Full-Speed Ahead For ULCC Allegiant Air

In addition to robust growth on domestic routes this year, the US carrier is eying entering international markets later this decade.

Credit: Rob Finlayson

Fast-growing ULCC Allegiant Air has no plans to catch its breath, projecting it will operate 19-23% more capacity in 2022 versus 2019.

The Las Vegas-based carrier, which specializes in leisure routes that are generally not served by other carriers, added 13 new routes in the 2021 fourth quarter, bringing its total to 608 routes connecting 133 cities. It has plans to add nine more routes in the current quarter and another nine in the 2022 second quarter.

New routes accounted for some 10% of Allegiant’s capacity in the 2021 fourth quarter and will account for 12% of its capacity in the 2022 first quarter. 

Allegiant increased capacity 8.1% versus 2019 pre-pandemic levels for the full-year 2021. “I don't think any [airline in the US] is growing as much as we are,” CEO Maurice Gallagher told analysts on a Feb. 2 earnings call to discuss Allegiant’s $10.7 million 2021 net profit. “We're in a growth mode. It's just a question of how we do it … I'm bullish. Certainly, in the second half of [2022], if not even in the second quarter, we'll be in good shape [regarding COVID-19]. Even March should be good.”

Gallagher said the opportunities for Allegiant to grow are vast. The carrier has a list of domestic-route opportunities exceeding 1,400 routes, 80% of which are currently not served by any airline. Gallagher said the 1,400 potential routes “represent more than 10 years of growth.”

The carrier also believes entering international markets is on the horizon as it begins taking delivery of 50 Boeing 737 MAX aircraft in mid-2023. Gallagher predicted Allegiant, which is seeking regulatory approval for an antitrust-immunized cross-border joint venture with Mexico’s Viva Aerobus, will “enter international markets in the next few years.”

Allegiant is currently an all-Airbus A320 family operator. It will end 2022 with 127 A320 family aircraft, a gain of 14 over the end of 2021. All of the arriving aircraft are A320s with 186 seats in a single-class configuration.

Commenting on Allegiant reaching its 20th anniversary—the ULCC was founded by Gallagher in 2002—the CEO said: “We, early on, understood we could not copy existing carriers and attempt to beat them at their game. So, in early 2002, we began experimenting and implementing this model you have come to appreciate and admire.” He noted that 75% of Allegiant’s current routes are non-competitive.

Senior VP of revenue and planning Drew Wells said the carrier’s business model protects it from fluctuations in demand throughout the year. The carrier operates 2X-weekly as a baseline on most of its routes and increases frequencies during peak periods, such as in March when American schools are on spring break.

“It’s far easier when you build your business model to operate twice a week, and have the ability to scale up when demand dictates, than the opposite business model built around daily service and trying to scale that down [when demand drops], which doesn't work very well. So, it's just part and parcel of who we are and core to this business model to cater to less than daily routes wherever no [other airlines are] paying attention.”