Allegiant Buys ex-Thomson 757s for Hawai’i Flying, I’m Looking at Long Beach

The long-discussed rumors have finally come true. Allegiant, long loyal to the MD-80, is branching out. Starting later this year, they’ll start flying 757s to Hawai’i. There has some really cool potential, especially some right in my backyard.

The plan is for Allegiant to buy 6 757-200s. The first two are to be delivered within a couple months and will go into service by the fourth quarter. Two more will go into service in the first half of 2011. The last two will go into service in the first half of 2012. This brings up two very big questions.

1) Where are they going to fly these things?

Allegiant’s model has always been to bring people from smaller cities with little service to large sun/vacation destinations a couple times a week. I don’t expect that to change. They tell us that these 757s are going to be used for Hawai’i flying. So we know that Hawai’i is the sun destination, but where will they be bringing people from?

I have one idea that makes me particularly excited, and it marks the first time that a sun destination and a spoke city are only 20 minutes apart. Long Beach. Allegiant will start service from Long Beach in August, so the timing is only slightly off, but I’m sure they can figure that out. This makes perfect sense. You can fly any number of airlines from LAX to Hawai’i and there is service from Orange County as well. But Long Beach doesn’t have any flights to Hawai’i at all, and the beauty for Allegiant is that it’s unlikely that it will ever face competition.

JetBlue doesn’t have the airplanes to make Hawai’i, so that’s not a real threat unless they buy a new fleet which seems unlikely in the near future. The other players either don’t have the fleet for it or they wouldn’t have any interest. That gives the market to Allegiant.

It makes even more sense considering that they already serve LAX from many smaller cities throughout the country. LAX is the sun destination. They don’t want to duplicate that service to Long Beach because Long Beach is more of an origin for large pockets of Southern California than it is a destination. This is a great way for them to open up Hawai’i while tapping into the Southern California market. Oh yeah, and the costs at Long Beach are really cheap. That helps.

I’m sure Long Beach won’t be the only place with Hawai’i flights. The most obvious would be to fly loads of Canadians from Bellingham, Washington. They already siphon off a ton of Canadian traffic there to send them down to Vegas. Considering the amount of lift that already goes from Vancouver to Hawai’i, I bet this would be a slam dunk.

Other than those to markets, I could see the potential for places like Fresno, Monterey, and Eugene a couple times a week. There is really a lot of opportunity for them here, and it fits right into their model.

2) Where are these planes coming from? I’ve heard plenty of speculation about this, so let me end it for you. Sources tell me that these planes are likely coming from AerCap, an aircraft lessor. AerCap is taking these planes back from TUI’s Thomsonfly subsidiary. If this is true, that puts the planes around an early 1990s vintage. That’s not too old, but just old enough that Allegiant could get a good deal on them.

I’m sure these planes will be stuffed with a bunch of seats to help get travelers to their vacation. The total cost for all these airplanes is expected to be $75 to $90 million to get them ready for service. At $12 to $15 million a plane, that’s cheap under regular circumstances but incredibly pricey compared to Allegiant’s cheap MD-80s.

I’m excited about the prospects here. Very cool move.


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Muscat,  Oman
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