ANALYSIS: Cities lose service as Allegiant expands

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Allegiant Air is growing by leaps and bounds.

But in its search for profitable flights, the Las Vegas-based ultra-low cost carrier has cut a host of underperforming routes in the last year and exited new markets sometimes only months after arriving.

The airline's executives say nimbleness is key to maintaining profits, but the drawbacks caught some airport executives by surprise and irked one of the airline's unions.

"Allegiant's expansion in Punta Gorda appears to be good news - for now. But what will be the impact on jobs and the local economy if the airline continues its record of cancelling routes and abandoning service?" writes the Transport Workers Union of America (TWU), which represents Allegiant's some 500 flight attendants, in an advertisement 21 August in the Punta Gorda Herald.

Punta Gorda in southwest Florida is one city that will benefit from a major expansion in Florida announced by Allegiant on 20 August.

Allegiant, which primarily connects smaller cities to holiday destinations, operated 198 routes in August 2013, up from 181 in August of last year, according to Innovata Flightmaps Analytics.

Growth aside, since August 2012 the airline has dropped 16 routes and ceased service to seven cities, data shows.

The cuts included flights from Orlando Sanford International airport to Salisbury in Maryland, Wilmington in North Carolina, Niagara Falls in New York, Saginaw and Grand Rapids in Michigan and Duluth in Minnesota, according to Flightglobal/Innovata data.

Bob Bryant, manager of the Salisbury-Ocean City: Wicomico Regional Airport, wishes Allegiant allowed its Orlando flight more time to mature.

Allegiant launched the flights in February 2012, suspended them in September and October, then pulled out entirely in January 2013, according to Flightglobal/Innovata data.

"[Allegiant] instituted a seasonal hiatus which kind of killed the momentum, and it was difficult to bring it back," Bryant says. "If they have stuck around for another four months ... traffic would have rebounded."

Allegiant likely was not earning enough ancillary revenue from the sale vacation packages, Bryant adds.

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Flightglobal/Innovata data

No hard feelings

Jeff Nagel, manager of MBS International airport near Saginaw is "disappointed" Allegiant ended Orlando flights in 2012 after only 10 months, but has no hard feelings.

"It's an industry where we work together," Nagel says, noting that Allegiant could someday return to MBS.

Allegiant's last flight from Orlando to Gary in Indiana, which began in February 2012, ended earlier this month.

James Ward, marketing and communications liaison at Gary/Chicago International airport is glad Allegiant tried Gary, but concedes the city "really did not meet [Allegiant's] business model."

Unlike most other Allegiant destinations, Gary is near other major airports in Chicago, says Ward, adding Allegiant could return to Gary with Las Vegas flights once the airport completes a runway improvement project.

Also gone in the last 12 months are Allegiant's flights from Phoenix-Mesa Gateway airport to Redmond in Oregon and Colorado Springs and Fort Collins-Loveland in Colorado, Las Vegas to Owensboro in Kentucky, and Oakland to Billings and Bozeman in Montana and to Medford and Redmond in Oregon.

"We were surprised," Jason Licon, director of Fort Collins-Loveland Municipal airport, tells Flightglobal, noting that the airport had been receiving positive feedback from Allegiant.

"We were highly regarded in communications they provided to us and to other [airports]," Licon says.

Load factors on Allegiant's flights from Fort Collins-Loveland to Las Vegas and Phoenix had load factors between 93% and 95%, he adds.

In addition, earlier this month Allegiant placed the majority of its roughly one dozen flights to Hawaii on "seasonal hiatus" due to insufficient demand.

Many of the routes cut were relatively new. Allegiant's Oakland flights to Medford, Redmond, Billings and Bozeman launched in 2012, as did its Fort Lauderdale-Niagara Falls and Orlando-Gary flights, according to Flightglobal/Innovata.

Allegiant's Las Vegas-Owensboro and Orlando-Saginaw flights began in 2011.

TWU has said the airline's quick exit from markets hurts communities and employees, and the union tracks routes Allegiant has eliminated on the website

"We think if you go into a market you should have done some forecasting before you ask your employees to uproot their lives," Thom McDaniel, TWU's international vice president, told Flightglobal in July. He noted that many employees moved to Hawaii to work those flights.

Strategy that works

But Allegiant's president Andrew Levy defends the cuts.

"Our loyalty is to our employees, shareholders and our customers, and none of them are served well if we are in markets that are not going to work long term," he told Flightglobal in July

Levy also defends Allegiant's forecasting, noting a lack of historic traffic data on many of the airline's routes.

He adds that Allegiant's strategy has paid off with 43 consecutive profitable quarters and a 2012 operating profit of $132.3 million.

Allegiant has added routes while cutting others, announcing 20 August the launch of 16 new routes from Florida later this year, including flights to new destinations like Islip and Stewart near New York City and Concord in North Carolina.

Other carriers also cut routes, but most not to the degree of Allegiant, which has a fleet of roughly 70 aircraft and carried seven million passengers in 2012, according to securities filings.

New York-based JetBlue Airways eliminated four routes in the last year, and Miramar, Florida-based Spirit Airlines eliminated seven routes, according to Flightglobal/Innovata data.

JetBlue had 180 aircraft and Spirit had 45 aircraft at the end of the year, according to annual reports.

Southwest Airlines and its AirTran Airways, which have some 700 aircraft combined, eliminated 43 routes in the last year, and Delta Air Lines, with more than 700 aircraft, cut 50 routes.