Allegiant Travel Stock

Allegiant Travel Company operates as a leisure travel company.

The company focuses on providing travel and leisure services and products to residents of under-served cities in the United States.

The company’s unique business model provides diversified revenue streams from various travel services and product offerings which distinguish the company from other travel companies. The company operates a low-cost, low utilization passenger airline marketed primarily to leisure travelers in under-served cities, allowing the company to sell air transportation both on a stand-alone basis and bundled with the sale of air-related and third party services and products. In addition, the company provides air transportation under fixed fee flight arrangements.

In connection with the company’s leisure travel focus, the company is completing the construction of its Sunseeker Resort in Southwest Florida, which the company expects to open in late 2023.

Below is a brief description of the travel services and products the company provides to its customers:

Scheduled Service Air Transportation

The company provides scheduled air transportation on limited-frequency, nonstop flights predominantly between under-served cities and popular leisure destinations. As of February 1, 2023, the company’s operating fleet consisted of 122 Airbus A320 series aircraft. The company was selling travel on 573 routes to 125 cities. References to ‘Airbus A320 series aircraft’ are intended to describe both Airbus A319 and A320 aircraft.

Ancillary Air-Related Products and Services

The company provides unbundled air-related services and products in conjunction with air transportation for an additional cost to customers. These optional air-related services and products include baggage fees, advance seat assignments, the company’s own travel protection product, change fees, use of the company’s call center for purchases, priority boarding, a customer convenience fee, food and beverage purchases on board, and other air-related services. The revenue for ancillary air-related products and services is reflected in the passenger revenue income statement line item, along with scheduled service air transportation revenue and travel point redemptions from the company’s co-branded Allegiant credit card and its non-card loyalty program.

Third Party Products and Services

The company offers third party travel products, such as hotel rooms and ground transportation (rental cars and hotel shuttle products) for sale to the company’s passengers. The marketing component of revenue related to the company’s co-branded credit card is also included in this category.

Fixed Fee Contract Air Transportation

The company provides air transportation through fixed fee agreements and charter service on a year-round and ad-hoc basis.

Business Model

The company has developed a unique business model that primarily focuses on leisure travelers in under-served cities.

The company established a broad route network with a national footprint, providing service on 571 routes between 93 origination cities and 32 leisure destinations, and serving 42 states as of February 1, 2023. As of December 31, 2022, the company was selling 573 routes. In most of these cities, the company provides service to more than one of its leisure destinations which are offered either on a year-round or seasonal basis.

The company has identified more than 1,400 additional domestic routes which the company could target in the future to further expand its network. The company owns and manages its own eCommerce platform, which gives the company the ability to modify its system to enhance third party product offerings based on specific needs.

Ancillary Product Offerings

The company offers various bundled ancillary products whereby customers can elect to purchase multiple ancillary products at a discount.

The company’s third party product offerings give its customers the opportunity to purchase hotel rooms, rental cars and airport shuttle service. The company’s third party offerings are available to customers based on its agreements with various travel and leisure companies. For example, the company has partnered exclusively with Enterprise Holdings Inc. for the sale of rental cars packaged with air travel.

Routes and Schedules

The company’s scheduled air service (including seasonal service) predominantly consists of limited frequency, nonstop flights into leisure destinations from under-served cities across the continental United States.

Segments

The company operates through two segments, Airline and Sunseeker Resort.

Airline

The Airline segment operates as a single business unit and includes all scheduled service air transportation, ancillary air-related products and services, third party products and services, fixed fee contract air transportation and other airline-related revenue. The CODM evaluation includes, but is not limited to, route and flight profitability data, ancillary and third party product and service offering statistics, and fixed fee contract information when making resource allocation decisions with the intention of optimizing consolidated financial results.

Sunseeker Resort

The Sunseeker Resort segment represents activity related to the development and construction of Sunseeker Resort in Southwest Florida, as well as the renovation of Aileron Golf Course. Plans for the resort include a 500-room hotel and two towers offering an estimated 180 one, two and three-bedroom suites, bar and restaurant options, and other amenities. The golf course is a short drive from the resort site and is considered, from a planning and strategic perspective, to be an additional resort amenity. The construction of Sunseeker Resort is an extension of the company's leisure travel focus and it is expected that many customers flying to Southwest Florida on the company will elect to stay at this resort and enjoy its amenities.

Marketing and Distribution

The company’s website and mobile app streamline the booking process and strengthen the company’s ability to sell air ancillary and third-party products.

The company’s direct-to-customer distribution method also enables the company to gather valuable customer data. In addition to helping the company better understand the company’s customers, the company utilizes data, such as customer email to market its products and services in a cost-effective way.

Beyond allegiant.com, the company markets its products and services through a combination of traditional advertising, including radio, television, as well as digital advertising.

Aircraft Maintenance

The company has a Federal Aviation Administration (‘FAA’) approved maintenance program, which is administered by the company’s maintenance department headquartered in Las Vegas. Technicians employed by the company has appropriate experience and holds required licenses issued by the FAA. The company provides them with comprehensive training and maintains its aircraft in accordance with FAA regulations.

VivaAerobus Alliance

In December 2021, the company announced plans for a fully-integrated commercial alliance agreement with VivaAerobus, designed to expand options for nonstop leisure air travel between the company’s markets in the United States and Mexico. The company and VivaAerobus have submitted a joint application to the DOT requesting approval of and antitrust immunity for the alliance.

Government Regulation

The company is subject to federal, state and local laws affecting the airline industry and to extensive regulation by the DOT, the FAA, and other governmental agencies.

Air carriers are subject to certain provisions of federal laws and regulations governing communications because of their extensive use of radio and other communication facilities, and are required to obtain an aeronautical radio license from the Federal Communications Commission (‘FCC’). To the extent the company is subject to FCC requirements.

The quality of water used for drinking and hand-washing aboard aircraft is subject to regulation by the EPA. To the extent the company is subject to EPA requirements.

Working conditions of cabin crew members while onboard aircraft are subject to regulation by the Occupational Safety and Health Administration (‘OSHA’) of the Department of Labor. To the extent the company is subject to OSHA requirements.

The company is a participant in the Civil Reserve Air Fleet (‘CRAF’) Program which affords the U.S. Department of Defense the right to charter the company’s aircraft during national emergencies when the need for military airlift exceeds the capability of available military resources.

History

Allegiant Travel Company was founded in 1997. The company was incorporated in 2006.