The Allegiant Way
January 8, 2009 – 8:05 amAs more and more airlines start to charge for baggage and seat assignments Allegiant Air continues to chug away with profits and a high stock price after years of employing these tactics. Still, they haven’t been mimicked and it’s worth taking a few minutes to look at Allegiant’s process. (Caveat: I haven’t flown Allegiant since January 2005, so my interpretation is based off the fare rules and information posted on the website.)
1. Name Changes: Name changes are permitted up to 24 hours prior to departure. Once travel has begun, name changes are not permitted. All name changes will incur a $50 charge per name change.
This is different from about every leisure fare on the market and I’m not quite sure why they allow it. For the consumer, if you get sick, you can easily send a replacement vacationer.
2. Changes/Cancellations: If you change your reservation up to 24 hours prior to departure a change fee of $50 per segment, per person plus any applicable fare increase will apply.
Only $50 change/cancel fees plus the additional fare collection. But, notice the 24 hour rule. Within 24 hours the only option you have is a name change. Otherwise you lose your money. Why? (See below)
3. Overbooking: Allegiant Air does not overbook its flights; therefore, if you do not show up for your flight or cancel within 24 hours of scheduled departure, your entire fare for that segment will be forfeited.
Since they don’t overbook, the prohibition on changes/cancels within 24 hours protects against flights not going out full. This likely is not a huge problem for them though as they only fly to/from their destinations 1-3 times a week. Therefore, they likely have a very high percentage of passengers that show up, unlike carriers that serve business travelers.
4. Baggage: When purchased at time of booking, a fee of $15 for first checked bag and $25 for second checked bag will apply per person, per segment. If purchased at flight check-in, $25 for first checked bag and $35 for second checked bag will apply per person, per segment. In all cases additional higher fees will apply for three or more checked bags. Bags that are “Gate Checked” will incur a $35.00 fee.
Allegiant charges $15 for the first bag and $25 for the second bag if bought online. However, if you fail to book this ahead then your prices jump $10 to $25 for the first bag and $35 for the second bag. Nothing too exciting about that. Here’s where it gets interesting: Bags that are “Gate Checked” will incur a $35.00 fee. So if you are the last person on board of a full MD-80 from Medford, Oregon to Mesa, Arizona and the storage space is gone, then you will be checking your bag for $35.00.
It’s complicated but that seems like an incentive to pre-book your seat.
5. Seats: For a nominal fee, select your seat at the time of reservation or when you check in, guaranteeing your comfort and location onboard your flight. Priority Boarding may also be selected for a nominal fee with seat selection. Be the first to board and ensure your carry-on luggage space.
Alleigant has been charging for seats for a while now. First, it was priority boarding. Now, they assign you a seat for a nominal charge (up to $16) and charge you extra for the priority boarding to avoid having to check your bag. And if you read carefully, you can only purchase priority boarding if you pay for a seat assignment.
Summary
Allegiant has a system and it works. The above only addresses the issues that are at the forefront of the travelers mind over the past year. This is part of the reason Allegiant is successful. The fact that they recognized they only could only make money if they charged you for a Coke, instead of giving it to you. There’s more to the story with careful route planning and a complete avoidance of any competition. Traditional airlines can easily implement the a la carte pricing. But, the rest is a bit more difficult to mimic.
