Allegiant Air’s model not easily duplicated. Does that guarantee a (bigger) niche in the US market?

Although Allegiant Air has encountered its share of challenges in 2015 - labour unrest and some operational issues - its business model arguably is emerging as one of the most watertight, reflected in its 1H2015 earnings growth of 76% to USD119 million and is trading at a P/E ratio of over 33.

Allegiant is facing similar unit revenue degradation that much of the US industry is battling, but for entirely different reasons than domestic competitive capacity increases. Its decreases are driven by a higher mix of off-peak flying, new route introductions and continued growth. The airline's shift into more mid-size markets is continuing, and the airline is forecasting additional expansion into those types of markets for at least the next couple of years.

The model adopted by Allegiant for the moment seems to be one that is withstanding the changing dynamics in the US domestic market, and despite some internal challenges, the company's business strategy generates strong sentiment from Wall Street. Allegiant's earnings multiples are more than triple some US major airlines, and its stock price is among the highest of US publicly traded airlines.