Looks like Allegiant is taking on AirTran

[145BOSS]

http://finance.yahoo.com/news/Allegiant-Air-Announces-New-prnews-394306967.html?x=0&.v=1

 

[Cardinal]

Very interesting. Many of those are secondary markets, at best, but it will make for a show. Airtran just announced DSM-MCO last week. Of all the markets to sprout dueling nonstops...

 

[citabriapilot]

Actually, AirTran took on Allegiant by going into the secondary markets already served by AAY. Even emulated the same low frequency/twice a week type service that AAY does. AirTran's difference was going right into MCO.

Allegiant is simply defending their turf.

 

[145BOSS]

Any bets on how many days pass until AirTran announces service from MCO to South Bend, Fort Wayne, Green Bay, Toledo, Roanoke, Bangor, etc...

 

[fly4surf]

I don't know but you just named a bunch of towns I never need to go to again.

 

[OurMoney1]

It's gonna be a slugfest.

 

[Kharma Police]

Actually, AirTran took on Allegiant by going into the secondary markets already served by AAY. Even emulated the same low frequency/twice a week type service that AAY does. AirTran's difference was going right into MCO.

Allegiant is simply defending their turf.

Pretty smart decision by Allegiant.

 

[Colonel Savage]

I know AAI's CASM is about 9.5 cents, anyone know what AAY's CASM is? My bet is it's higher, due to lack of frequency, despite the lower salaries.

 

[OurMoney1]

That'd surprise me if it was higher than Airtrans. Those MD-80s are so worn that they get them at basement prices, couple that with labor costs and secondary airport usage (Bangor, Allentown, & the likes).

Does anybody know?

 

[Beetle007]

I know AAI's CASM is about 9.5 cents, anyone know what AAY's CASM is? My bet is it's higher, due to lack of frequency, despite the lower salaries.

4th Quarter 2008 CASM -Allegiant = 9.1 and AirTran = 10
1st Quarter 2009 CASM - Allegiant = 7.4 and AirTran = 9.2
2nd Quarter 2009 CASM -Allegiant 7.6 and AirTran = 9

 

[Colonel Savage]

4th Quarter 2008 CASM -Allegiant = 9.1 and AirTran = 10
1st Quarter 2009 CASM - Allegiant = 7.4 and AirTran = 9.2
2nd Quarter 2009 CASM -Allegiant 7.6 and AirTran = 9

Thanks. Looks "fuel cost sensitive".

 

[maxblast72]

Of course Airtran's total CASM systemwide includes operating out of higher operating cost airports (holding, long taxi lines, high gate costs, etc). If you just look at a ABE-MCO leg or TYS-MCO leg, Airtran is probably pretty close to Allegiant's CASM. You also have to remember Airtran is running a smaller airframe which might make it easier to manage the RASM side of the equation.

Be interesting to see if one airline or the other chickens out of some of these markets with the competition. Traditionally, Allegiant has gone the no competition route but may be changing their strategy as they accumulate more money in the bank.

 

[Mr Wu]

It's just a consolidation of routes before the big announcement on the 21st.

 

[anewunion]

A true race to the bottom of the ticket yield game. The Truth of the matter is that AAY at it's current pricing structure is only making a net operating profit on the extras it sells on board. AAI on the other hand could, and should also sell extras. This would allow them to achieve a lower price point with respect to their average ticket price.

This is a very important time for MCO. MCO has always had a very low ticket yield, Actually one of the lowest in the world. We are now going to see for the first time a true battle royal. The LCC's that have taken over MCO are going to be tested for the first time ever from a new ELCC ( Extreme Low Cost) business model. This has never been done. The LCC's are the expensive outfits in town, that's just crazy to think that way.

The reality of the situation, is that AAY has nowhere it go. They cannot go any lower. They have figured out a way to make a profit at the end of the year from exclusively selling product in route. If you stripped out these extras, they would achieve breakeven. So, in turn they are at the ultimate bottom. When they develop a pricing structure, AAY doesn't factor in making a profit. They price on break even, as opposed to everyone else in business factors in a profit. This is the big advantage AAY has.

The trump card is when every one like JB,SW,and AAI get together and dump an enormous amount of seat availability on a market. Can AAY achieve a load factor to break even?. Remember, AAY needs to fill the plane just to break even. That's the unknown. It's all going to come down to who has the most cash to burn. I hope it never happens to the LCC guys that they have to take a pay cut to achieve victory in this blood bath. If that happens we are all screwed.

One last point, It's not the 20 $ gap in Capt. pay that let's AAY make a profit, or charge lower for a round ticket. The 1.018% in total labor costs from paying more to the Capt's would not change the business modal at all. Please stop telling the AAY guys they are only making money because of the low pilot pay. That's crazy talk. And if so, let's look at the other LCC's startup pilot pay scales back in the day. It's not even close to the legacy pay for that time. It was just as bad. So don't call the kettle back boys.

good luck

 

[Beetle007]

Allegiant's net income this year is $73,246,000.

That might be one reason Allegiant's combined stock value is 844 million and Airtran's combined stock value is only 600 million. It seems kind of crazy that Allegiant is worth 40% more than Airtran.