Las Vegas-based Allegiant Air already has a broad U.S. route map. But the fast-growing ultralow-cost carrier can expect a recognition boost after winning the naming rights last month to the Raiders' football stadium under construction in its hometown. Airlines editor Robert Silk spoke with Allegiant CEO Maury Gallagher about this and other topics at the recent International Aviation Forecast Summit in Las Vegas.
Q: What will the new Allegiant Stadium mean for your brand awareness?
A: We've never done anything like this before. It certainly could help us in Las Vegas. But we're in 120 cities around the country. And the whole brand factor of doing something like this, it's been surprising how big the response has been. We knew it would be good, but I think it has been better than I expected because the NFL is big news, and this stadium is going to be big news around the country, and it's possible you could think about it worldwide, as well.
Q: Your margin is generally industry leading. What's your secret?
A: It's third-party products. Since 2005 we've done over $1.3 billion in top line and made $350 million of operating income from selling hotel rooms, rental cars and things of that nature. So we want to enhance that.
Q: Along those lines, Allegiant is now building its own hotel, Sunseeker, in Port Charlotte, Fla. Tell me how this will mesh with the airline.
A: It meshes perfectly. We're carrying 8 million people in and out of Florida now. The hotel location is 15 minutes from Punta Gorda, which is going to be approaching 2 million passengers per year in and out. We're one of the two airlines in the world that have our own reservation system; we don't go through a third party. So now we can start packaging things to a greater degree with our own product.
Q: You were the focus of a highly critical story on "60 Minutes" in April 2018, much of it related to the safety of your MD-80 aircraft. Since then you've completed the retirement program of those aircraft, replacing them with Airbus. Is there any lingering public perception impact from that story?
A: Not that we can tell. That was a hit piece. They never came to us wanting to know the facts. They made the facts fit the story, and that's what they wanted, in our opinion.
Q: You've reduced your cancellation rate substantially in the past two years. How have you accomplished that?
A: One, the Airbus is a more reliable airplane. Second, we put an emphasis on maintenance reliability through management changes and approaches. Not to say we were unreliable before, but we're just much more reliable now.
Q: What's your growth arc as you look forward?
A: We've told the Street [financial website] we want to grow 10% a year. We're going to do that for the foreseeable future. And we've got lots of markets out there that we think fit with our service pattern.