StarBulletin.com

Travel firm to launch isle routes


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POSTED: Saturday, March 06, 2010

Hawaii tourism officials, who have been reaching out to major markets on the West Coast, are about to get some help from some of the smaller cities in the region.

Las Vegas-based Allegiant Travel Co. said yesterday it is planning to begin service in the fourth quarter of this year to Hawaii from smaller cities that currently don't offer nonstop service to the islands.

Allegiant has signed a purchase agreement to acquire six used Boeing 757-200 aircraft that will enable it to expand its leisure travel strategy into Hawaii. It says it plans to spend between $75 million and $90 million through 2012 acquiring and preparing the fleet for service.

Two aircraft will be delivered within the next two months to be placed into service in the fourth quarter of this year. One aircraft will be delivered in November 2010 and another in January 2011 to be placed into service in the first half of 2011. And two aircraft delivered in the fourth quarter of 2011 have planned in-service dates in the first half of 2012.

“;Hawaii is the most prominent U.S. leisure destination currently unserved by Allegiant, and our small-city customers have been requesting this service,”; Allegiant Chairman and Chief Executive Officer Maurice Gallagher Jr. said. “;We are very optimistic about our ability to exploit the large third-party ancillary revenue opportunity we believe exists in Hawaii.”;

Gallagher said the company expects the sale of hotels, rental cars, attractions and activities to provide “;a very meaningful contribution”; to the success of Allegiant's Hawaii service.

Allegiant, which is publicly traded on the Nasdaq, has had 28 consecutive quarters of profitability—an achievement that Allegiant attributes to operating as a full-service travel company. Allegiant had net income of $76.3 million in 2009 on $557.9 million in revenue.

The company, which is awaiting regulatory approval to begin the Hawaii routes, currently operates 46 MD-80 aircraft and said the 757 program will not affect its MD-80 growth plans. Allegiant said it expects to have 54 aircraft in service by the end of this year—52 MD-80s and two 757s.

Among the western cities that its subsidiary, Allegiant Air, serves are Los Angeles, San Diego, Santa Maria, Fresno, Monterey, Oakland and Stockton, Calif.; Medford, Eugene and Bend, Ore.; Bellingham and Pasco, Wash.; Mesa, Ariz.; and Las Vegas.

Allegiant spokeswoman Tyri Squyres said the airline is not ready yet to disclose the city pairings and the frequency of the flights.

“;Normally, we don't start with daily service on a route—maybe twice, three times weekly or four times weekly,”; Squyres said. “;We're not the traditional airline. In the beginning we find routes that we would uniquely own. Historically, that's where we've found the most success.”;

State tourism liaison Marsha Wienert said 580,000 new seats were expected to be added to the Hawaii market this year—prior to Allegiant's announcement—from 14 new routes and increased service on three existing routes. This month, Hawaii's expected air-seat capacity of 796,570 was down 11.1 percent from 895,770 in March 2008 just prior to Aloha and ATA airlines shutting down, according to Daniel Nahoopii, Hawaii Tourism Authority director of tourism research.

“;The state of Hawaii welcomes any new air seats coming into the market, and as we go through this year, we believe the latter part of this year and the beginning of next year the market will continue to improve,”; Wienert said.

David Uchiyama, vice president of brand management for HTA, said the agency has worked with Allegiant over the past two years and attended its annual conference after the company expressed interest in entering the Hawaii market.

“;Airlift continues to be one of the top priorities for HTA and Hawaii's visitor industry,”; Uchiyama said. “;Allegiant's announcement that they will begin services from secondary cities to Hawaii is exciting news for our state. These flights will allow for more convenient direct access to Hawaii from the western region of the United States.”;