Still reeling from the demise of two of its major airlines two years ago, the Hawaii travel market welcomed Allegiant Travel Co.’s plans to extend its low-fare operations to the 50th state this year.
Timing may bode well for the Las Vegas-based carrier to apply its mainland business model to Hawaii. Allegiant Air links customers in smaller, underserved regions to top leisure destinations such as Las Vegas, Los Angeles, Phoenix and Orlando.
The company derives much of its profit from selling travel packages through Allegiant Vacations.
"Hawaii is a little more value-centric now," said Tyri Squyres, Allegiant's vice president of sales and marketing.
To execute the long flights to Hawaii, Allegiant is acquiring six Boeing 757-200s this year and next from a European carrier. The 757s, with a maximum seating capacity of 234, are capable of landing at all of Hawaii’s major island airports.
"First and foremost, any new seats are welcome news," said Marsha Wienert, tourism liaison for the state of Hawaii. With the loss of ATA, Hawaii’s former low-cost carrier, followed by the sudden shutdown of Aloha Airlines in early 2008, "it fills our void," Wienert added.
"We look at 2010 as our stabilizing year. Demand is starting to increase, as with the economy," she said, adding recovery for the destination is anticipated in 2011.
If all goes as planned with FAA certification of its 757s, Allegiant expects to begin flights in the fourth quarter and will formally announce its routes and travel partnerships about 120 days beforehand, Squyres said.
David Uchiyama, Hawaii Tourism Authority vice president of brand management, said Allegiant’s entry would be "a major plus" for Hawaii. "It creates an opportunity for more accessibility to people we may not be serving readily," he said.
Moreover, by operating out of second- or third-tier airports, Allegiant could help expand the Hawaii message into new areas.
Allegiant’s appeal rests not only with the added airlift into the state but with the fact they are a travel company.
"They have a very unique business model," Uchiyama said. "They have very specific things they look for."
Citing company news releases, Uchiyama said potential origination sites under review could include Bellingham, Wash.; Eugene, Ore.; and Stockton, Calif.
Squyres said departure markets are chosen based on criteria such as the stability of local economies, income and debt levels, even marriage statistics, but she said no route decisions have been finalized.
Squyres added that Allegiant usually does not go head-to-head with other airlines. Overall, Allegiant Air only faces direct competition nonstop on 10 of its 137 routes. "We generally stimulate a new demand," Squyres said.
As to its travel company partnership strategy, "We try to develop direct relationships," Squyres said. "Though every market is unique."
Company officials have been talking to many hotels over the past few years and already have established relationships with the chain operators.
Squyres said it had not been decided whether Allegiant would offer agents its standard 10% commission rate as for mainland hotel and land package sales. As to whether Allegiant might need to rely more on agents to introduce its Hawaii products, her response was, "Not at this point."
Allegiant conceivably could tap into the sizable budget of the Hawaii Tourism Authority’s joint marketing initiatives for airlines and their aligned tour operators.
"We will work closely with several partners to support our efforts," Squyres said.
Wienert noted the one-stop-shop model offered by Allegiant is not new for Hawaii. Hawaiian Airlines’ website offers hotels and car rentals, as do other Hawaii carriers as well as wholesalers such as Pleasant Holidays and Classic Vacations.
"We have been telling people to look at buying packages," Wienert said, "especially as the packages and tour operators have become more aggressive."
