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Tourism and Travel
Allegiant trying not to make noise with expansion
By Richard Velotta / Staff Writer

Passengers board an Allegiant Air plane in Fort Collins, Colo., in July 2004.
STAFF FILE PHOTO

There’s a reason you may not have heard much from Allegiant Air recently.

The Las Vegas-based carrier announced earlier this month with little fanfare that it is expanding operations in eight of its 33 markets. In most cases, the airline will add flights on additional days of the week or implement some new seasonal flights.

New flights to and from Las Vegas are coming to Missoula, Mont.; Bismarck, N.D.; Wichita, Kan.; Tri- Cities, Wash.; Billings, Mont.; Peoria, Ill.; Cedar Rapids, Iowa; and Des Moines, Iowa.

Allegiant is somewhat of a novelty in the aviation industry, avoiding the traditional population centers for cities identified in smaller type on most maps.

Allegiant isn’t talking much about the expansion — or anything else, for that matter — because the company is in a so-called “quiet period” while executives work to make the Allegiant Travel Co. a publicly traded company. If successful, Allegiant would trade on Nasdaq with the ALGT symbol.

The federal Securities and Exchange Commission has rules for companies that file for public offerings of securities, and one of them is to limit public comments about the company to avoid infl uencing the initial offering of stock.

About all spokeswoman Tyri Squyres could say about Allegiant’s IPO recently is that it is “continuing” and that the airline would continue to be in a “quiet period” until the offering is completed.

But the good thing about an IPO is that the company is required to file a detailed registration statement with the SEC, offering details of the operation that had never been made public before while the company was privately held.

Some interesting tidbits about Allegiant from its registration form:

• The company has identified 65 cities in the United States and Canada that have the characteristics of the company’s target market and are prospects for expansion. Executives have talked about numerous options it has in the United States, but Canada hasn’t been part of the mix. The company also has its eye on other tourism destinations from which it could carry passengers from small-town America, but they weren’t identified. Allegiant is immersed in the tourism markets of Las Vegas and Orlando. Are the Caribbean or Mexico next?

• In an industry that has struggled to make money, Allegiant reported net income of $7.9 million in 2005. That total was down from $10.3 million the year before as the airline fell victim to the rising cost of fuel.

• Southwest Airlines attributes much of its success to a welldesigned fuel-hedging program, basically agreeing in advance to buy fuel at a certain price and then hoping the market goes the way managers expect so that they’re not paying more than current market prices. Allegiant has taken a small hedge position on fuel and at the end of last year had hedged 6.4 percent of its projected fuel requirements for 2006.

• Allegiant doesn’t take the traditional approach of most airlines and charges for many things that their competitors give away. A small charge accompanies snacks and drinks on flights. It costs more to choose your seat assignment than if you settle for first-come, first-served. Online reservations cost less than those handled by reservation agents. That ancillary revenue climbed from $89,000 in 2002 to $11.2 million in 2005. Ancillary revenue represented 3.5 percent of the company’s total revenue in 2003. By the fourth quarter of 2005, it had climbed to 11.3 percent of the total.

In other news:

The new rules: US Airways, the No. 2 operator at McCarran, announced last week that the new security rules imposed on passengers have resulted in a 23 percent increase in the number of checked baggage systemwide.

Because the Transportation Security Administration has banned liquids, creams and gels in the main cabin of aircraft, travelers have resorted to taking their toothpaste, deodorants and perfumes along in suitcases instead of in carry-on bags. While the lines are longer in the baggage check-in areas, fewer carry-on bags have resulted in faster aircraft loading and more on-time departures. US Airways said on-time arrivals have been running above 80 percent since the new rules took effect as opposed to the normal rate of about 75 percent.

The airline also announced that it is putting more bottled water and beverages on its planes as a result of the new rules. US Airways was one of the first airlines to relax rebooking fees and cancellation policies following the establishment of the new rules and will keep them in effect through Sept. 1 on flights between the United Kingdom and the United States. Excess baggage fees also are being waived through that date on those routes and on a discretionary basis on domestic flights.

Southwest expands, but not here: Normally when Southwest Airlines announces new flights, Las Vegas is somehow in the mix. But in a rare departure, the busiest operator at Mc- Carran had nothing new for Las Vegas when it announced a fall service expansion recently.

Most of Southwest’s newest growth was centered on its Dallas Love Field operations, with new flights to St. Louis, Kansas City and New Orleans.

Las Vegas’ northern neighbor, Reno, did get an additional round trip flight to and from Chicago’s Midway Airport in the latest expansion.

Behave!: The Associated Press reported that the Communist Party is cracking down on China’s tourists, who made 31 million trips abroad last year.

According to the AP, many Chinese tourists spit, loudly clear their throats, take off their shoes on planes, smoke in public places and shout into their mobile phones.

The government directive is for tourists to straighten up and quit being uncouth. Leaders don’t want the world to get the impression that the Chinese don’t know how to behave, especially with the 2008 Olympic Games coming to Beijing and the Chinese on the verge of producing 100 million tourists a year by 2020.

Nevada continues to be the only U.S. government entity to have a licensed tourism office in China, so it’s trying to bring those people to Las Vegas, no matter how they act in public.

Richard N. Velotta covers tourism for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at (702) 259-4061 or by e-mail at velotta@ lasvegassun.com.

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