Allegiant Air’s strong fundamentals remain intact even as costs continue to rise; US ULCCs Part 1

Ultra-low-cost airline, Allegiant Air's roughly 17% growth in operating revenue year-on-year for CY2013 reflects the solid foundation of a niche business model that appears safe from duplication within the North American market place.

As the final stages of consolidation within the US market near completion, it would seem that Allegiant's opportunities for growing its leisure-only customer base will continue to grow, evidenced by its expansion from Cincinnati, a Delta hub whose importance continues to diminish in the legacy airline's network.

But even as Allegiant's unique model continues to deliver solid returns, it faces challenges of rising costs driven by factors that could linger for the foreseeable future - salaries and maintenance.