Allegiant air booking profitable year

By TED JACKOVICS
Media General News Service
Published: July 15, 2008

CLEARWATER — Many customers of Allegiant Air refer to the Las Vegas-based airline as “Ally-Giant,” Sabrina LoPiccolo, the airline’s public relations and promotions manager, acknowledges.
There might be merit in that pronunciation for anyone checking out the financial statements of the discount carrier, which serves St. Petersburg-Clearwater International Airport.
The reason: Allegiant Air posted an 8.1 percent profit margin in the first quarter of this year when it booked a $10 million operating profit, or profit before interest and taxes. That’s a nationwide best for all airlines in the quarter, a Bureau of Transportation Statistics report shows.
In June, Allegiant filled an average of 94 percent of its seats on its MD-80 series 130- and 150-passenger aircraft. Rather than competing with larger airlines, Allegiant has created a niche to link small-market destinations such as Roanoke, Va., and Rockford, Ill., with leisure destinations such as Clearwater and Orlando.
The airline was founded in 1997 and began service at St. Petersburg-Clearwater International in November 2006. It plans to retrench the majority of its local service in late summer and early fall to fly where and when there is peak demand.
Allegiant stays in the black by adjusting routes and moving in and out of airports temporarily, as it will do in August at St. Petersburg-Clearwater International.
The airline has been known to relocate, as it will do when it bolts Green Bay, Wis., for Appleton, Wis.
Robert Ashcroft, Alllegiant’s vice president of planning, recently responded by e-mail to questions about the company’s strategy.

What is Allegiant’s strategy for St. Petersburg-Clearwater International Airport?
Truth be told, we’re probably a little undersized in Tampa Bay, and the only reason we’re not expanding in St. Pete this winter is that we’re a lot undersized in Phoenix. So what little expansion we’re doing this winter is focused there.
I know our good friends at St. Petersburg-Clearwater International were a little nervous when they say how many routes we cut back during the slow period of September-October, but Tampa Bay has been good to us, as have our friends at the airport.
I believe all of the routes return before Thanksgiving and are already available for sale.

How does Allegiant manage to keep its flights operating almost full?
Generally we use the behavior of passengers in prior years, on a market by market basis, to guide us this year. That enables us to do a good job judging what fares we should have out there and for how many seats.
The other thing we’ve done is right-size a lot of our markets since fuel went up, and that’s been very successful. I have to say our pricing folks have done an outstanding job this year.

How are things going this year?
We expect the low periods to be worse than usual and the peaks to still be good. Americans generally do what it takes to get with their friends and families for Thanksgiving, for instance. So we’re concentrating on putting capacity at the peaks, and being more conservative about our off-peak capacity.

What do you expect for the winter holidays?
A lot of industry capacity has come out in the fourth quarter, particularly into leisure destinations like Florida.
If you look at Tampa Bay, including Sarasota, you will see that scheduled industry seats are down more than 10 percent in the fourth quarter relative to last year, and around 15 percent in the first quarter of 2009 relative to 2008.
That means it’s going to be harder for folks to travel for Thanksgiving and the winter holiday.