Everett, Wash.
Published: Tuesday, August 5, 2008

Allegiant loved in some cities, but not all

The airline, which wants to fly from Paine Field, has angered some cities by pulling out of new sites quickly when it wasn't making money.

By Jerry Cornfield and David Chircop
Herald Writers

 Allegiant Air flies where it can best fill planes and make money and considers Snohomish County's Paine Field a place it can do both.

History shows that if the airline does arrive and profits don't, the company will move swiftly to end service and pull out.

"If we make a profit, we stay. If we're making a loss, and we can't see how we'll ever make a profit, then we leave," said Robert Ashcroft, vice president of planning for the Las Vegas-based airline.

"That's the only criteria that make any sense, if you think about it," he said.

Allegiant Air's resume is a matter of community debate as the airline continues negotiating with Snohomish County on an agreement to allow the start of passenger flights between Paine Field and Las Vegas.

If a deal is reached, the low-cost airline would be the first provider of commercial jet service from the county-owned airport.

Opponents of commercial air service at Paine Field warn against signing on with this company because, if business isn't good, it may depart quickly, leaving a wake of resentment.

"Don't let Allegiant Airlines exploit Everett and South Snohomish County the way they do other communities," blared a widely circulated e-mail July 23.

A company response two days later said decisions to curb service and withdraw from some airports was to ensure profitability. Allegiant Air and Southwest Airlines are the only two airlines reporting profits this year.

About 61 airports are served by the airline, which is busiest at its locations in Bellingham; Las Vegas; Orlando, Fla.; Ft. Lauderdale, Fla.; Tampa Bay, Fla.; and Phoenix-Mesa, Ariz.

When it doesn't work out

Where Allegiant curtails its presence, airport operators generally understand the reason.

The discount airline early this year canceled flights from Kinston, N.C., to Orlando, Fla., despite airplanes filled with passengers.

The twice-weekly run from Kinston Regional Airport -- a decommissioned military airfield in the heart of Eastern North Carolina -- was popular for the year it was in service.

But the market apparently wasn't profitable enough for Allegiant, which also sells hotel reservations and vacation packages for destinations such as Disney World, said Don Howard, the airport's operations director.

"We put plenty of people on the planes. That wasn't an issue," Howard said.

The airport paid $60,000 to advertise the new run. It seemed to work. Flights were 90 percent full on average and passengers drove from as far as two hours away.

The problem, Howard said, was passengers didn't book enough cars, hotels and Disney tickets. Despite the disappointment, the airline was well-run, has good airplanes and its executives are easy to work with, he said.

Lynne Douglas, director of marketing for Columbia Metropolitan Airport in Columbia, S.C., said her airport also helped Allegiant with advertising. Unlike Kinston, Columbia wasn't able to attract as many passengers.

After operating there for less than two months in 2007, the airline canceled a daily departure from Columbia to St. Petersburg, Fla.

Three-quarters of the seats on Allegiant's jets were booked for the first two weeks, but the number of passengers dropped to less than half occupancy before the airline pulled up stakes in early February.

Douglas said Allegiant should have done a better job promoting itself with civic groups and made sure there was enough demand to sustain the run.

"It's not all about high-priced ads," Douglas said. "It's about getting out in the community."

While airlines leave the airport from time to time, Douglas said she isn't aware of another airline going away as quickly as Allegiant.

In Worcester, Mass., political leaders were enraged when Allegiant left the regional airport in September 2006, nine months into what city officials believed would be at least five years of service.

Then Mayor Tim Murray blasted Allegiant's chief executive officer Maurice Gallagher for the decision.

"This is not the type of guy we want to do business with," he said in comments reported in the Worcester Telegram & Gazette. "This is an example of the charlatans that exist in the corporate world."

Worcester is the state's second largest city and lies about 45 miles west of Boston. The city-run airport had no commercial airline service when talks with Allegiant began. That lasted a year before flights started to Orlando, Fla., in December 2005.

In those talks, city officials said they made clear it wanted a five-year commitment and provided enticements, including use of a federal grant for marketing. Flights were filled to 80 percent capacity or greater.

Murray, now the state's lieutenant governor, said he stands by his comments then and offered this advice to Snohomish County leaders: "Dot your I's and cross your T's when dealing with Mr. Gallagher."

Allegiant's Ashcroft said it was a poor decision to go to the airport and one made before he joined the company.

Delta, American and U.S. Airways served the airport in 2000 and had left soon after. No commercial jet service flies out of the airport today.

"Our service was quickly, and obviously, unprofitable," he said.

In Mississippi, after a short run last year, Allegiant cited rising fuel costs for its decision to cancel two flights per week between the Mississippi coast and Las Vegas.

"The economics just didn't work out for them," said Jim Pitts, director of business development with the Gulfport-Biloxi International Airport.

Given surging fuel expenses, Pitts said it's not just Allegiant that is cutting less profitable runs.

American Airlines Eagle is eliminating service from Gulfport to Chicago and Continental Airlines is dropping flights between the beachfront city and Houston.

'An excellent reference'

Allegiant still runs three weekly round-trip flights between Gulfport and Orlando.

Jeremiah Gerald, the airport's air service development manager, said Allegiant is anything but a fly-by-night operation.

"These guys have a track record," he said. "They've been in the industry for many years. They're professional and straightforward. They'll ask for airports to be creative, but that's smart for them."

Idaho Falls airport director Len Nelson is unequivocal when he describes the firm as "cost-conscious."

"They would like to come into your community and not have to pay anything except for fuel," he said. "I think they bring a valuable thing to your community."

Delta, Northwest and United operated at the airport when Allegiant arrived in September 2006.

Allegiant flights leave for Las Vegas each Monday and Friday at noon and are running more than 80 percent full. He said the company is talking of adding a third flight to Las Vegas and new service to Mesa, Ariz.

At the Tri-Cities airport in Eastern Washington, Allegiant began service in April 2006 with two flights a week to Las Vegas. In the ensuing months, the number increased to five and is now down to four and could drop to two in the fall months, airport director Jim Morasch said.

He said company officials came looking for a deal and then signed on to the same arrangement offered existing airlines Horizon and Skywest.

In Medford, Ore., Allegiant employees work off a laptop on a ticket counter that they rent on an hourly basis. Planes are "very full" and the workers are top-notch, said Bern Case, director of the Rogue Valley International-Medford Airport.

"They've got really positive people working for them, I haven't heard any complaints," he said. "If you were employing this company, I'd give them an excellent reference."

Medford airport helps promote flights but doesn't pay subsidies to the company, he said.

"We do not ask for, nor do we accept, so-called 'revenue guarantees,'" Ashcroft said. "Instead, we ask the airports keep their costs low -- we figure it's up to us to find sufficient passenger revenue."

Welcomed in Wyoming

At Natrona County International Airport in Casper, Wyo., where Vice President Dick Cheney flies home on Air Force Two, people are looking forward to Allegiant Air's arrival.

After talking with local officials for a year, the airline last month announced that it would offer two flights a week to Las Vegas starting in September.

The announcement was made at a press conference, complete with Allegiant Air's own showgirl, who frequently turns out for promotional events.

The airport, working with the Casper Area Economic Development Alliance, agreed to supply Allegiant with up to $50,000 worth of ground equipment, including cars, an escalator, a baggage cart and a conveyer.

Cindy Breipohl, who works in the Natrona County International Airport manager's office, said she suspects a lot of folks this winter will take trips to Las Vegas, where the average high temperature in December is 58 degrees -- more than 20 degrees warmer than Casper.

"We're getting a lot -- a lot -- of phone calls," she said.

Reporter Jerry Cornfield: 360-352-8623 or jcornfield@heraldnet.com.



Allegiant Air

Founded 1997

Headquarters: Las Vegas

CEO: Maurice Gallagher

Number of airports: 61

Number of routes: 100

2007 passengers: 3.3 million

2007 Revenues: $361 million

2007 Profits: $32 million

History: Mitch Allee founded the company in 1997 and it received FAA certification in 1998. In 2000, Allee filed for bankruptcy protection. Two years later, Allegiant emerged from bankruptcy with a new owner, Maurice Gallagher, and a different business model. The company has been consistently profitable since 2003.
© 2009The Daily Herald Co., Everett, WA