Allegiant’s Time To Thrive: How The Crisis Could Be Good For The Carrier

Allegiant Air is an ultra-low-cost-carrier (ULCC) that can sometimes fly under the radar, so to speak. The airline often takes a different approach to many other carriers, including now. While the crisis continues onward, this may be a time to thrive for the airline. Here’s how.

Allegiant A320
Allegiant has previously used crises to expand and continues to see opportunities through this one. Photo: Allegiant Air

From a fleet perspective, the crisis opens up opportunities

Speaking at a CAPA Live event, Robert Neal, Treasurer and Vice President of Fleet and Corporate Finance at Allegiant, spoke about how Allegiant can benefit from the crisis completely from an aircraft acquisition standpoint.

The airline will not go out and make a big order from Airbus. However, it could take a few aircraft here and there in smaller transactions, so the operator is not burdened with an order book for planes it cannot fill or does not want to fly at a loss. Lease rates on a lot of aircraft are down. Robert Neal specifically stated to the moderator at the event:

“You’ve seen a lot of commentary about those rates being down anywhere from 15 to 30%. That’s on lease rates, and definitely we’ve seen that, but also we’ve seen some pockets discounted a little deeper than that, particularly where an owner has an aircraft that they don’t want to put into storage because they don’t like the risk of what might be on the other side of that or how long it’s parked. And then, as aircraft are a little bit older, maybe 12 years or more, the discounts have been a little bit deeper than that. And so I think it’s just a really good landscape for Allegiant to take advantage of, at this point.”

Allegiant has not shied away from taking older aircraft in the past. Therefore, it is not surprising to see the airline talk about looking at planes that are cheap or coming in at the age of 12 or older.

Allegiant A320
Allegiant has previously taken on some aircraft that reached the end of their time at another airline. Photo: Allegiant Air

What planes is Allegiant looking for?

Allegiant Air has an all-Airbus A320ceo family fleet. The carrier is very unlikely to break that mold and take on other aircraft like Boeing. Instead, the airline wants to find aircraft that have commonality with the current operating fleet. This means taking aircraft from other low-cost carriers, such as easyJet or Cebu Pacific, whose retired planes allow for a nice, quick integration into Allegiant’s fleet.

Allegiant Air
Allegiant has bucked the trend of other low-cost carriers by taking older aircraft. Photo: Getty Images

On the other end, Allegiant is avoiding aircraft that require a lot of pilot training and have limited commonality with the current fleet. While the Airbus A321s could be a possible addition for Allegiant in the future, the carrier is not planning to take any now. Lastly, Allegiant is hoping to stay away from planes coming out of repossessions or bankruptcy scenarios.

Allegiant has also used crises to expand

Mr. Neal stated that, in the past, Allegiant has used crises to expand into new leisure destinations, mid-sized, and even some small markets as legacy carriers tend to retrench to their hubs.

For example, the airline has been adding plenty of new flights and remains optimistic about its recovery. Aside from JetBlue and a little action from United, not too many legacy carriers have added point-to-point flying, so Allegiant has jumped in where it can.

Allegiant Air A320
Allegiant still sees opportunities to add new markets, and, for this, it may need new aircraft. Photo: Getty Images

Time will tell exactly how many “new” aircraft join Allegiant’s fleet, but the airline did say earlier in the year that it did have plans to add some more used A320 family jets to its fleet. The carrier prefers the larger A320 to the A319, although the A319 does work in some markets for Allegiant where the A320 does not.

Do you think Allegiant should add more planes to its fleet? Let us know in the comments!