with Wi-Fi and TVs in every seat, Allegiant buys old planes to avoid hefty aircraft loans. And to pack in as many passengers as possible, its seats don’t recline. But for small-town Americans with limited flight options, these inconveniences are worth it for a few days of sunshine.
“They could be the worst airline in the world and we’d fly them because we want to go to Vegas,” says Tom Mayo of Cedar Rapids, Iowa, who recently flew there with his family. “It’s our only option.”
Allegiant offers non-stop service from places like Owensboro, Ky.; Casper, Wyo.; and Appleton, Wis., to popular destinations in Nevada, Florida, Hawaii and Arizona. These may not be the most coveted routes in the airline business, but that is precisely why Allegiant likes them.
Only 17 of Allegiant’s 203 routes are flown non-stop by another airline.
“Typically, the best way to make money is not to compete with somebody,” says Andrew C. Levy, president of Allegiant Travel Co., who sits in a cubicle next to the rest of his staff.
Rather than battle major carriers for customers on routes between major cities, Allegiant uses its marketing muscles to convince people in small towns to fly away for a vacation.
“Allegiant tends to bring people into the airport who wouldn’t normally fly,” says Tim Bradshaw, director of the Eastern Iowa Airport in Cedar Rapids. “It brings people off the couch.”
Last year, 7 million passengers took a flight on Allegiant. That is a sliver of the 642 million people who took a domestic flight last year. But Allegiant earned a whopping $11.22 each way from those passengers. On average, the airline industry earned 37 cents each way, per passenger, according to Airlines for America, the industry’s lobbying group. Southwest Airlines, one of the industry’s most profitable carriers, made $3.85 per passenger last year.
Allegiant is ruthless about keeping its costs down. Like some other budget airlines, Allegiant advertises extremely low base fares and then tacks on numerous fees. A roundtrip ticket with Allegiant costs $195, on average. But passengers pay an additional $83 in fees – or 30 percent of the total cost of flying.
To book a trip by phone, Allegiant charges $50 for each roundtrip ticket. To book online costs $20 for each roundtrip ticket. The only way to avoid the fees is to purchase tickets at the airport, something fewer than 3 percent of its customers did last year. But whether you book by phone, Internet or in person, paying with a credit card costs an extra $8.
Using the overhead bin is $10 to $25. Boarding passes signify who has paid the fee. If passengers show up at the airport with a large carry-on bag and haven’t prepaid the fee, the airline penalizes them an additional $25 to $50, depending on the route.
But what really makes Allegiant different are the commissions it earns from selling hotel rooms, rental cars and other extras including Everglades boat tours and theme-park tickets. Before a passenger can finalize a ticket purchase online, they must click through page after page offering them these add-ons.
Last year, revenue from commissions totaled $36 million, or nearly $12 per roundtrip passenger. Once onboard, passengers are again bombarded with sales pitches. On a recent flight from Cedar Rapids to Las Vegas, flight attendants came over the loudspeaker and hawked show tickets and airport shuttles. The in-flight magazine is filled with ads for shows and attractions instead of stories. One ad offers $30 off a Las Vegas helicopter tour if purchased from flight attendants, who are paid extra for each item sold.
News Business Reporter Samantha Maziarz Christmann contributed to this report.