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:
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.]
