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Allegiant, Southwest Post Profits

Southwest’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…)

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3 Comments.

  1. 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.

  2. 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.