Allegiant praised for public response to MD-80 grounding

Washington DC
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Allegiant Air’s proactive response to the recent grounding of more than half its fleet of Boeing MD-80 aircraft may indicate an increasing focus on customer service at the growing Las Vegas-based ultra-low cost carrier.

“The company seems to have grown up by doing its best to re-accommodate passengers,” Helane Becker, managing director at financial services firm Cowen Securities, tells Flightglobal. “They were proactive. They made it public... and talked about what they [were] doing.”

Becker made her comments in response to Allegiant’s announcement on 20 September that it had grounded more than 30 of its 52 MD-80s due to maintenance problems.

The airline said it failed to inspect the aircrafts’ emergency evacuation slides every year, as recommended by slide manufacturer Zodiac Aerospace.
Zodiac had previously recommended inspections every three years, but changed its recommendation to yearly in 2007.

On 20 September, Allegiant issued three media releases and held two conference calls with reporters to discuss the groundings and the resulting impact on operations, a level of transparency Becker finds notable.

In addition, Allegiant is giving travel vouchers worth up to $200 to customers whose flights were delayed, and is refunding tickets to customers whose flights were cancelled.

“In the past, Allegiant likely would not have provided any compensation for affected travel, so the compensation shows the company has "grown up,” says Cowen in a 23 September research note written partly by Becker.

The airline also said it was chartering aircraft from other airlines to fill in schedule gaps.

“I feel like they might not have done that [in the past],” Becker says. “The whole goal from their perspective is to try to come across to their customers as more customer-friendly.”

Becker says that Allegiant in years past might have been less transparent and “tried to sweep [the grounding] under the rug”.

“Ultra-low cost guys are not known for not being customer friendly,” she says.

Michael Boyd, an aviation consultant with Boyd Group International, says a quick, transparent response to safety issues can help airlines avoid the wrath of the US Federal Aviation Administration (FAA).

“Any indication that [an airline is] lagging” in its response can be used as “an excuse” by the FAA to take drastic measures, Boyd says, noting that the agency has been known to shut down carriers at a moment’s notice.

Though still a niche carrier, Allegiant is increasingly becoming a national player, flying from major leisure destinations to hundreds of secondary US cities.

The carrier reported 7.5 billion available seat miles in 2012, up 69% since 2008, according to securities filings.

Becker estimates the maintenance work and resulting flight disruptions will cost Allegiant millions of dollars, but probably not hundreds of millions of dollars.

“We recognise this is a near-term, one-time issue and should have no meaningful impact on the long-term thesis of the company,” says Cowen’s research note.

Allegiant has said the maintenance work will take five days per aircraft. It hopes to finish the work by the end of September.

The FAA learned Allegiant may have not inspected the slides at required intervals while investigating an emergency evacuation of an Allegiant MD-80 at Las Vegas on 16 September, the agency says.

No passengers were injured during that incident, which was prompted by reports of smoke in the cabin.

“The agency directed Allegiant to immediately report the inspection status of all slides installed on its MD-80 fleet,” the FAA said in a statement.

Allegiant has said it will hold another media call at 15:00 Las Vegas time on 23 September.