Allegiant, Southwest Post Profits
Jul 25th, 2008 | By Jared BlankSouthwest’s profitability has been well-publicized, and they’ve had another fine quarter due to them running a fantastic operation, and their oft-discussed fuel hedges. Well done.
Allegiant, which I speak of frequently, also turned a tidy profit and got almost no credit for it. Their management team has built an impressive operation around a tight strategy: fly leisure travelers from tertiary cities a couple of times a week to sun destinations, and upsell everything. And this works. Really well. Their planes were 94% full in June, and 90% full for the quarter. Their non-air revenue per passenger hit almost $28 (JetBlue is about $8). They are basically a seller of travel products (hotels, show tickets, etc) that happen to run an airline. Oh, and they manage to do that flying old MD-80s with no fuel hedges. Incredibly impressive.
(I own a small number of shares in Allegiant…)
Jared, do you know how the majors book the revenue from selling vacations and cars from their websites? It strikes me that they might pull in a lot there, although, to be honest, I’ve never booked a hotel room or vacation that way.
upsell
RE other: I flew AA last week for the first time in two years. Man, those flight attendants are old. $5 for a beer is not a bad value — but their little paid snacks are so sad looking.
right, and I meant to send you this link as well:
http://www.chrishayes.org/blog/2008/jul/23/why-airline-travel-sux-big-air-responds/
The majors book a tiny amount of revenue from their hotel sales. Allegiant sells a huge amount of hotel rooms in Vegas b/c that’s primarily where they fly.