Allegiant’s model susceptible as oil spikes; May-2009 traffic preview

Las Vegas-based LCC, Allegiant Air’s ability to offer sustainable low fares requires strict cost control, and a key part of its lower cost structure centres on the operation of ageing MD-80 family jets, which the airline can purchase and refurbish for as little as USD4 million. While the aircraft are less fuel-efficient than newer types, Allegiant is able to purchase them outright for one-tenth the cost of a new B737 aircraft, and because of the low cost of ownership, the carrier is able to fly the aircraft less (seven hours per day versus 13 hours per day at JetBlue), which helps keep labor costs lower. Overall, Allegiant operates with 35 full-time workers per plane compared to more than 50 at other carriers.

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