Allegiant Air projecting double-digit capacity growth

An Allegiant Air jet takes off from McCarran International Airport on Friday, Aug. 26, 2011.

Allegiant Air’s ability to find profitable routes and willingness to ditch unprofitable ones is leading the airline to project double-digit capacity growth in the third and fourth quarters of the year.

Allegiant, a subsidiary of Las Vegas-based Allegiant Travel Co., projected available seat miles would grow 15 to 19 percent on scheduled service in the third quarter and 22 to 26 percent in the fourth quarter.

Much of the projected growth is due to Allegiant’s new service to Hawaii from several mainland cities.

The growth guidance was disclosed in Allegiant’s June traffic report, which showed the airline had an 8.1 percent increase in passengers and a 3.3 percent growth in departures, while loads were down 0.8 percentage points for the month.

Systemwide, Allegiant served 584,472 passengers in June. Flights between Las Vegas and Honolulu began June 29, and there was only one flight between those cities for the month.

For the second quarter, passenger volume was up 16 percent, the number of departures climbed 12.7 percent and loads were down 1.9 percentage points to 90.1 percent.

By comparison, Dallas-based Southwest Airlines increased its number of revenue passengers carried by 0.8 percent to 10 million in June and 0.1 percent to 28.9 million for the second quarter.

Allegiant is projecting the cost per available seat mile, which excludes fuel, to fall by 13 to 14 percent and fee revenue to rise by $12 million to $13 million for the second quarter.

The company’s financial results are scheduled to be released Aug. 1.

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  1. They're going to need that growth in order to have more cash on hand, as they appear to be looking into bringing another aircraft type in the near future, something from Airbus. In recent weeks, there have been posting on the Allegiant careers page for some management positions related to an unspecified Airbus aircraft type.

    Allegiant has been able to make the MD-80 family a/c in their fleet work for them because they paid for them outright (including a/c bought solely to be stripped for parts) and their less than daily service on their routes maximizes the load factors on those flights. Allegiant will drop service on a route if it isn't making enough money for them. These route could have load factors that any other airline would not have an issue with (and would kill for), but for Allegiant, they want to maximize their revenue and if another city can make them more money, they will end service at one that isn't living up to their standards.

    Bringing in the 757 was a major shift in their model, but this could be a temporary member of the fleet, especially if the Airbus a/c they bring into the fleet has the range to fly to/from Hawaii. The MD-80s will continue to get more and more expensive to operate, even if fuel prices don't get out of hand, as the maintenance costs (especially for the major checks the a/c have to undergo after a certain amount of time) will rise and it reaches a point where it does not make financial sense to spend the money to put some a/c through these checks. Allegiant is going to have to renew their fleet at some point, and airlines will start retiring some of their older Airbus a/c, especially once the Boeing 737 MAX and Airbus A319/320/321neo (New Engine Option) start being delivered to customers.