Allegiant captures Chattanooga market share

Randy Ellis was flying on Allegiant Air from Chattanooga to Orlando on Friday to see his daughter and said a cheap ticket was his reason for picking the airline.

"Basically, it's the fare," he said.

Discount carrier Allegiant is advertising one-way tickets from Chattanooga Metropolitan Airport to Orlando for $29.99 and to Tampa-St. Petersburg as low as $19.99.

Since landing in Chattanooga almost three years ago, Allegiant has captured nearly 20 percent of the local market, figures show.

Allegiant's model is flying high when it comes to making money in a tough economic time.

Earlier this week, the carrier reported net income of $13.8 million for its third quarter, up 181.7 percent over the same period a year ago. Per dollar of operating revenue, Allegiant is the nation's most profitable airline.

To capture one out of every five fliers from the Chattanooga airport, Allegiant is doing more than just offering seats on a plane, said Mike Landguth, the Chattanooga airport's president.

Allegiant is trying to entice customers by being something of a one-stop shop -- booking not just flights, but hotels, car rentals and amusement park tickets, he said.

"Their CEO talks a lot about being a booking company first and airline second," Mr. Landguth said. "It has done a good job of collecting ancillary revenue."

In the first three quarters of recession-plagued 2009, Las Vegas-based Allegiant boarded 43,761 people in Chattanooga. While that's down 5.9 percent from the same time a year ago, it's better than some airlines at the airport and includes the indefinite suspension of Allegiant's Chattanooga-Fort Lauderdale service amid slow traffic.

Tyri Squyres, Allegiant's corporate communications director, described the company as "a full-service travel company" offering flights, hotel reservations and the other travel services.

Allegiant was rescued from bankruptcy in 2001 by its now chief executive, Maurice J. Gallagher Jr. After the purchase, company officials hit on a strategy of offering now only low-cost ticket prices but other travel services and flying routes from Las Vegas to smaller cities. Later, the airline implemented the same blueprint to Florida.

On Friday, Jerry Pollard, of Rossville, said he was flying on Allegiant to Orlando, Fla., because of the low fares offered by the airline.

But, he added, the airline has a lot of add-on fees included in the booking process, including ones for seat selection and bags. What started as a $39 fare wound up costing $198 for two one-way tickets, Mr. Pollard said.

It all starts with the ticket price, Ms. Squyres said. Prior to Allegiant, Chattanooga didn't have a low-cost carrier, she said, which is the case in many of the cities served by the airline.

"When we introduce low fares, it stimulates demand," Ms. Squyres said. "That becomes very attractive. That's an important part."

Officials at the Chattanooga airport help Allegiant maintain its low fares, Mr. Landguth said. Three years ago, when the airport was wooing Allegiant, officials agreed to handle the airline's ticket counter and baggage operations to cut the carrier's expenses.

While Allegiant pays for the service, the cost is lower than providing its own people, Mr. Landguth said.

"Without that piece, without venturing into that, it didn't work out for Allegiant," the airport official said.