Allegiant Heads for Hawaii

According to Flightbase, Allegiant's largest base is at Las Vegas with 725 weekly departures, followed by Phoenix Mesa, St Petersburg (Clearwater), Orlando (MCO) and Orlando Sanford.

Its wider strategy has been to connect main operating bases to smaller cities, capturing traffic by offering a low frequency product. Avoiding primary airports has, in turn, enabled Allegiant to dodge competition from US legacy and other low-cost carriers.

This approach appears to have served Allegiant well, with it announcing a profit in the fourth quarter of 2009. In fact, its parent company, Allegiant Travel, has marked its 28^th consecutive profitable quarter, making Allegiant one of America's most profitable airlines.

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Allegiant is the sixth largest carrier at Las Vegas behind Southwest Airlines, which has 47% market share; Delta Airlines with 10%; United Airlines with 8%; US Airways with 7% and American Airlines with 5% (Flightbase: June 14-20, 2010).

It faces competition on just two of its 39 routes from Vegas - to Bellingham (Washington State) and Fresno (California), according to scheduling data.

Allegiant doesn't operate more than five weekly frequencies (with the exception of Bellingham, which is served 22-times weekly and a six weekly service to Colorado Springs).

Its top 10 markets out of Las Vegas are all, generally speaking, to secondary regional airports at leisure destinations, as the following data illustrates:

It is also noteworthy that Allegiant hasn't chosen to operate any routes from Las Vegas that Southwest serves. This progressive strategy extends to other airports, as it faces no other direct competition at Phoenix Mesa, St Petersburg and Orlando Sanford. At Orlando (MCO) airport, five of its 10 routes are not operated by any other carrier.

Allegiant's Strategy in Hawaii

By leasing B757-200s, Allegiant has chosen the best aircraft to suit its leisure-focused strategy and the market, this aircraft has a lower seat capacity, good seat costs and good range capabilities. It also has a lower seat capacity, compared to the 767, ideal for Allebiant's thinner routes.

To what points could it fly these B757 aircraft? According to Flightbase, there are 11 airports operating scheduled services among Hawaii's islands.

Honolulu, the largest Hawaiian airport on the island of Oahu, is likely to be the serving airport for Allegiant, however Kona and Kahului could be other options, as they are the only other airports on the islands that can handle B757 (or larger) aircraft and they each have US services.

The following data summarises the current competition between the US and Hawaii:

Source: Flightbase: June 14-20, 2010).

Owing to the flight range of a B757-200, Allegiant won't be able to serve Hawaii from one of its bigger bases in Florida, however, it is likely that Allegiant could choose to serve Honolulu from its existing bases in Phoenix Mesa and Vegas, or even Bellingham where the carrier has a significant presence. Of these airports, Vegas and Phoenix (Harbour - PHX) serve Hawaii with service from Hawaiian Airlines and United Airlines. Phonenix Mesa is unserved from Hawaii. Alaska Airlines, Hawaiian and Delta Air Lines each serve Hawaii from Seattle (Washington State).

What is certain is that Allegiant will target markets that are largely unserved from Hawaii and are likely to succeed in the process.