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Allegiant Air finds silver lining amid industry's clouds

Maybe you scratched your head over news reports that discounter Allegiant Air was adding new routes from the Tampa Bay area. Aren't airlines slashing schedules to cope with a weak economy and high fuel costs?

True if you're a huge hub-and-spoke carrier like American, United or Delta. But tiny Allegiant, the biggest player at St. Petersburg-Clearwater International Airport, smells opportunity in the new business landscape. Allegiant claims a unique niche of flying middle-class travelers from small cities like Chattanooga, Tenn., and Peoria, Ill., nonstop to vacation destinations.

Major airlines are cutting capacity deeply this quarter in Allegiant's four destination markets: Orlando (13.9 percent), Las Vegas (12.8 percent), Tampa Bay (11.1 percent) and Phoenix (10.5 percent). Facing skyrocketing fuel prices, the big boys dumped flights in low-fare markets like Florida. They also cut back in some small cities where Allegiant flies.

"We expect many new opportunities … as leisure routes continue to be abandoned by those whose business models do not enable them to profit in this environment but work very well for us," said CEO Maurice Gallagher, as the airline announced its 22nd consecutive profitable quarter in July.

Allegiant runs lean. But the real trick is making money from customers beyond the cost of their tickets. The airline charged for phone reservations, assigned seats, a cup of coffee and bag of chips long before major carriers.

When big airlines began collecting $15 for a checked bag this year, Allegiant raised its fee for Web-checked luggage to match. The carrier's average one-way fare is $85. But Allegiant gets almost $27 more from other purchases.

The airline's expansion is rare good news for St. Petersburg-Clearwater International. With the departure of No. 2 USA 3000 and Allegiant in its much-reduced fall schedule, only eight commercial flights per week take off from the airport.

The numbers perk up to 39 in November and peak around 60 for the weeks of Christmas and New Year's Day. That's a fraction of the activity at Tampa International, where Southwest alone makes 82 departures a day. But Allegiant will start flying next month to four destinations, for a total of 19.

Perhaps St. Pete-Clearwater International can adopt a new slogan: Today Tri-Cities, Tomorrow Elmira.

Steve Huettel can be reached at huettel@sptimes.com or (813) 226-3384.

Allegiant Air finds silver lining amid industry's clouds 09/30/08 [Last modified: Wednesday, October 1, 2008 7:59pm]

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