Allegiant shows a willingness to think differently in early stages of Sun Country merger
During the post-pandemic years, when the viability of ultra-low cost carriers in the US came under intense scrutiny, niche players Allegiant Air and Sun Country Airlines stayed above the fray as they avoided direct competition with the country's largest operators.
Now that Allegiant has closed on its acquisition of Sun Country, it has opted to adopt portions of Sun Country's strategy, including a decision to give passengers complimentary drinks. Plans are also under way to debut Allegiant's version of a first class, which shows a willingness to adapt in a changing US marketplace.
Given these recent changes, the merger of Allegiant and Sun Country should be one of the more interesting tie-ups to watch, and it reflects a certain openness at Allegiant to think differently.
Summary
- Allegiant and Sun Country avoided intense post-pandemic ULCC competition by focusing on niche networks rather than battling the largest US airlines.
- Allegiant has completed its acquisition of Sun Country, creating a notable tie-up in the US low-cost sector.
- Allegiant launched its first-ever OTA distribution deal via a one-year agreement with Expedia, leveraging Sun Country’s experience with external channels.
- Early results show about 3% of Allegiant bookings coming through Expedia, with more than half from new-to-Allegiant customers.
- Allegiant will introduce complimentary onboard beverages, adopting a Sun Country staple despite a modest near-term ancillary revenue trade-off.
- Allegiant plans to add a first-class product in 2027 on new 737 MAX deliveries, building on the success of its Extra legroom offering.
Allegiant alters its distribution strategy with new Expedia deal
On 10-Jul-2026 Allegiant launched a one-year distribution agreement with Expedia - a first for the company, but Sun Country has worked with online distributors.
"We intentionally launched with a simplified airfare-only offering, and over time expect to enhance the integration with additional products and capabilities," said the Chief Commercial Officer, Drew Wells, during a recent discussion with analysts and investors.
He explained that "...in the past Sun Country filings they've noted approximately 20% of bookings from external distribution, part of that coming from Expedia".
Since Allegiant launched its partnership with Expedia, broadly 3% of its bookings have stemmed from the new agreement, with more than half new customers to Allegiant, Mr Wells observed.
Beyond the near-term benefits to bookings, the Expedia channel helps "...address one of the unique challenges of operating such a broad network by providing a scalable way to build awareness", and accelerate demand in newer markets, he explained.
Allegiant operates more than 550 routes in 120 cities.
Even though Sun Country has an agreement with Expedia, Mr Wells noted that Allegiant had started the process "well before" the combination with Sun Country.
After some healthy debates, Allegiant opts to offer passengers free in-flight beverages
Allegiant has also opted to offer free complimentary onboard beverages, which is a mainstay on Sun Country.
Pointing to some heathy debates as the Allegiant-Sun Country integration continues, Mr Wells said both airlines are interested in the customer experience. "As we started talking, it became a no-brainer that we go down this path and explore and match the Sun Country offering on complimentary in-flight beverages."
He did acknowledge that the shift would post a mild near-term challenge to ancillary revenue; Allegiant still does expect to grow its ancillary revenue per passenger during the third quarter, and Mr Wells said: "I don't think it's a material headwind."
A first class is coming to Allegiant after a successful roll-out of its extra legroom product
Recognising what appears to be a permanent passenger preference for premium products, Allegiant is preparing to launch its version of first class in 2027, featuring eight two-by-two seats in the front of the cabin, with a 5 inch recline and a 37 inch pitch.
New 737-MAX deliveries next year will feature the new first class.
In some ways, the deployment mirrors the roll-out of Allegiant Extra in 2018 and 2019 as a test across four aircraft: the 'Extra' offering includes more legroom and priority status for check-in and boarding.
Extra has grown during the last two-to-three years, and is available on a significant portion of the company's equipment. Mr Wells said that the decision to offer a distinct first class was a couple of years in the making, generating from favourable results from the extended legroom offering.
The success of Extra, and repeat customers within the extended legroom product, opened the door for Allegiant to explore whether more value options were available to the customers.
Noting that Allegiant would offer more of the Allegiant First economics in the future, Mr Wells stated that the decision to offer a dedicated first class, "really came down to the success we saw in Allegiant Extra and the customer strength profile".
Allegiant CEO Greg Anderson noted that approximately 70% of the company's customers are repeat travellers, and given the success of Extra, it's a safe bet going further upscale should provide additional upside to Allegiant.
Optimising Allegiant and Sun Country's networks should kick-in during 2027
Allegiant's model is based on operating at peak times "...and reducing capacity on days that do not meet our financial hurdles," said Mr Anderson.
For the softer third quarter, capacity for the combined entity is scheduled to drop 5.5% year-over-year. The company forecasts earnings per share in 2026 of USD6, which is not far below Delta Air Lines' projections of USD6.50 - 7.5.
"As we look to start optimising our combined networks into 2027, there is tremendous potential," said Mr Wells. Allegiant's specialty is connecting underserved small and mid-sized communities to leisure destinations, while "Sun Country brings a powerful position in Minneapolis St. Paul", creating a broader network that is more flexible and resilient.
Offering insight into that resiliency, Mr Anderson commented that combined, "Allegiant and Sun Country are the number one or number two carriers in roughly 95% of our originating markets".
Even combined, the two airlines don't venture too far into the territory of large US airlines, which - combined with their ability to exploit high peak demand without trying to push high aircraft utilisation year-round - makes the combination an interesting one to watch.
See related CAPA - Centre for Aviation report: Allegiant and Sun Country tap their unique strengths to jumpstart US low cost consolidation
But at the same time, the combined entity still represented just a fraction - broadly 2.1% - of US domestic departing frequencies in Jun-2026.
US airlines ranked by domestic departing frequencies for Jun-2026
Source: CAPA - Centre for Aviation.
What that means is: even as they are building relative scale, Allegiant and Sun Country are not aspiring to shift their focus to compete with large legacy airlines.
And it's unlikely that a major pivot is in store for Minneapolis, where Sun Country and the airport's largest airline, Delta, have peacefully co-existed for quite some time.
Minneapolis-St Paul International: airport system departing seats by airline, w/c 10-Aug-2026
Source: CAPA - Centre for Aviation and OAG.
Allegiant and Sun Country stick to proven formula in the early days of their merger
The merger between Allegiant and Sun Country is the first in the US low cost space.
But in the early days of the integration, there are no drastic plans to veer from what distinguished the two airlines from other low cost operators - avoiding direct competition with industry giants that have become fierce competitors.
📊 Expert Analysis You Can Trust
This analysis was composed by CAPA's global team of expert analysts with decades of combined experience in aviation and travel industry intelligence. Our independent, data-driven insights help industry leaders make informed decisions in an increasingly complex market.
We value your perspective
Have feedback on this analysis? Questions about our methodology? Suggestions for future topics? We'd love to hear from you.