Unlike larger discounters Spirit and Frontier, Allegiant Air is making money these days, buoyed by its business model of primarily flying city pairs that no other airline serves.
But like those competitors, Allegiant, too, has leaned into the industrywide premium trend.
This quarter, the Las Vegas-based airline expects two-thirds of its flights to be with planes that offer its extra-legroom product, called Allegiant Extra. And by year's end, 70% of the Allegiant fleet will have the extra-legroom seats.
"We have participated in that premium move in our own little way, and we've seen the results," chief commercial officer Drew Wells said.
More will be coming, including WiFi eventually, and potentially a first-class seat.
"Is a first-class seat right for us? I'm not sure, but certainly we need to dig into it," Wells said.
Allegiant Extra seats have 34 inches of space between rows, four to six more inches than what flyers get on standard Allegiant seats. Flyers who purchase the product, which generally costs an extra $40 to $60 one-way compared to not selecting a seat, also get dedicated overhead bin space and early boarding.
Allegiant, with its unbundled merchandising model, doesn't typically offer free food or drinks. But free snacks, though not beverages, are another perk of Allegiant Extra.
Allegiant launched the Extra product as an experiment on three aircraft in 2019, so it's not exactly a newcomer to the post-pandemic premium boom that has overtaken the airline industry. But the recent trend is a reason Allegiant has gradually expanded the offering. Planes are being retrofitted at a pace of six to 12 per quarter, Wells said, and Allegiant's new deliveries, all Boeing 737 Max 8s, are arriving with the extra-legroom seats.
Ultimately, Allegiant expects to have the Extra seats at the front of its entire fleet of Boeing Max and Airbus A320 aircraft. The airline's fleet of 28 Airbus A319s are unlikely to receive the retrofit.
For the first half of this year, Allegiant enjoyed an adjusted operating margin of 9% and adjusted net income of $73.3 million. Those figures come against a backdrop in which fellow ultralow-cost carriers Frontier and Spirit have been losing money. Spirit, especially, is embattled, having warned on Aug. 11 that it could cease operations within the next 12 months.
Both airlines have responded to their struggles by attempting to be more appealing to higher-spending leisure flyers. Frontier plans to begin rolling out a first class-style seat at the front of aircraft later this year. Spirit, which has long had such an offering with its Big Front Seat, quickly added extra-legroom seats to more than 100 aircraft this summer.
In addition, both carriers have transformed their merchandising approach over the past year by offering a more prominent slate of bundled-fare products geared away from the bargain flyers they have traditionally catered to.
Wells said that Allegiant's more gradual moves toward the premium market shouldn't be viewed in the same light, strategically. A key to the airline's resilience is that approximately three-quarters of its routes have no direct competition.
Instead, Allegiant frequently flies to sunny vacation destinations from small and midsize markets, often utilizing secondary airports within those vacation areas. For example, it centers its Orlando-area service at Sanford Airport rather than Orlando International.
Allegiant doesn't directly go after business flyers, and much of its route network operates on a less-than-daily basis. But one result of being the lone option on so many of its routes, said Wells, is that the carrier offers a convenience factor that draws leisure flyers of all types, not just budget flyers.
By adding the Extra product, and also through ongoing efforts to improve the quality of its snack and beverage selections, Allegiant isn't so much trying to appeal to new flyers as it is trying to appeal more thoroughly to its existing mix of customers, Wells said.
Numbers suggest the strategy is working. The airline makes just more than $70 of ancillary revenue per passenger in total and captures and average of $3 extra in ancillary per-passenger revenue on flights with Allegiant Extra.
Wells didn't say when Allegiant would add WiFi and noted that no vendor has been selected yet, although the airline views such an addition as table stakes over the medium term.
"We do believe it's something that our customers are going to require at some point," he said.
As for first-class seats, Wells said customer response to Allegiant Extra suggests there is more the airline could do for its higher-spending flyers.
"We'll be responsive," he said. "It's a fast-evolving industry, perhaps even more so after the pandemic. But I don't foresee us changing course and going after a business customer or suddenly flying everything on a daily basis."
Correction: Allegiant's chief commercial officer is Drew Wells. His name was incorrect in an earlier version of this report.