There are those airlines in the industry which continue to swim in the red (like American and British Aiways), and then there are those that are taking a more Blue Ocean Strategy-like approach. Most recently we touched on this with the opening of Pet Airways, and now with an intriguing article on Allegiant Air — the most profitable airline in the USA. Under their unique business model, they act more like a full-fledged travel agent as opposed to just an airline. They strip away any extra costs down to the base ticket price, and then let the customer customize the extras — such as seating assigments and checked bags — for themselves, allowing them to create the perception of low cost and more customer control. Perhaps most impressively, they target otherwise non-served third tier cities, so that only 6 of their 134 routes have any competition — talking about making the competition irrelevant!
From Fast Company:
You’ve probably never heard of the most successful airline in America. That's because Allegiant Air is not for you. It eschews business travelers, daily flights, even service between major cities. Allegiant is the anti-airline, or as CEO Maurice Gallagher calls it, the "accidental airline."
But it's no accident that Allegiant's planes are full, profits soared 200% in the first quarter to $28.2 million, and the number of passengers is up 18% through May during the worst recession in recent memory. While competitors furiously cut back, Allegiant has boosted capacity 30%. The more intriguing question, though, is whether its rock-bottom fares, bootstrap approach, and focus on the places abandoned by the hubs and spokes are the new blueprint for building an airline in tough times.
[Image via rrstar.]
