Allegiant Airlines reported phenomenal Q2 earnings – over 800% in net income (this is not a typo..). This, during an extremely difficult economic landscape and a 13% rise in fuel prices for the quarter. The airline still has a very strong load factor of 90.8%.
We – of course – are not an airline, we don’t even own or operate aircraft. But we are in an adjecent market and naturally very interested in any innovative and successful air-travel business models that come about (c.f. my discussion of Pet Airways) – whether they are scheduled or on-demand operations.
In a nutshell, Allegiant’s business model is focused on leisure travelers (mostly those in colder climates traveling to warmer ones) – offering low-cost flights from secondary (or even tertiary) airports, picking their destinations carefully and managing costs closely. There are some opportunistic exceptions to the above, but it is clear that the company has excelled at managing costs and has practically zero competition on the vast majority of its routes.
We believe that the air-carrier industry (scheduled or not) is moving more and more in a direction of specialization and that the era of the legacy airline that tries to be everything to all people is all but over. Legacy airlines have moved in the past year to focus on their core business models and reduced their route coverage substantially, while specialized business models expanded.
At FlyMiwok – we work with on-demand operators to help them achieve, maintain and grow their profitability. In order to achieve this, the business model is also very specialized. We focus on the ultra-short-haul market (typically less than 250 miles), catering mostly to time-sensitive business travelers, traveling to small general-aviation airports while offering prices that are at, or close to, economy class prices for the same trip. The technology platform we have developed gives the customer the convenience of on-line bookings and helps the operator manage costs and resources more efficiently.
Gad Barnea – CEO – FlyMiwok, Inc.
Comments on this entry are closed.