Allegiant to Lease A319s for Expansion

Allegiant Air, the US low cost tour operator, today announced that it has entered into agreements with GE Capital Aviation Services (GECAS) and Cebu Pacific Air to lease and purchase nineteen Airbus A319 aircraft to aid its expansion plans.

Airbus A319 aircraft

 Out of its key hubs the A319 offers a range of up to 6,850km – significantly more than Allegiant’s fleet mainstay the MD-80 and also more seating capacity.

 Out of the nineteen A319s, nine would be purchased from GECAS while another ten would be purchased from Cebu Pacific Air. The GECAS aircraft would be ex-easyJet. The aircraft will be configured with 156 seats and will be of the four-exit doors variant. The first of these A319s would be operational by the 1st quarter of 2013. Deliveries are planned to run till 2015.

 The airline expects that the A319 will offer 25% better fuel economics and 40% lower maintenance costs per block hour, over the MD-80 family. It also expects to capitalize on the market opportunity with lower acquisition costs as the A320neo and 737 MAX families depress older vintage aircraft’ market values – while other airlines’ tendency to move away from smaller A319 size aircraft to larger aircraft also contribute to a lower lease rental.

 The A319 on average is set to deliver a $10 lower block hour cost over the MD-80, per Allegiant’s estimates.

 Allegiant presently operates a fleet of 58 MD-80 family aircraft and four Boeing 757-200s.

 While the first cities to be served by the A319s or any new destinations have not yet been announced – it seems to be a strategy that is perfectly supporting Allegiant’s proven business model. The A319s from Cebu Pacific, a low cost carrier, would have likely accumulated high cycles and will have an affordable market price allowing Allegiant to purchase them outright without investing too much capital – while the leases would allow us to keep its cash flow strong; both of which will allow it to keep its costs low while offering competitive fares as well as tour packages. The airline followed a similar path when it ordered its MD-80 family aircraft.
Enhanced by Zemanta

, ,

Leave a Reply