Allegiant Revives Plane Business' Titanic Watch

[Murdoughnut]

Plane Business's "Titanic Watch" resurfaced this month to cover Allegiant Airlines. I can't post the article because of the paywall, but Titanic Watch is a piece covering airlines perceived as being on a road to financial insolvency. Given the health of the industry, it hasn't resurfaced in years - until now.

The main point of the article is that the exodus of so many executives points to a looming decline in stock value (executive moves aren't always correlated with stock trends). Other takeaways ...

"Meanwhile, a number of subscribers tell us that resumes from Allegiant employees are showing up en masse at other airlines"

"You can only start up a low-cost, bare bones airline and run it for so long before 1) employees unionize; and 2) costs catch up with you as you are forced to ditch the cheap aging aircraft you started with that are now costing you an arm and a leg in maintenance and you are also forced to invest in the necessary technology a growing airline requires"

"It has never invested in technology. Time after time, we've listened to the quarterly calls when the issue of technology has come up, and it is always the same story. Too little invested too late, or money only invested when there was no longer a choice. If then."

 

[wheelsup]

Of note is Spirit has lower costs than Allegiant. Allegiant always had a niche business market, akin to the Dollar Tree and Dollar General of the retail world. I think there are limits to their expansion and growth with their current business model, and there are other carriers that are doing the general "airline thing" better.

 

[SeanD]

I really dont see how this model works anymore for them. A majority of what Allegiant profits goes right back into fixing their airplanes but hey...cheap ass tickets to Boise.

 

[FlyingAccountant]

I really dont see how this model works anymore for them. A majority of what Allegiant profits goes right back into fixing their airplanes but hey...cheap ass tickets to Boise.

Their yields must be trash. How much money can you make flying from the middle of nowhere Montana to Vegas?

 

[SeanD]

Their yields must be trash. How much money can you make flying from the middle of nowhere Montana to Vegas?

Judging by the slow growth of updating their fleet and below average pay for pilots Id say not much.

 

[BEEF SUPREME]

I'm still bummed I got the TBNT letter from them.


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[Murdoughnut]

Of note is Spirit has lower costs than Allegiant. Allegiant always had a niche business market, akin to the Dollar Tree and Dollar General of the retail world. I think there are limits to their expansion and growth with their current business model, and there are other carriers that are doing the general "airline thing" better.

It'll be interesting to see how they pan out in the transcon market, which I heard one of their network planners mention last week was a target with the new Airbus equipment.

Their yields must be trash. How much money can you make flying from the middle of nowhere Montana to Vegas?

The yields are hard to measure since, despite being low, they average $41 each way in fees. Then there's the revenue related to ancillary leisure bookings (rental cars, hotels)

 

[Der_Meister]

Their yields must be trash. How much money can you make flying from the middle of nowhere Montana to Vegas?

They are annually the airline with the one highest profit margins. The large majority of revenue is made from ancillary add on's and selling a vacation package and not just the airfare. I use to fly for them, not a bad company to work for over all. It had it's issues like any airline. The longer routes will be hard to for them to get into with their current out and back model that the currently run for their airplanes and crews.

 

[NovemberEcho]

How much money can you make flying from the middle of nowhere Montana to Vegas?

Plus the random mid point destination thrown in for free some times.

 

[Murdoughnut]

They are annually the airline with the one highest profit margins. The large majority of revenue is made from ancillary add on's and selling a vacation package and not just the airfare. I use to fly for them, not a bad company to work for over all. It had it's issues like any airline. The longer routes will be hard to for them to get into with their current out and back model that the currently run for their airplanes and crews.

I think the point of the article was to suggest that their profitability has come (partially) as a result of failing to reinvest their revenue in necessary expenses - expenses that will eventually catch up with them.

 

[Der_Meister]

I think the point of the article was to suggest that their profitability has come (partially) as a result of failing to reinvest their revenue in necessary expenses - expenses that will eventually catch up with them.

They spend quite a bit on trying to build systems from the ground up so that they can sell them to other company's. However many of those systems are horrible and not very user friendly. They try to save $ in the short term but end up spending quite a bit more long run instead of just buying off the shelf systems and applications.

 

[gotWXdagain]

Plus the random mid point destination thrown in for free some times.

MOT - LAS with a plane change in PVU?

 

[BEEF SUPREME]

MOT - LAS with a plane change in PVU?

I think he was referring to all the emergency diverts


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[ComplexHiAv8r]

I really dont see how this model works anymore for them. A majority of what Allegiant profits goes right back into fixing their airplanes but hey...cheap ass tickets to Boise.

With BOI now a SKW base maybe they will do LAS flights!!!


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[BEEF SUPREME]

With BOI now a SKW base maybe they will do LAS flights!!!


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How I imagine my first SKW flight to Vegas...



Oh lord, I'm already over it. "If I hear the lost wages joke ONE TIME!"


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[derg]

I'm not sure I see the "ZOMG! Vegas Flights!" zeal.

Lots of passenger issues, scarce food options, takes a month to get out of the airport to the van pickup and unless you've got a sufficient layover, you're going to be blowing $50-plus on dinner and watching everyone else have a drunken good time because you've got to be up at crack 'o dawn.

Don't get too excited.

 

[SeanD]

I think he was referring to all the emergency diverts


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They add a new Florida destination every week.

 

[gotWXdagain]

I think he was referring to all the emergency diverts


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So was I.

 

[SeanD]

I'm not sure I see the "ZOMG! Vegas Flights!" zeal.

Lots of passenger issues, scarce food options, takes a month to get out of the airport to the van pickup and unless you've got a sufficient layover, you're going to be blowing $50-plus on dinner and watching everyone else have a drunken good time because you've got to be up at crack 'o dawn.

Don't get too excited.

There was a pax fist fight on an AA flight to LAS lastnight actually.

 

[BEEF SUPREME]

I'm not sure I see the "ZOMG! Vegas Flights!" zeal.

Lots of passenger issues, scarce food options, takes a month to get out of the airport to the van pickup and unless you've got a sufficient layover, you're going to be blowing $50-plus on dinner and watching everyone else have a drunken good time because you've got to be up at crack 'o dawn.

Don't get too excited.

This one million times over.

When we flew into Henderson I always asked to be put at the Hampton Inn right by the airport. I could never figure out why a crew member would want to drive 30 min to an hour stuck in traffic, spend 35 minutes waiting in line to check into a hotel. Doubly so when people were smoking and there was an incessant racket from gambling machines.


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