McDonnell Douglas MD-83 ‘N425NV’ Allegiant Air. Photo: Allegiant Air.

MIAMI — Low-cost carrier Allegiant has announced yesterday the expansion of its operations at its Memphis base, by adding non-stop service to Austin and Tampa / St. Pete, starting on October 1, 2015, hence offering flights to five popular vacation destinations from the city. Also, it is rumored that the carrier has plans to establish a base in Cincinnati / Northern Kentucky International AIrport (CVG), as reported last June by the Cincinnati Enquirer.

“Allegiant’s decision to quickly add additional air service is a strong validation that Memphis passengers have embraced the Allegiant product,” said Scott Brockman, Memphis-Shelby County Airport Authority president and CEO. “Airlines are seeing opportunity here, and we look forward to the possibility of continued growth by Allegiant.”

An unexpected move with unexpected results

Serving 56 cities with 170 daily departures, CVG has become a haven for low-cost carriers in recent months. The airport states that landing fees have decreased by 30%, attracting low-cost carriers such as Allegiant and Frontier, as these fees help to make profitable potential marginal routes.

Ultra low-cost carrier Frontier Airlines expanded its CVG operations from one to eleven destinations in a short two years. Allegiant, who began service to CVG in February of 2014 with two destinations, is now servicing eleven destinations in a move that appears to fill the gap left by Delta Air Lines. The Atlanta-based carrier used to have up to 600 flights daily departures from CVG at its peak. Progressively, the airline began to downsize until the most recent cut that took place last March, which included 14 cities, among these, Philadelphia, Charlotte, Baltimore, St. Louis and Pittsburgh, all of them business destinations, and leaving no doubt that the next cut might be the last to close this base. However, Henry Harteveldt from The Atmosphere Group, states that the Allegiant strategy is not the one that has “guaranteed success” written on it.

Harteveldt highlights that Allegiant’s presence in CVG might be built up as Spirit’s in DFW and IAH, provided that the carrier sets up the right network, schedules and fares.  “We’ve seen that it is possible for an Ultra-Low-Cost Carrier (ULCCC) to enter a base and challenge the incumbent carrier” he notes. Allegiant tends to operate a schedule that targets connecting secondary cities with leisure traffic dominated secondary airports. For example: Bellingham, Rockford, Knoxville and Orlando/Sanford and St. Petersburg/Clearwater airport. The bulk of the carriers flights don’t run on a daily basis, much less with any daily frequency.

As mainline legacy carriers have abandoned former bases like Memphis, Cleveland, St. Louis, and Milwaukee in the wake of consolidation, LCCs and ULCC’s like Frontier and Spirit and network carriers like Southwest have rushed in to fill the void. Nevertheless, Allegiant is not Spirit nor even Frontier. The Las Vegas-based carrier operates an extensive fleet of 95 aircraft, mostly comprised by aging McDonnell Douglas MD-80 aircraft which have had more than their fair share of reliability issues. Moreover, Allegiant’s track record with new bases is not perfect. “The airline previously had a base in Grand Rapids, and ended up closing that.” Harteveldt recalls. “Opening crew bases requires a lot of management attention, can be expensive since the airline needs to build out office space and the base’s management infrastructure and, if it fails, disruptive and demoralizing to the employees.”