Underserved Markets: A Strategic Approach
Starting off, I’d like to bring your attention to one of Allegiant Air’s key strategies: targeting underserved markets. Now, what does this mean exactly? In the airline industry, most high-traffic routes are dominated by major airlines. They’ve cornered the market on flights between large, bustling cities. This leaves a lot of smaller, less popular destinations without much coverage.
Allegiant Air has recognized this gap in the market and has strategically positioned itself to serve these overlooked areas. They’ve focused their operations on connecting small-to-medium sized cities across America, providing a vital travel lifeline.
Serving smaller markets means less competition, which equates to greater pricing control for Allegiant Air. They’re not forced to lower prices substantially to attract passengers. Instead, they can offer reasonable yet competitive rates that appeal to their specific demographic.
Additionally, Allegiant Air also operates on a point-to-point system. This means they don’t work with hub airports, like many other airlines do. They’re skirting the unnecessary cost of maintaining operations at these hub locations.
Let’s pause for a moment to look at the numbers. In a recent survey, roughly 80% of Allegiant’s routes had no other direct competition. This data underscores just how strategically important it is for Allegiant to tap into these underserved markets.
Below is a snapshot of the route scenario:
| Route Type | % of Allegiant’s routes |
|---|---|
| No Direct Competitor | 80% |
Understanding Allegiant Air’s focus on underserved markets helps shed light on their affordable pricing. It’s clear that this strategy is integral to their ability to keep prices low without compromising on service quality. But the story doesn’t stop here. There’s still more to discover about Allegiant’s unique operating model. So stick around, as we navigate further into this intriguing airline’s strategies.
Less Frequent Flights, More Savings
Yet another feather in Allegiant Air’s cap is the strategy of running less frequent flights. Now, this might seem counterintuitive at first – you’d think more flights mean more business. But here’s how that plays to their cost-saving advantage.
Unlike major airlines that offer multiple daily flights between cities, Allegiant typically schedules only a few flights per week from each of its destinations. They’re essentially operating on the concept of demand over frequency. This not only aids in reducing operations costs but also helps in perfecting a lean business model, ultimately passing on the savings to their customers.
Let’s break this down even further. By reducing the frequency of flights, Allegiant minimizes:
- Ground time at airports
- The need for standby planes
- Large-scale staffing and maintenance costs
Speaking in numbers, below is a comparison of weekly flights from Las Vegas (LAS) to Fort Lauderdale (FLL) and Grand Rapids (GRR) by Allegiant versus major airlines for the week of May 10, 2021.
| Airline | LAS to FLL | LAS to GRR |
|---|---|---|
| Allegiant | 2 | 3 |
| Delta | 21 | 14 |
| Southwest | 28 | 0 |
As seen, Allegiant’s policy of reducing flight frequency helps maintain low operational costs while fulfilling the market demand. This ascertains a level of price control that traditional airlines may not have.
I’d also like to shed light on a side benefit of this approach. Less frequent flights mean less stress on the fleet. This could potentially contribute to the longevity and robust health of their aircraft, further keeping the maintenance and repair costs in check.
Unbundling and Charging for Extras
At its core, Allegiant Air follows an ultra-low-cost carrier (ULCC) model. This approach is perceptively crafted, enabling the company to offer baseline low fares. One distinctive factor is the unbundling of services. Yes, you heard that right! Unbundling, in simple terms, means separating costs.
Instead of including everything under the ticket price, Allegiant Air breaks down the services it offers. Each item such as checked baggage, seat reservation, onboard meals, and even the ability to print your boarding pass at the airport, is charged separately. By doing this, it provides consumers the choice to pay only for what they need or want. It’s a neat little trick to keep the base ticket price low, thereby attracting price-sensitive customers.
Let me put this into perspective through an example: Airline A includes in-flight meals and baggage in every ticket, costing say, $100. Allegiant Air, on the other hand, strips these extras down and lets you ‘build-your-package’. Perhaps your ticket is only $60, but that doesn’t include a seat or any baggage.
If you don’t want a pre-allocated seat and just have a backpack for the ride – the ticket stays at $60. On the other hand, if you want to select your specific seat and need to check-in your suitcase that is too big for the overhead locker – you would add the cost of those services to your base ticket price.
This unbundled approach, combined with charging for extras, is a strategic move tailored to meet the demands of selective consumers. It enables price customization based on individual needs and desires, rewarding those travellers who are happy to travel light and aren’t too fussed about where they sit.
On a closing note, it’s essential to realize that these minimalistic tickets are part of the reason why Allegiant Air can offer such competitive pricing. Although this strategy may sound complicated, it’s the beauty of smart business conduct. The spectrum of customer preferences is broad and diverse, and Allegiant Air leverages this fact to their benefit, while remaining affordable for a wide array of passengers.
The Allegiant Air Fleet: Efficiency and Cost Management
What’s a vital strategy behind Allegiant Air’s ability to keep prices low? It’s about an efficient and cost-effective fleet maintenance. Allegiant Air primarily operates a fleet of old but fuel-efficient planes, namely the Airbus A320 family and MD-80 series.
With an average age of 22 years, Allegiant’s fleet is among the oldest in the industry. But don’t mistake age for inefficiency. By choosing older aircraft, Allegiant sidesteps the high purchase and lease costs associated with newer planes.
Maintenance of older aircraft can be costly, but Allegiant has found a way around this as well. Allegiant Air follows a method of preventative maintenance, repairing small issues before they escalate into bigger, more expensive problems. However, given the age of their fleet, Allegiant’s maintenance costs are actually 20% lower compared to industry averages.
| Allegiant Air Fleet | Age | Maintenance Costs |
|---|---|---|
| Airbus A320 | 22 | 20% lower |
| MD-80 Series | 22 | 20% lower |
Another smart move is Allegiant’s choice to operate a single aircraft type. This simplifies operations, maintenance, training, and parts inventory, further cutting costs. It also results in staff needing less training, as they become highly proficient with the specific type of aircraft.
While other airlines opt for flying to multiple major airports, Allegiant Air prefers less competitive secondary airports. These smaller airports often come with lower landing fees, less traffic, and faster turnaround times. For Allegiant, it’s a matter of in and out, quick and efficient.
The combination of an older, yet efficient fleet and strategic selection of airports is key. And don’t forget: the strategy extends even to their unbundling of services and additional charges. Everything Allegiant Air does focuses on keeping those fares as low as possible, while still offering a solid service.
Conclusion: Cracking the Code of Allegiant Air’s Low Fares
So, we’ve peeled back the layers of Allegiant Air’s low-cost strategy. It’s clear that their unbundled services and pay-for-what-you-use model is a big part of the equation. But it’s not the whole story. Their efficient fleet maintenance, with older but fuel-efficient planes, also plays a crucial role. Add to that the airline’s smart choice of operating a single aircraft type and flying to less competitive airports, and you’ve got a winning formula.
It’s evident that Allegiant Air is all about keeping fares low without compromising on service. They’ve cracked the code, and it’s a strategy that seems to be paying off. So next time you’re looking for affordable air travel, remember Allegiant Air and their commitment to low fares.
