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Allegiant Air's prudent ways help it soar amid slump in travel

AIRLINES

The little-known Las Vegas carrier is the nation's most profitable: first-quarter profits rose nearly 200% to $28.2 million on revenues of $142.1 million. And that's despite teaser fares as low as $9.

May 13, 2009|Peter Pae

With the high cost of flying and headache of getting through airport security, James and Wendy Greenfield of Fountain Valley have never flown with all their children.

But thanks to a special $9 air fare, the Greenfields -- 11 in all -- were able to board a plane at Los Angeles International Airport recently and travel together on an airline they had never heard of before.


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"It's the first time we could afford to fly with all our children," said Wendy Greenfield, who was clutching two large boxes of doughnuts, the family's in-flight breakfast, as the couple and their nine children, ages 5 to 19, streamed into a 150-seat jetliner.

The flight to Medford, Ore., to visit friends was made possible by a little-known carrier that has been quietly thriving and expanding at a time when other airlines have been posting huge losses and cutting service.

Allegiant Air began rolling out nonstop service from LAX on May 1 with flights to Medford and Grand Junction, Colo. By the end of the month, the airline expects to have nonstop flights to 13 smaller cities west of the Mississippi, including Monterey, Calif.; Billings, Mont.; and Fargo, N.D.

The airline, based in Las Vegas, was offering promotional fares for as low as $9 one-way (nearly $20 when taxes are included). Most travelers on average will pay $74 one-way, which is still less than half what competitors have been charging for flights that typically include a stopover.

Despite offering some of the lowest airline fares, Allegiant is the nation's most profitable carrier and one of the very few that is growing amid a sharp downturn in travel. While the largest U.S. airlines reported losing billions of dollars, Allegiant profits soared nearly 200% in the first quarter to $28.2 million on revenues of $142.1 million.

In April, Allegiant's passenger traffic surged 36% compared with a year earlier, and its planes were also more crowded, with nearly every flight flying with 90% of the seats occupied, up from about 87%. On many flights, the planes were completely full.

The results were staggering compared with other airlines that have been seeing fewer and fewer travelers on their planes.

"They've done a really excellent job in terms of managing their load factor," said Helane Becker, airline analyst with New York-based Jesup & Lamont Securities Corp.

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