Allegiant Airlines Is Leaving Hawaii
Why Allegiant Airlines is Leaving Hawaii
After much fanfare and high expectations, Allegiant Airlines is leaving Hawaii in August 2016. Allegiant began offering airfare to Hawaii in June 2012. The carrier was hoping to expand its business model of serving smaller markets. In such markets, there is little or no competition. Its business model is offer such areas discounted direct flights into key leisure markets such as Las Vegas and Florida. The original plan was to offer service to Hawaii from up to 10 US mainland cities on the west coast. These areas included places like Fresno, Santa Maria, Boise, Spokane and Eugene.
Allegiant had to acquire 6 used Boeing 757s to do this. This is because its then current fleet of aircraft didn’t have sufficient range and certification to get to and from Hawaii. Up to that time, Allegiant’s entire fleet consisted entirely of older second-hand MD-80 variants, Allegiant had acquired these aircraft from other airlines.
Expectations Not Realized
However, the company’s high hopes for this route never fully materialized as planned. From the beginning, it had bad press. They came from a number of high profile delays and customer complaints related to maintenance problems. After a while, the company scaled back flights from many cites. It eventually settled on offering flight to Hawaii from Los Angeles and Las Vegas. This represented a significant departure from its business model of serving smaller markets. And in these larger markets, Allegiant had to go against legacy and other established regional carriers.
Business Model Irony
Ironically, the planes that allowed Allegiant to get into the Hawaii market is now one of the factors forcing them out of it. Allegiant’s 5 remaining Boeing 757s must undergo major required maintenance in the near future. According to reports, this maintenance is going to cost the company around $50 million. Additionally, rather than spending the money on maintenance, the company prefers to bank its future on new Airbus A-320s. This will be its aircraft of choice to eventually replace its aging fleet of MD-80 variants. Furthermore, having less different aircraft types will help to decrease the company’s aircraft maintenance expenses.
Any air carrier leaving the State is not good news for the Hawaii visitor industry. But there may be a silver lining behind this. One of the other reasons why Allegiant Airlines is leaving Hawaii is the prospects of increased competition, particularly by Southwest. Allegiant expects them to enter the fray within a couple of years. So if that prediction comes true, losing Allegiant for Southwest may not be so bad a trade-off.