One local company in particular got a nice March Madness boost - Allegiant Air. Although Las Vegas wasn't a venue for any NCAA Tournament games, Allegiant was hired for charter flights to take several college basketball teams from their homes to their tournament sites.

Allegiant's overall passenger count climbed by 49.1 percent over last March, and the company reported 44.7 percent more departures over the same month a year ago.

It's all part of the business plan developed by Maurice Gallagher, chief executive of Allegiant Air, whose company is now the seventh-busiest carrier at McCarran International Airport. The company is expanding and will soon move into a new corporate headquarters in southwest Las Vegas.

Although there have been tough times in the aviation industry, Gallagher is optimistic that his company and the industry will improve.

Gallagher talked with In Business about Allegiant's growth and some of the company's plans.

Answer: It doesn't seem quite that rapid when you're living it every day. We've just been able to execute very well. We have a terrific staff, a team that has done an exceptional job of taking our vision - our business model - and executing it very well. As a result, we've been generating profits and growing very nicely at the same time.

We have five destinations, what we term destinations, for our leisure customer. We have Las Vegas; one of our newest ones, the Phoenix-Mesa airport; Sanford-Orlando; St. Petersburg, (Fla.); and Fort Lauderdale, (Fla.). To those five destinations, we have as many as 53 small cities - we term them small cities.

Brilliant is an overused word, per se. We have just gone about trying to be different. So, for lack of a better description, we have originated the plan. Will others imitate us? Possibly. But we also think we have some barriers to entry, not the least of which in today's financial market is capital. It's a very tough financial market to raise capital to do this business. We have relationships that provide us our ancillary revenue, which are tough to duplicate quickly, and those include the hotel relationships here in Las Vegas, as an example. The other key piece of this is our automation system, which is really customized for our needs. It's critical in creating these ancillary revenues. While somebody could come in and fly the routes and provide the service, generating these other revenues, which are key to our profits and our success, would be very difficult to do quickly.

National was a more traditional airline in the terms of the industry parlance. By that, I mean (National officials) tried to run a hub-and-spoke. They flew bigger airplanes. They offered a more luxurious product, including very sumptuous first-class service. Their (Boeing) 757s had 175 seats, and we started with as many as 160 seats, so you can see that the economics on a per-seat basis favored our airplane. We built this business around low-cost, leisure orientation. They were more of a traditional business orientation. At the end of the day, their strategy, I think was flawed. They also had a problem with distribution, and by that I mean a lot of companies that start in major metropolitan areas - say Chicago - you can sell to the local population and really generate a lot of local traffic. Frankly, coming to and from Las Vegas, the local traffic is the smallest piece of what you do so National (officials) had to distribute their product in the Chicagos and the Philadelphias and the New Yorks and the Miamis. Frankly if you're in Chicago and you had choices between American, United and National, you don't really know who National is. Why would you choose National? It was a tough business model to make work. Having said that, it had great people and a lot of its alumni are here with us today. It's been a great source of good, quality people that helped us grow and prosper.

In a macabre sense. As they say in golf, every shot makes somebody happy. (National's) demise really released a lot of good people that we've helped to build the airline with.

We're a business. We need to make money. So many times people in our industry have done their business model around market share or nonprofit-oriented arenas. As we tell people, our service going into a small city is their dream and our money. Not to say that we're not interested. Certainly we wouldn't go into a town and start it if we didn't believe it was going to work. But after a very reasonable amount of time, which we believe is anywhere from 90 to 180 days, if it doesn't work - there are reasons structurally because we offer a good product, we certainly know the fares are very low and maybe we missed it - but we're realists, and we'll back up. If there are hard feelings, we don't try to go out that way. That's not to say that we don't damage some feelings or perhaps people don't believe we didn't give it all we should or any number of reasons. But we're pretty good at analyzing what works and what doesn't work and if we conclude that if it doesn't work, we're going to move accordingly.

Historically, cities have approached us. They send out the airport personnel, the manager or director, perhaps a city father. In small cities, the airport is an economic driver in their environment, and we fully understand that. Small cities are very limited in their air service. If you live in the Midwest, I like to joke that between the Rockies and the Mississippi, most of the cities in that environment are islands surrounded by grass. And the only way out, save getting in your car and driving for multiple hours, is going out through the four corners. You get on a turboprop or a small jet and you go through Minneapolis to the north on Northwest, you have Denver with United, American in Dallas, Continental in Houston and then Chicago is American and United again. So those are the ways out of those environments. We give people a nonstop way to get from here to there, particularly for the leisure destination. Those are reasons we succeed. We come in with that different approach that has been very successful, a hallmark of what we do.

We're in more than 50 cities and the pursuit of us by different cities, at this point we'd just as soon not say. One of the unique things we did this spring was have our own small-city fair and we invited all our existing cities as well as anybody interested in our service to come and talk to us over a three-day period. Very unique. No one to my knowledge has ever done this before. We had as many as 100-plus attendees, a terrific turnout. It was well-received. We told people we were already serving how they were doing - we gave them a report card - and if we weren't serving them, what it would take to come in. A lot of people come out thinking, "We'll show you the revenue is really good." Frankly, revenue takes care of itself. We're more interested in a low-cost structure that really meets our needs, that's long term, is dependable and forecastable. At that point, we know we can make the economics work because we pretty well understand how to do the revenue side. It's a bit of an eye-opener for our small cities, but that kind of fair approach, which we're going to do annually, is very efficient for all of us, the cities as well as Allegiant.

We did that in early February at a number of resorts around town. It's not hard to get people to visit us in our fair city, and so they came during that period and it was exceptionally well-received.

We have determined that there are upward of 90 to 100 small cities that we think make sense. We're in 53 of them. We've probably stopped service to five or six that would be difficult to go back into, so that leaves 30 to 40 more smaller cities. Our criteria, as I just mentioned, are low cost and us having the capacity and the airplanes to do the service. But we're continually plowing that ground, trying to understand which cities make the most sense in the near term.

Uh, cheaper gas? As the banker once said, "Plan for the worst and hope for the best." We have to plan for higher fuel. That's just the way the world is working today. I think the fuel prices are exacerbated by the current economic malaise. You have macro-issues like the Fed lowering interest rates, so you have people selling the dollar and buying oil as a hedge. Putting those aside, this is a very disciplining event. Probably prior to the last two or three years, you have not seen the airline industry as a whole cut capacity back. Since deregulation in the late '70s, it's been a market-share game, and it's been grow, grow, grow. There's been no incentive or understanding that by cutting capacity you can raise fares. People tell us, "Well Maury, if the price of gas is going up, just raise fares." And you go [slaps his forehead], "Damn, why didn't we think of that?" That's what we do all day. The simplistic approach that you can just raise a fare or that you've not optimized your fares with the capacity that's in there is not very logical. So to raise fares practically, you have to cut capacity. Air travel in this country has been the best bargain over the last 20 years. On an inflation-adjusted basis, it's down 50 percent in real terms since the 1970s. You're going to see fares go up. They have to, to offset the cost of gas. That's the foreseeable future.

The MD-80 is a reasonably good airplane for its age. It was an airplane developed in the late '70s and manufactured through the '80s and most of the '90s. We carry 160 seats, so the fuel burn per seat is very good on a relative basis. Having said that, a Boeing 737-800, you can put as many as 189 seats in it, so there's 29 more seats, and it burns probably anywhere from 150 to 200 gallons less per hour of flight. That's a pretty big difference. So the economics on that airplane on a fuel basis are very attractive. Having said that, the cost of our airplanes are 15 percent of what a new airplane costs. We, historically, have been very comfortable with the MD-80 particularly on the cost side. Do we look at new airplanes? We're always investigating what makes sense. How would they fit in our system, all of those aspects certainly are under review. You've also had one of the most bullish airplane sales markets that we've seen in the history of airplanes. Boeing would tell you they're sold out through four or five years. You can't get an airplane. Worldwide demand for the Boeing and Airbus products are all competing interests to trying to understand what makes sense, what's the best economics and how you should go about looking at your fleet.

Absolutely. We have to have airplanes to grow. There were about 1,000 of them manufactured and are still in use. In fact, American Airlines has 300 of the airplanes that they're still flying. Delta, I believe, has 120. There are fleets all over the world. The airplane is in transition, reaching its more mature phase. Carriers are looking to get out of the airplanes, so we're talking to them all the time. The benefit to us is that this is an operationally terrific airplane. It shows up everyday, it's very reliable, it's certainly safe. It's reasonably cost-efficient to operate. The cost of that airplane on a financial basis, and with us being one of the only people in the market, gives us a terrific financial advantage when purchasing - and we own our fleet, I might add - so those are all attributes for us going after the airplane and they're out there for us to get. So if somebody's selling a fleet of MD-80s, odds are they're talking to us.

The MD-80 was one of the first Stage 3-compliant airplanes. They have certainly made progress from that date on, about being able to make a better profile airplane when it comes to noise. Are we the noisiest out there? I don't think so. Are we among the noisiest? We could be. But we are compliant with the regulations the way they are, and we certainly want to be good neighbors so we're trying to fly appropriately and be a good neighbor over the people who surround the airport.

To the contrary, all the issues are raised by people such as the press and airport directors, frankly. Our customers have shown no reticence to buy our products offered that way. Candidly, if you were to go in and buy a car and you wanted a plain-vanilla car and they made you buy all the features and you had to pay for it, or said differently, you'd rather get a plain-vanilla car and have this feature or that feature, that's our approach. We're one of the few industries that have a real monotone approach to pricing. Frankly, as an industry, we're revenue-starved. We need more money coming through the turnstiles and we have not as an industry been able to figure out ways to generate something beyond just charging for a fare. There is a psychology, candidly, to say, "I buy the fare and then I make other decisions." We've been able to leverage that psychology and we're sensitive to it. If our customers stop buying seat assignments or buying stuff on the airplane - Cokes or whatever they might be - we would react accordingly. But the average person appreciates that those things cost money and they're not an unreasonable request to purchase. At the end of the day, you don't have to purchase it. That's our position.

The world's coming to our way of doing it. United with the baggage charges, Southwest with its upgrade for business customers charged more for - effectively - a higher boarding pass that gets you to the front of the line irrespective of when you arrive at the airport. All of those are recognition that you can sell different products inside an airplane. We've had first class for years. Irony of ironies, we've charged for liquor, and we've thought nothing about that, but we're not supposed to charge for a Coke. It's somewhat incongruous.

One of the great things about my job is that I get to take some of the credit, at least for some of the PR things. Tyri Squyres, who runs all of our media relationships, kind of put this together with another person from Blue Man Group (Erin Tischendorf), and they took the time to work through the details and all the aspects of it. We have cultures that I think are fairly similar with entrepreneurial small companies that have grown up to be reasonably successful, outgoing organizations that we are today. That mesh of cultures, their interest in our customer base, our interest in their product, all of it kind of meshed nicely. Tyri and Erin did a great job putting it together for our announcement a couple of weeks ago. We're starting to sell their tickets on board, and it gives us a great product to sell, and they're looking for other distribution methods. So it's a win-win for everybody.

Absolutely. That's a terrific touch, isn't it? They did that without us asking for it. It was really a nice feature. They've been bringing that airplane out there (on stage) for quite awhile and they put our logo on it, so it goes exceptionally well.

We certainly are a hometown airline in the sense that Las Vegas is our headquarters, and we're very proud to be from here and feel very good about it. On a practical business basis, only about 5 (percent) to 10 percent of our customers originate here. That's the whole mystique of this town. People come to this town, and we have 40 million people a year coming in and out of here, and we have a base of about 1 million or 1.2 million, so we have a 40-1 ratio of folks coming to and from the town. So we focus on getting people to and from the town, which makes us successful. Certainly customers (here) use us. I have friends and neighbors all the time say, "Gosh, Maury, going to Missoula, (Mont.), what a great trip." Or Pasco, (Wash.), or wherever these small towns are that they couldn't get there before. So we're used by the locals. Interestingly enough, how they find out about us is that they're from Missoula and some neighbor or friend from Missoula starts talking to them and they say, "By the way, did you hear about this great airline?" So we get this word-of-mouth advertising that's been very powerful and it gets the message out probably as well as we could have by spending money here.

You certainly have a higher profile. You have additional requirements and duties as a public company that are over and above what you typically have as a private company. You have to become Sarbanes-Oxley qualified, which is a technical requirement that is a very high standard of financial statement reporting and the systems to make sure you can accurately do all that very technical jargon. But we're in pretty good shape for all those things. We have very good people, very good systems, good control of our business, so that transition has been pretty straightforward on that end. Last but not least, you have a public shareholder that you need to talk to. Tyri Squyres does a lot of that work for us. We, the management team, are constantly talking to investors and analysts. We do road shows to promote our stock. So those are all new aspects, but we knew they were coming and it's part of the turf and you have to deal with it.

The latter. We don't track business traffic. My sense is that most of the business traffic using Las Vegas as a background originates out of Las Vegas. I know there are many casinos in smaller towns through the Midwest so I've got some acquaintances that told me they fly on us to the Peorias of the world to get to their business destinations, but it's really a very small part of our business.

It's doing quite well. We have two fundamental parts to that. We fly airplanes for Harrah's in Laughlin, Reno and most recently in Tunica, Miss. Those relationships have been very strong. We call that our fixed-fee flying in our financial statement. The secondary piece is our ad hoc flying, as we call it. We wait for the phone to ring, in effect. As an example, our March Madness traffic we are very involved in the movement of college basketball teams around the country, so we gear our business model up this time of year to have all hands on deck. I like to joke that it's our retail season for Christmas. From Feb. 15 through April 1, that six weeks is when we do a great deal of our business model, not the least of which is March Madness. But all during the year, we'll wait for the phone to ring and respond to people who want an airplane to move people around, particularly sports teams.

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