Strategic Business Plan for Allegiant Air Company

Abstract

ALGT, Allegiant Travel Company, is a recreational organization established as an aviation industry in Nevada in 1997 (Allegiant Travel Company, 2019) and transitioned into a tourism and travel industry in 2017 with the purchase of Sunseeker resorts Florida (Gilbertson, 2018). The airline business proposal, strengths, weaknesses, opportunities, threats, and competitors, as well as a three-year business strategic plan, will be examined in this research study. Allegiant Air study will be undertaken utilizing Allegiant’s pages, Hoovers, Allegiant’s financial statements, Yahoo Finance, and several journals about Allegiant Air.

Allegiant Air Overview

The business was launched in January 1997 under the name WestJet Express, after many name and logo disputes; it changed its name to its current one the very next year. Following its Chapter 11 bankruptcy filing in December 2000, the business would afterward be restructured using a low-cost model focused on emerging economies not delivered by leading aircraft industries. Presently, the airline does not serve any international routes. Allegiant Air, a branch of Allegiant Travel Company with head office in Las Vegas, Nevada, is an ultra-low-cost air company prototype. Allegiant has scheduled uninterrupted flights between metropolises that are popular tourist terminuses but are unjustified by the majority of the major scheduled carrier in the US (Allegiant Travel Company, 2019). Allegiant serves 142 municipalities in 41 countries, from Orlando, Florida to Fargo, North Dakota, to Cedar Rapids, Iowa. Allegiant’s convoy consists of 94 Airbus A319 and A320 aircraft that chair approximately 138 passengers and 51 MD-80 and Boeing 757-200 aircraft that were recently retired. The airline sector is highly competitive, and they compete with Hawaiian Airlines, Alaska Air, Frontier Airlines, Hawaiian Airlines, and American Airlines (Hoovers Company Records, 2020). Allegiant has only 2.36 percent of the market, according to data from the third quarter of 2020. 2021) (Bureau of Transportation Statistics). Despite Covid-19, Allegiant Air is looking ahead and has announced that they will rise their ways by 15 in 2021. (The Business Insider, 2020).

Mission and Vision statements

As per Allegiant Air’s corporate webpage, “Our responsibility is to deliver our customers with high value, affordable tourism experiences. Allegiant declares a phrase rather than a strategic vision: “Our victory in this duty is to attend our shareholders through success, our clients by availing their prospects in the holiday tourism space, and our workers through perplexing yet satisfying business setting. Allegiant’s aim speech is simple: they need their clients to have the best encounters possible at any cost. Their charge report is aimed at shareholders, and it describes how they intend to make them lucrative and meet the desires of employees and clients (Allegiant, 2021a).

Primary Products and Services

Allegiant Air gives ordinary expeditions from towns not typically served through air carriers. Allegiant serves towns that are usually amusement places close to big towns, together with Provo, Utah, simply after Salt Lake City and Mesa, Arizona, or around Phoenix (The Business Insider, 2020). Allegiant is an ultra-low-price issuer that most effectively operates in financial system magnificence and does now no longer code-percentage with some other carrier. The fee for the whole thing on their fleet of Airbus A320s includes bags charges, chairs, alternate bills, foodstuff, and drinks in-seat (Allegiant Travel Company, 2019). In 2019, the common fee of an Allegiant price tag was $61.58. (Mazareanu, 2020).

Market Share

Air travelers have many options. As of October 2020, Allegiant has a trades share of 2.36 percent, with the top arcades being Sanford, Florida, and Saint Petersburg, Florida. They observed a slight rise in the share of 0.63 between 2019 and 2020. In 2019, their trades share was merely 1.73 percent. One of our opponents, American Commercial Airlines, has an elevated allocation at 18.94 percent (Bureau of Transportation Statistics, 2021).

Route Link

Allegiant Air’s road network consists of non-stop local routes. The best market in Punta Gorda, Sanford, Florida, and St. Petersburg, Florida. Here are the main routes Allegiant voyaged from November of 2019 to October of 2020:

• Mesa, Arizona             Provo, Utah
• Asheville, North Carolina             Ft Lauderdale, Florida
• Allentown, Pennsylvania            Sanford, Florida
• Asheville, North Carolina             St Petersburg, Florida
• Cincinnati, Ohio             Punta Gorda, Florida
• Cincinnati, Ohio          St Petersburg, Florida
• Asheville, North Carolina         Sanford, Florida
• Knoxville, Tennessee            Sanford, Florida
• Grand Rapids, Michigan           St Petersburg, Florida
• Grand Rapids, Michigan               Sanford, Florida

(Search by the Bureau of Transportation Statistics in 2021)

Key Opponents

There are many challenges in the segment of ultra-low-cost and low-cost air carriers. Most of our challengers have worked many years and have more monetary assets. In spite of these Allegiant shortcomings, they can usually serve cities with low air traffic, but larger airlines serve nearby cities. The main opponents they face are Hawaiian Airlines, Frontier Airlines, Spirit Airlines, American Airlines, and Spirit Airlines (Mergent, 2021). For example the end of 2019, Allegiant’s sales were $1.840.97 million. Opponents reported revenues of $532.3 million from Frontier Airlines, $22428 million from Southwest Airlines and $969.8 million from Spirit Airlines, and $45,768 million from American Airlines. Although Allegiant outperforms other ultra-low-cost airlines over its competitors, it cannot match the revenues of low-cost airlines such as American Airlines and Southwest Airlines. No (Hoover Company Report 2020).

Internal Allegiant Rating

This internal rating can assist Allegiant Air in developing a strategy to contend more effectively with other airline companies in the industry. All carriers have battled with Covid19, but Allegiant’s approach to the problem can be beneficial and detrimental in the years ahead (David & David, 2017).

Financial Ratios

Profit on Resources  – 8.30

Sales Proportion  – 1.43

Current Ratio  – 0.92

Weight Proportion – 3.41

Equity – 1.61

Remunerations per Share  – $14.27

Dividend per Share – $2.80

EBITDA  – 28.08 percent

Margin Return on Equity – 29.06 percent

(Retrieved from Mergent Online, 2021)

Corporate Charts, Existing and Postulated

Allegiant Air has a governing body, which includes some of the company’s executives. Chairman and CEO Maurice Gallagher Jr. Redmond, John D. Scott Sheldon, President, EVP and COO CFO and Chief Accountant Gregory Anderson, Tracey Tule, Senior Vice President, Flight Crew Operations (Allegiant, 2021b) and Scott DeAngelo, Chief Marketing Officer (Allegiant, 2021b). Management is removed from the governing body in the proposed management structure, and the committee oversees the company’s operations.

Market Position vs. Competitors

Allegiant had a 2.36 percent stake as of October of 2020, with their top markets seeming to be Sanford, FL and St. Petersburg, FL. In both 2019 and 2020, their sales increased by 0.63 percent. Their share of the market in 2019 was just 1.73 percent. Being one of their industry rivals, American Airlines has the biggest share of 18.94 percent. Another rival, Frontier Airlines, had a market share of 3.55 percent in 2020, while Spirit Airlines had a market share of 5.43 percent (Bureau of Transportation Statistics, 2021).

Existing Advertising Approach

Allegiant businesses itself as a travel agency as well as a low-cost carrier. Scott DeAngelo, the new Chief Marketing Officer, was nominated on January 29, 2020. His focus is on information and technology and how to use these tools to gain new people (Allegiant, 2021e). Allegiant expands into low‐income cities and targets vacationers. They rely heavily on online marketing. They are striving to strengthen their smartphone website in order to remove customer calls and provide a more satisfying experience (Wells, 2020). Allegiant has reached a pact with the novel Las Vegas Raiders to rename Allegiant Stadium, beginning with the 2020 season. This one will place Allegiant on the televisions of masses of Citizens and also overseas supporters who watch the Raiders’ NFL games or any events that might take place there (Raiders, 2019). They use posters, radio sets, and television for advertising and use less than $7 per commuter on promoting. On the other hand, Delta uses roughly $20 per traveler (Shabat, 2019).

Value Chain Analysis

Allegiant offers affordable produce in a highly competitive arcade. They can increase their price strategy by maintaining low working rates and not having to contend with some larger carriers since they do not work in several similar municipalities. In 2019, they had a higher weight piece of 80.61 percent (Allegiant, 2021f). Allegiant arcades to the lowest income client, so they keep a program of fewer than daily departures and therefore merely conduct business on generally busiest (CAPA, 2015).

Social media websites

Allegiant is present on all major social media websites, including Instagram, YouTube, Twitter, and Facebook. Their posts feature remarkable tourism and feature their workers (Allegiant, 2021a).

Strengths and Weaknesses

Strengths:

• One-of-a-kind business strategy
• Contribution in a Worker Standard Acquisition Strategy
• Allegiant make credit card
• Named one of the main 100 spaces to grind in a Glassdoor survey
• Make-A-Wish Foundation company
• Provision for low-income metropolises
• High returns from auxiliary things
• Used airliner/lesser ownership charges
• Financial flexibility as a result of unrestricted usage of money (Allegiant Travel Company, 2019)

Weaknesses:

• Utilized airliner will want to be replaced quicker than fresh
• Competitive business
• Carrier commerce is unstable
• COVID associated drop in tourism business
• Maintenance costs go up with an aging fleet
• Federal Aviation Administration growth limitations
• Rise in labor prices • Sunseeker Resort is currently on hold as a result of Coronavirus.
• Workgroups embody their workers (Allegiant Travel Company, 2019)

Allegiant External Evaluation

Allegiant’s external evaluation will include a discussion of the main rivals, airline industry patterns, and opportunities and threats in the external environment.

 Major Competitors

In the aviation industry, Allegiant faces numerous competitors. They do have a specific business plan that is challenging to replicate, but the air company as a whole is oversaturated. Allegiant’s closest ultra-low-cost airliner competitors are Spirit Airlines and Frontier Airlines. They all start with an unbundled reduced ticket fare and then charge for bags, seats, and anything else you might need as a passenger. Frontier Airlines had an 86.6 percent load factor, 22,965 million income traveler miles, and 29,511 million vacant chair miles in 2019. Spirit Airlines had an 85.1 percent load factor, 31,590 million proceeds commuter miles, and in 2019, 37,107 million vacant chair miles . Allegiant had an 84.4 percent payload capacity, 13,128 million income commuter miles, and 15,559 million vacant chair miles. As a result, Allegiant still has a portion of the market from Spirit and Frontier. Still, in 2019 their working proceeds of $1,703 million equated to $2,406 million for Frontier and $3,724 million for Spirit (Bureau of Transportation Statistics, 2021).

Main trends in company

The air company will rapidly recover once more people take the Covid-19 injection, and we achieve masses invulnerability. With more flights filling up, the industry is showing promise. Airports have a significant impact on a passenger’s overall experience. Passengers will most likely return to that airport because of their ease through security and customs. With the advent of the 5G network, passengers will travel more easily through landing strip where it is accessible. Improved know-how is likely to alter the liquid guidelines in place at airport security. The sensing device is checked in order to sense hazardous materials more accurately. Greener planes are also becoming popular in the air company. This results in a lower cost of fuel, which means reduced travel document fees for consumers (Linchpin, 2021).

Opportunities and Threats

Opportunities:

• Purchase new Airbus airliners
• Escalate aircraft occurrence
• Spreading out to worldwide markets
• Co-branded credit card generates fidelity plan
• Contract out main maintenance
• Improved smartphone applications for greater encounters
• Advertising in the direction of adverts followers via Raiders stadium
• Codeshare with a different air company to raise client base
• More domestic amusement hubs
• Added United States ways

(Allegiant Travel Company, 2019)

Threats:

• The similarity of some fairs with challengers
• High cost of fuel
• Covid-19 initiating commercial depression
• Security of information
• Possible airstrikes from unfortunate industry union employees
• Sunseeker resort left intact since Coronavirus
• Strict management guidelines
• Strict Environmental Protection Agency rules
• Computerized organizations/dependability
• Foundation of dues London Inter-Bank Offered Rate is discontinued.

(Allegiant Travel Company, 2019)

SWOT Analysis

Strategies and Recommendations

Allegiant plans to uncouple their facilities, charging for every additional product separately. This has been confirmed to generate a lot of proceeds for them, with ancillary items bringing in $56.68 per passenger in 2019. They do not face many rivals because they use underserved markets and landing strips that other airliners do not utilize. Commendations for Allegiant include expanding their routes and building the Sunseeker resort to maintain their leisure travel strategy of flying Allegiant and hanging around at the brasserie.

Allegiant Airlines has the possibility of current advertising through their Allegiant Stadium and attaining display time on millions of televisions in families seeing a Raiders NFL game (Allegiant Travel Company, 2019). Another suggestion would be to construct a spa in Las Vegas, where they are based.

Allegiant Human Resource Evaluation

Allegiant has understood its portion of worker problems. From the threat of a strike to going community with an absence of welfare values. Finally, they appeared to get it right when they achieved the Glassdoor Best Places to Work Award in 2020. (Green-Vamos, 2020).

2015 Occupation ratings

In 2012 and 2020, worker remarks on salary and welfares, employment, work-family balance, organization, and values were recorded on a scale of one to five. 2015 was one of the years with the lowest scores. Employee pleasure has an impact on every aspect of a business. Dissatisfied employees will not provide excellent customer service. Work-family balance received a 3.3 in 2015, wage and reimbursements received a 2.9, advancement and employment security received a 3.3, board received a 2.4, and nation received a 3.7. Generally, the mean score for every group in 2015 was the lowest ever recorded, at 3.2. Allegiant appeared to pay attention to these ratings earnestly, and in 2017, they had attained their maximum mean of 4.0. (Zizka et al., 2020).

Management Response for Improvement

Innocent executives were probably not surprised by the 2015 recruitment rates, as many pilots and flight attendants publicly expressed their dissatisfaction with the firm and were in dialogues to strike. This year has also seen a startling increase in the number of aircraft care issues, and there have been high-level safety reports indicating that safety is not the key to cost-cutting. The pilots were attempting to reach a contract agreement because the majority of them were dissatisfied with the Allegiant planning system, which they claimed was confusing and did not allow for adequate staff rest. They also expressed dissatisfaction with their pay and benefits. If pilots and flight crews go on strike, the airline’s operations will be severely disrupted (McMorris, 2016). Although was no agreement reached in 2017, older ships withdrew and installed new Airbus A320s to address some security concerns (Mutzabaugh, 2016).

Allegiant Corporate Social Accountability

The Company has three major zones of philanthropic support to share its commitment to communal organizations. The anticipation is to transform the communities they attend by assisting those facing medical challenges in traveling, promoting community safety and recovery, and providing charitable organizations that promote STEM education (Allegiant, 2021d).

Recommendations for Social Sustainability

Allegiant received a bad report in February 2021 after a few African-American youths returning home from a basketball game were kicked off the plane for not properly wearing a mask. It appears to be racist, and some passengers interviewed have sided with the youth, claiming they are not breaking any laws. Still, the cabinet team claims the child violated a new organizational law requiring a face mask on a plane. According to an Allegiant representative, “diversity and inclusion are important values of the company” (Puhak, 2021). They list the names of the variants and listings under the allegiant pricing category on their website (Allegiant, 2021a). Allegiant should change its values to include diverse words and make them more visible on its website to satisfy the UN Sustainable Development Goals of curbing unfairness as well as endorsing an integrated society and peaceful (Zizka et al., 2020).

Allegiant Aircraft Maintenance Overview

Allegiant employs technology that alerts the flight crew before any problems arise. These predictive adjustments are on time rather than taking off to avoid any travel inconvenience. They give other businesses special attention but provide general care in-house (Allegiant Travel Company, 2019).

Recommendations for Sustainable Business Decisions

Allegiant should take extra precautions to stabilize their flight. They will then be able to exert control over their care practices. Suggestions are that they purchase new aircraft to use up-to-date performance on new engines that are more efficient, lowering fuel prices (Allegiant Travel Company, 2019).

Management Decisions at Allegiant

Addressing Industry SDGs

The United Nations inaugurates the principles of sustainable growth, which are also applicable to the aviation industry. Completing them cannot be completed entirely, but self-awareness allows the aviation industry to ensure its long-term viability. SDGs, gender equivalence, hunger, zero poverty, quality education, clean water and sanitation. Health and well-being, decent work and economic development, affordable clean energy, infrastructure, and industrial growth. They reduce inequality, life on Earth, sustainable cities and communities, climate action, underwater life, peace, responsible consumption and production, justice, purposeful relationships, and robust institutions (ATAG, 2021).

Financial Implications

The financial impact of long-term objectives is enormous. There is not enough money in the world to alleviate poverty, but $ 160 million has been raised in collaboration with UNICEF and airlines to collect coins for passengers. Spending of Worldwide $51.4 billion on new airports and aviation development (ATAG, 2021).

Allegiant Reaction to Coronavirus Pandemic

Allegiant Air quickly saved money, halting the construction of Sun Seeker Resort and entering into agreements with merchants to postpone account payments in March 2020. They were also able to work with the IRS to get a refund for lost operating costs and $ 100 million for the 2019 losses they were already facing (Gallagher, 2020). Allegiant’s website informs potential passengers about the safety precautions to keep the plane clean. They thoroughly clean the aircraft using standards that violate CDC guidelines, in addition to standard cleaning. Treatment of each flight with antimicrobial protection, and when requested, each customer gets a disinfectant. The cabin air is cleaned every three minutes with flexible organic multiple filters to keep germs and viruses at bay. They also claim that they spent less time exposing themselves to viruses by restricting time at airports (Allegiant, 2021c).

Long-Term Effect

Allegiant received $ 172 million in government assistance through the Payroll Support Program. Because it is a grant, a un-payment of 87 percent, and the remaining 13 percent is a long-term credit (Gallagher, 2020). Because of the ability to halt production of the resort at the start of the Epidemic, they had the ability to cut prices as well as labor to reduce their dues. Gallagher anticipates an increase in future trips, and as of June 10, 2020, the upcoming reservation had surpassed the previous year (Gallagher, 2020).

Employee and Customer Perspective

Allegiant has been upgraded to a 7-star airline by AirlineRatings.com due to the Covid-19’s safety features. They adhere to the CDC guidelines and the community level where passengers’ board, Flight Guards use appropriate Personal Security Equipment, and planes are thoroughly cleaned (Flight Rates, 2020). The customer has expressed trust in Allegiant because his future booking has exceeded last year’s booking (Gallagher, 2020).

Conclusion

To summarize, Allegiant Air is a recreational airline marketing company with a unique business model that works for underserved cities. They have a small market share but can grow in the coming ages because they have retired their old fleet and are now only using Airbus A320 and A319s. This will aid them in saving money on maintenance and fuel. They are in good financial shape, but they must demonstrate that they are concerned about long-term resilience. Allegiant will be a developing airline, and it would not be astonishing if it eventually relocated to one of the world’s smallest cities (Allegiant Travel Company, 2019).

References

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