LAXintl From United States of America, joined May 2000, 22072 posts, RR: 51 Reply 1, posted (11 months 3 weeks 1 day 16 hours ago) and read 3491 times:
Not to worry.
ASM's grew by whopping 25.3% yoy. Overall they absorbed the added capacity quite well with LF still respectable 89.2%.
From the desert to the sea, to all of Southern California
azstar From United States of America, joined May 2005, 541 posts, RR: 0 Reply 2, posted (11 months 3 weeks 1 day 16 hours ago) and read 3491 times:
Their business model is intriguing. Since they fly to leisure destinations to/from pretty small communites, once everyone in the community has taken their vacation trip, what's left? How many people can fly from Duluth to Las Vegas multiple times in a year? After the market has tapped out, what's next? Can they sustain their routes long term, or will they be forced to keep finding new routes at the expense of the old ones?
HiFlyerAS From United States of America, joined Jul 2011, 607 posts, RR: 1 Reply 3, posted (11 months 3 weeks 1 day 16 hours ago) and read 3446 times:
Quoting azstar (Reply 2): n they sustain their routes long term, or will they be forced to keep finding new routes at the expense of the old ones?
Excellent thought-train, Azstar. You're spot-on...and maybe this has something to do with G4's frequent shuffling of routes. As soon as one starts to show signs of slowing down, it's adios and on to look for fresh markets?
CIDFlyer From United States of America, joined Apr 2005, 1991 posts, RR: 3 Reply 5, posted (11 months 3 weeks 1 day 15 hours ago) and read 3266 times:
Quoting azstar (Reply 2): Their business model is intriguing. Since they fly to leisure destinations to/from pretty small communites, once everyone in the community has taken their vacation trip, what's left? How many people can fly from Duluth to Las Vegas multiple times in a year? After the market has tapped out, what's next? Can they sustain their routes long term, or will they be forced to keep finding new routes at the expense of the old ones?
I don't know, G4 has been here at CID for 8 years and has done pretty well. That can also be applied to several of their other markets too. There are a lot of people who go to Vegas on a yearly basis. Also to Arizona and Florida as well. Some of the markets even produce a small amount of people who trek back to the smaller cities as well to visit families, etc.
MaverickM11 From United States of America, joined Apr 2000, 15742 posts, RR: 48 Reply 6, posted (11 months 3 weeks 1 day 14 hours ago) and read 3107 times:
Quoting azstar (Reply 2): Since they fly to leisure destinations to/from pretty small communites, once everyone in the community has taken their vacation trip, what's left?
That's the very finite limit of the model. G4 has done a tremendous job and they have many further opportunities, but they're more limited than say, plugging CID into DFW and flying those passengers to business and leisure destinations day in, day out, any time they want as long as they're willing to pay a premium.
I'm curious to see how Hawaii will pan out, since Hawaii hotels are much more expensive than LAS/PIE/AZA for example, and therefore harder to stimulate demand with not-that-low fares. And those 757s have a lot of seats and burn a lot of fuel.
AWACSooner From United States of America, joined Jan 2008, 1422 posts, RR: 1 Reply 7, posted (11 months 3 weeks 1 day 13 hours ago) and read 2999 times:
I wonder if their carry-on charges will now add to their misery??
Nutsaboutplanes From United States of America, joined Jul 2010, 319 posts, RR: 6 Reply 8, posted (11 months 3 weeks 1 day 13 hours ago) and read 2938 times:
I dont think that this is a big deal.....keep in mund that for the first time in a long time, airlines are seeing signs of a softening revenue environment and there is some very real concern about post-summer demand. G4 will do what it has always done and if there is a downturn, their low cost structure will allow them to weather the storm rather well.
US Airways, Alaska Airlines, Northwest Airlines, America West Airlines, USAFR
FATFlyer From United States of America, joined May 2001, 5668 posts, RR: 17 Reply 9, posted (11 months 3 weeks 1 day 13 hours ago) and read 2913 times:
The presentation has lots of info and charts. Some of the charts include comparisons of numbers to Spirit, Southwest, JetBlue and Alaska.
Slide #27 shows the number of new routes/routes canceled per quarter in the last 3 years.
G4's $369 million in unrestricted cash vs only $144 million in total debt is still amazing to see.
Quoting azstar (Reply 2): Their business model is intriguing. Since they fly to leisure destinations to/from pretty small communites, once everyone in the community has taken their vacation trip, what's left? How many people can fly from Duluth to Las Vegas multiple times in a year? After the market has tapped out, what's next? Can they sustain their routes long term, or will they be forced to keep finding new routes at the expense of the old ones?
They've discussed some of that with investors and analysts over the years. Back in 2010 (per slide 17 in this presentation), the results of a survey they had conducted of passengers showed repeat customers broke out as:
Allegiant flights by passengers in 2 years prior to survey:
1 flight in 2 years = 26%
2 flights in 2 years = 20%
3 flights in 2 years = 13%
4 flights in 2 years = 12%
5 flights in 2 years = 8%
6 or more Allegiant flights in 2 years = 21% http://files.shareholder.com/downloa...2010_-_Management_Presentation.pdf
[Edited 2012-06-06 21:35:50]
"Travel is fatal to prejudice, bigotry, and narrow-mindedness." - Mark Twain
dlramp4life From United States of America, joined Jun 2011, 704 posts, RR: 1 Reply 10, posted (11 months 3 weeks 1 day 8 hours ago) and read 2669 times:
Quoting CIDFlyer (Reply 5): I don't know, G4 has been here at CID for 8 years and has done pretty well.
They have also done pretty well in cities like FAR,FSD,RFD,SGF,and MSO as well as CID. During the year these are the flights that are always full or close to it wether it is winter visitors or college kids on spring break. Some of the succesful routes like CID and the others I posted above have alot to do with how close they are to a major city where a good chunch of traffic will come from.
Worked/Planned Loads on: CRJ-2,CRJ-7,CRJ-9,737-4,737-7,737-8,757-2,757-3,767-3,A319,A320,A330,MD83,MD90
flyinryan99 From United States of America, joined Feb 2001, 1920 posts, RR: 11 Reply 12, posted (11 months 3 weeks 1 day 4 hours ago) and read 2416 times:
Quoting LAXintl (Reply 1): ASM's grew by whopping 25.3% yoy. Overall they absorbed the added capacity quite well with LF still respectable 89.2%.
Also, Easter was really late last year which means that travel leaked over into May which probably inflated a lot of numbers. This year, Easter had no affect on travel in May. This is nothing to worry about with them. I sometimes wonder if 90% plus load factors are actually turning passengers away. I understand they are trying to get as many passengers on as they can, but at some point, you are turning customers away. I wonder if they tried to push higher fares also...just thoughts..
MLI717fan From United States of America, joined Oct 2006, 239 posts, RR: 0 Reply 13, posted (11 months 3 weeks 1 day 3 hours ago) and read 2342 times:
Quoting azstar (Reply 2): How many people can fly from Duluth to Las Vegas multiple times in a year? After the market has tapped out, what's next? Can they sustain their routes long term, or will they be forced to keep finding new routes at the expense of the old ones?
There are also people who fly on G4 and then drive to wherever they are going. Just last month, I flew MLI-SFB and drove up to JAX because at $221 RT, all fees included, it was less than half the price of $475 to fly MLI-JAX. I know people that have flown MLI-LAS and then driven to CA, or MLI-PIE and then driven to RSW. I read somewhere that when G4 starts a route, they dramatically increase the number of passengers traveling between city pairs, and I believe it. During some parts of the year, I've seen MLI-AZA run 5x weekly. It's amazing that an airline with no connection options, running 150 (or 166 now) seat passenger jets can make that work!
Also, It'd be interesting to see, but I'd bet that the majority of G4 routes have stuck since their introduction (if you don't count the SFB -> MCO -> SFB fiasco).
AVLAirlineFreq From United States of America, joined Jun 2008, 788 posts, RR: 0 Reply 15, posted (11 months 3 weeks 1 day 3 hours ago) and read 2285 times:
HiFlyerAS From United States of America, joined Jul 2011, 607 posts, RR: 1 Reply 16, posted (11 months 3 weeks 1 day 3 hours ago) and read 2252 times:
Quoting flyinryan99 (Reply 12): Also, Easter was really late last year which means that travel leaked over into May which probably inflated a lot of numbers.
Saw in press releases this morning that both WN and HA load factors were down in May as well. Perhaps you're on to something.
ScottB From United States of America, joined Jul 2000, 6365 posts, RR: 34 Reply 17, posted (11 months 3 weeks 1 day 3 hours ago) and read 2234 times:
Quoting CIDFlyer (Reply 5): Some of the markets even produce a small amount of people who trek back to the smaller cities as well to visit families, etc.
These aren't particularly good customers for G4, though; passengers traveling to the small cities aren't booking hotel rooms/rental cars/tours/attraction tickets through the website, and that's basically where Allegiant makes its profit margin.
Quoting FATFlyer (Reply 9): the results of a survey they had conducted of passengers showed repeat customers broke out as:
Allegiant flights by passengers in 2 years prior to survey
Alluding to what I mentioned above -- I wonder if the really frequent customers are less valuable than the ones who traveled once or twice over two years. The frequent customers in my estimation are probably less likely to book ancillary items and probably learn how to not get dinged with G4's sundry fees.
MLI717fan From United States of America, joined Oct 2006, 239 posts, RR: 0 Reply 18, posted (11 months 3 weeks 1 day 2 hours ago) and read 2103 times:
Quoting ScottB (Reply 17): These aren't particularly good customers for G4, though; passengers traveling to the small cities aren't booking hotel rooms/rental cars/tours/attraction tickets through the website, and that's basically where Allegiant makes its profit margin.
Yes and no.. On my last G4 flight, I was next to a grandma who decided to fly to visit her new grandson, and she told me she paid $320 one-way for her flight, and hadn't booked her return flight yet. I'm sure G4 made a pretty penny off of her, and they probably did too on her return. With LFs in the 90% range, there are a bunch of people who are willing to pay a chunk of change for a last minute flight.
FATFlyer From United States of America, joined May 2001, 5668 posts, RR: 17 Reply 19, posted (11 months 3 weeks 21 hours ago) and read 1864 times:
I was thinking about these results this morning and something besides the mention of spring break being late occurred to me.
They are increasing the number of seats in the MDs. But the increase is not enough to warrant cancelling a frequency on most routes. It does give them capacity though to handle more passengers at peak times without adding another flight.
I would not be surprised to see year over year LFs slightly lower in 2012 as they increase seat capacity thru the end of the year and work to fill them back up.
Quoting ScottB (Reply 17): These aren't particularly good customers for G4, though; passengers traveling to the small cities aren't booking hotel rooms/rental cars/tours/attraction tickets through the website, and that's basically where Allegiant makes its profit margin.
Quoting ScottB (Reply 17): Alluding to what I mentioned above -- I wonder if the really frequent customers are less valuable than the ones who traveled once or twice over two years. The frequent customers in my estimation are probably less likely to book ancillary items and probably learn how to not get dinged with G4's sundry fees.
If you look at their website they do sell hotels, rental cars, etc in many of the small cities. For example, they already sell rooms/cars smaller areas like IDA, COS, BIL, MSO, etc. Those are offered to the reverse travel out of the large destinations and does get booked.
It is likely that more frequent travellers on Allegiant know which fees they are willing to pay or how to not pay them.
But the brand recognition with those more frequent airline travellers may soon get leveraged. G4 has been discussing new initiatives coming in the near future that will be taking advantage of that brand recognition and very well could draw travellers into spending more money with Allegiant.
First, Allegiant considers itself a travel company not an airline. So they are preparing to expand the web site into a travel portal, booking rooms and other travel products even in cities they do not fly to. Yes that puts them in competition with Expedia, Travelocity, etc. But selling land only packages (for example) increases revenue. Brand recognition and pricing will be two keys there.
Second, they have been working on a frequent booker program. No not a mileage program but rather a program that rewards based on how much is booked thru Allegiant. So a traveller could earn credits by booking land-only hotels (once offered), etc thru Allegiant even if they bought a ticket on a different airline. I can see that leading to situations like where someone uses miles on say UA to fly to Hawaii but then buys rooms/cars thru G4's website.
I'm waiting to see how those work out for them.
"Travel is fatal to prejudice, bigotry, and narrow-mindedness." - Mark Twain
n471wn From United States of America, joined Dec 2003, 1186 posts, RR: 1 Reply 20, posted (11 months 3 weeks 21 hours ago) and read 1803 times:
SWA did not have a good month either.......I am sure the weakness is on the Air Tran side but combined the two carriers were down 2% in RPM's.
Time for SWA to reduce fares to reflect the lower price of crude oil----they are at risk of losing the advantage of being the carrier that most people think of first when they think "low cost"
srbmod From United States of America, joined Mar 2001, 16888 posts, RR: 51 Reply 21, posted (11 months 3 weeks 18 hours ago) and read 1663 times:
What helps them is their less than daily service to their markets. In addition, places like Las Vegas, Los Angeles, Phoenix and Orlando (and soon Hawaii) are year-round destinations, so they really don't see as huge of a drop (although G4 does offer some routes on a seasonal basis). They do drop markets at the drop of a hat if they don't perform to their expectations (Allegiant has left markets in which they had load factors other airlines would kill for because they weren't up to snuff and were dragging down the overall load factor for the airline.) and that does make some passengers leery of booking with them.
One thing to also factor is that they're not just attracting passenger from those small towns, they're attracting passengers from further out from those towns. One example is BLI, which has been marketed by several airlines past and present as an alternative airport to YVR, especially those in southern B.C. close to the US border.
CIDFlyer From United States of America, joined Apr 2005, 1991 posts, RR: 3 Reply 23, posted (11 months 3 weeks 16 hours ago) and read 1460 times:
Quoting ScottB (Reply 17):
These aren't particularly good customers for G4, though; passengers traveling to the small cities aren't booking hotel rooms/rental cars/tours/attraction tickets through the website, and that's basically where Allegiant makes its profit margin.
not their desired customer I know, but those passengers are just the icing on the cake, ones that can fill up any remaining seats.
Quoting MLI717fan (Reply 13):
There are also people who fly on G4 and then drive to wherever they are going. Just last month, I flew MLI-SFB and drove up to JAX because at $221 RT, all fees included, it was less than half the price of $475 to fly MLI-JAX. I know people that have flown MLI-LAS and then driven to CA, or MLI-PIE and then driven to RSW. I read somewhere that when G4 starts a route, they dramatically increase the number of passengers traveling between city pairs, and I believe it. During some parts of the year, I've seen MLI-AZA run 5x weekly. It's amazing that an airline with no connection options, running 150 (or 166 now) seat passenger jets can make that work!
Also, It'd be interesting to see, but I'd bet that the majority of G4 routes have stuck since their introduction (if you don't count the SFB -> MCO -> SFB fiasco).
I've done this myself before too. A few years back my cousin was getting married in Los Angeles, and for a family of four it was cheaper to fly CID-LAS rent a car and drive down to LA. Than it was to fly to LA. We enjoyed the drive down to LA so much we've done that a couple times since. Ive been on flights from CID-PIE where people were renting cars and going on down to Ft Myers, Miami, etc.
hatbutton From United States of America, joined Mar 2005, 1453 posts, RR: 15 Reply 24, posted (11 months 3 weeks 16 hours ago) and read 1424 times:
Quoting srbmod (Reply 21): What helps them is their less than daily service to their markets.
I think this is the big point that hasn't been made clearly up until this post.
Sure, people who live in these small communities may only fly once a year on G4. But it's not like G4 is flying 2x daily to these cities either. They're going 2x weekly in most cases. So they don't need to get everyone in the small cities to fly multiple times a year to fill their flights because they are operating 104 round trips annually as opposed to 728 if they were to go 2x daily. 104 flights isn't a whole lot to fill up for an entire year for a small community. It's almost like they're a charter airline since they can focus on a smaller number of frequencies in each market to sell seats on.
25 HiFlyerAS: Which people find out when there's a problem such a mechanical or weather delay. You're at the mercy of that one flight per week and you wait until t
26 RWA380: I have lived in only 1 G4 city during the time they served it, and that was RDM, bad example now as G4 is now leaving, but what I noticed when they d
27 HiFlyerAS: I think you've hit on the appeal of G4. Local pride. They go into a small city that doesn't have jet service but only commuters to hub cities. We're
Sponsor Message: 
From United States of America, joined Jul 2011, 607 posts, 
Printer friendly format 
