Allegiant Air assures prudent capacity management will counter softness in demand

US ultra low cost carrier and travel company Allegiant Air remains optimistic about its performance during 1Q2013 despite macroeconomic trends that pressured close-in bookings during late 2012.

The company's confidence is fuelled by the first quarter typically being its strongest and applying prudent capacity management to improve performance during off-peak times. Included in the pruning of supply are some of Allegiant's routes to Hawaii, where the carrier is still learning the ropes with respect striking an optimal supply-demand balance.

Allegiant during 1Q2013 will continue to place significant emphasis on its Florida markets and ease off Las Vegas as cost pressure in the market continues to mount.

Allegiant executives recently stated that beginning in Nov-2012 average base fares were lower than anticipated, which dampened the forecast for Dec-2012 and led the company to revise passenger unit revenues for 4Q2012 downward. At the end of 3Q2012 Allegiant estimated 4Q2012 passenger revenue per available seat mile to fall 7%-9% year-over-year and during Nov-2012 revised the estimate to a 8% to 10% decrease. The drop in passenger unit revenues was actually 10.3% for the last three months of the year.