To hear Allegiant Air executives tell it, theirs is a tale of neglect – of a massive airport bureaucracy that has failed to take the time to find a new home for a small but feisty airline that’s growing and profitable.
At issue: Allegiant recently announced it will suspend flights from Los Angeles International Airport to three small airports, a choice executives said they were forced into because LAX wouldn’t give the airline the gates and ticket counters it needs.
But there’s another take on the matter. Officials at Los Angeles World Airports, the city agency that runs LAX, said they’ve done plenty to help Allegiant. Industry analysts said that while gate space might be an issue, it’s just as likely that the airline is using a lack of space at the airport as an excuse to cut unprofitable routes – without saying it misread the market.
“My gut feel is that these routes simply weren’t performing well,” said Hubert Horan, an aviation consultant in Phoenix. “The gate issue might not be totally irrelevant but is being overstated for PR reasons.”
Allegiant, owned by parent Allegiant Travel Co. of Las Vegas, has been known to quickly abandon cities and routes that aren’t making a profit. That’s part of a unique business model that has helped the 11-year-old company stay profitable.
It uses older inexpensive jets to fly leisure travelers from small markets with few commercial flights, such as Bentonville, Ark., and Missoula, Mont., to Los Angeles and a dozen other vacation destinations, including Las Vegas and Orlando, Fla.
The company has managed to stay profitable and grow through the recession, expanding from 78 routes in 2007 to 186 this year. Since entering the L.A. market in 2009, the airline has grown from 11 routes to 17, flying to such locales as Medford, Ore., and Wichita, Kan.
But now Allegiant is cutting back on its Southern California presence. In November, it axed all six of its routes out of the Long Beach Airport. This month, it announced it will suspend flights between LAX and airports in Sioux City, S.D.; Billings, Mont.; and Pasco, Wash. That will leave 11 Southern California routes, the number Allegiant had three years ago.
Jack Keady, president of airline consultancy Keady Transportation Consulting in Playa del Rey, said it’s likely that Allegiant overestimated the size of the Southern California market and is now adjusting its presence here. But he added that the recently announced flight suspensions could be evidence that the small airline, perhaps more used to dealing with service-starved regional airports, is having trouble at LAX, one of the country’s biggest airports and one that has a history of favoring large operators.
“LAWA has never been known for benevolence or working very hard for smaller, less consequential airlines,” Keady said. “I suspect LAWA could have done more.”
No room
To be sure, there is a shortage of available airport gates at LAX as construction and renovation work continues on several terminals. Allegiant lost some of its space earlier this year when Alaska Airlines moved from Terminal 3, which is now being renovated, into the recently updated Terminal 6.
Since then, Allegiant has been leasing gates at Terminal 5, which is controlled by Delta Airlines, but will have to leave some of those gates as Delta flights pick up. Allegiant executives said LAWA has not helped the airline find new digs.
“The airport has the obligation to find gates and ticket counters for us, and we believe LAWA failed in its obligations,” said Keith Hansen, director of airports for Allegiant Travel. “They succeeded for other airlines, but we’ve been the odd man out, the one forced to cancel flights while others have been able to find a home.”
LAWA spokeswoman Nancy Castles counters that the airport offered to let Allegiant keep its ticket counters in Terminal 6 and to bus passengers to and from a remote terminal on the airport’s far west side. The airline was also offered space in Terminal 2.
“They declined and instead opted to cut their service. None of the other airlines at Terminal 6 opted to do that,” Castles said.
Hansen said LAWA’s proposals, including an offer to give Allegiant gate space at the struggling Ontario International Airport, wouldn’t work for the budget airline, and would lead to either increased ticket prices or operational problems.
Keady said that’s possible, but it’s more likely that Allegiant is suspending routes simply because they weren’t making money. The airline has a history of quickly abandoning unprofitable or less-profitable routes.
“Allegiant does not take a long-term view. If things don’t produce, they get up and leave,” Keady said. “And the last thing an airline wants to say is, ‘We misjudged the market.’”
But Hansen said Allegiant doesn’t hide behind pretenses when it comes to canceling routes. The airline pulled out of Long Beach because routes out of the small airport were less profitable than others.
“We’re not shy about canceling routes that aren’t profitable,” he said.
