Low-cost carrier Allegiant Air, which announced plans last month to begin flying to Honolulu, said Monday it will expand the service to include four additional West Coast cities.
The Las Vegas-based airline, which primarily connects secondary markets to leisure destinations, said it is adding seven weekly flights to Hawaii from four mainland cities starting in November. It will begin service from Bellingham, Wash., two days a week to both Honolulu (starting Nov. 14) and Kahului (Nov. 15), and one day a week from Eugene, Ore. (Nov. 17); Santa Maria, Calif. (Nov. 17); and Stockton, Calif., (Nov. 18) to Honolulu.
All except Bellingham represent the first nonstop flights from those cities to the islands.
In April, Allegiant announced it was entering the Hawaii market with flights from Las Vegas to Honolulu three days a week beginning June 29 and from Fresno to Honolulu one day a week starting June 30.
Allegiant is offering introductory one-way fares ranging from $159 to $199. Tickets must be purchased by Monday for travel by Jan. 15.
"All these markets have been on our list for more than 2 1⁄2 years, and the reason they have been is because these are markets we have served in every case for years and have had a lot of success in serving," Allegiant President Andrew Levy said in a telephone interview. "So when we looked at potential markets into Hawaii, these are the ones that rose to the top of the list because of the success that we’ve had, the history that we’ve had and obviously because of the fact that they are easily reachable with the range of the 757 aircraft."
Visitors arriving on the Allegiant flights announced Monday are expected to provide up to $86.6 million in visitor spending and $9.4 million in tax revenue annually, according to Mike McCartney, president and CEO of the Hawaii Tourism Authority.
"The regional cities that these new flights will service provide greater opportunity for travelers in the U.S. West, our largest market, to visit the Hawaiian Islands," McCartney said. "Allegiant’s two new flights servicing Kahului will also help to distribute the benefits of tourism across the state. We … look forward to working with them in building their presence in Hawaii."
Visitor arrivals from the U.S. West were up 6.3 percent in the first quarter of this year from the same period a year ago, according to HTA.
Gov. Neil Abercrombie said the addition of Allegiant to Hawaii signals increased confidence in the state when visitor arrivals are projected to hit an all-time high this year.
"Allegiant’s arrival will help meet this demand and provide additional options that are sure to be welcomed by Hawaii residents and visitors seeking the best value for vacation and business travel budgets," Abercrombie said.
Allegiant, which announced in 2010 it was targeting Hawaii, has purchased six Boeing 757-200 aircraft to fly to the islands. It has one 757 now, with two more due by the end of June and another by summer. Allegiant said it will have six altogether by the first quarter of 2013.
Levy said Allegiant might add one or two additional routes from mainland cities to Oahu before the end of this year, and there likely will be more in 2013. He said bookings have been "really, really strong" for the previously announced Las Vegas and Fresno routes.
"The size of our 757 fleet will be dependent on the success we have in Hawaii," Levy said. "Certainly we won’t be looking more for delivery this year, but it’s certainly possible if the results are as good as we think they’ll be that we’ll be looking to grow the fleet more than the six that we currently have. We expect that to happen in the next few years."
Seattle-based Alaska Airlines, which flies 20 percent of its routes to Hawaii, is the only airline currently flying between Bellingham and Hawaii. Alaska started nonstop, daily service between Bellingham and Honolulu in January 2011.
Levy said Allegiant wasn’t deterred that Alaska Airlines struck first in Bellingham, which draws travelers from both Washington state and Canada. Bellingham is about a 20-minute drive from the Canadian border.
"Bellingham is one market that we feel confident about in service to Hawaii because Bellingham is a very deep market, and we think there’s enough demand to go to both Maui and Oahu," Levy said. "People in that part of the world seem to favor Maui based on historical data. There may be other markets we may want to offer service to in Hawaii as far as other islands, but we’ll play that by ear and see where that goes. Most of the traffic comes into Oahu and then to Maui, and then there’s a drop-off. We want to put one foot in front of the other and approach this in a methodical way and let customer demand take over. That will guide our future decisions."
Corporate parent Allegiant Travel Co. generates substantial revenue by selling hotel rooms, car rentals and attractions, as well as airline tickets, to its passengers. Levy said Allegiant currently is selling rooms at 46 hotels on Oahu and 26 on Maui.
"A big part of our business is selling hotel rooms," Levy said. "We’re very big players in the Las Vegas market, and we think in Hawaii we can be very effective in selling that because we offer tremendous value for those buying the two pieces (airfares and hotel rooms) together. We offer great savings for the customer, and that’s obviously something that’s very important to the hoteliers as well."
Levy said the new airline service will generate more demand for Hawaii hotels.
"Typically, by offering low prices, it stimulates many new travelers and grows the market," Levy said.
He said Allegiant’s low-cost price structure will help it fend off threats from Alaska Airlines and other carriers.
"Our view is that Alaska announced that (Bellingham) route to try to dissuade us from doing the same," he said. "But Bellingham is a very important market for us. It’s done extremely well. We don’t pay too much attention to them (Alaska). Our business is built to fly low-cost leisure travelers and offer great savings when people buy hotels, rental cars and attractions. Alaska doesn’t have anywhere near the cost structure or revenue stream that we have, and we’re not very concerned about Alaska in that market."
Due to its cost structure, Allegiant plans to charge on the Hawaii routes $25 for each prepaid carry-on bag placed in an overhead bin and $35 for each carry-on declared at the airport. Personal items that can fit under a seat incur no charge.
Allegiant, which is publicly traded on the Nasdaq, was founded in 1997 and has posted 37 consecutive profitable quarters. It has a market capitalization of $1.2 billion, more than four times Hawaiian Airlines’ market cap of $293.1 million. Hawaiian is the state’s largest and oldest carrier.
Allegiant’s stock closed down 13 cents at $63.87 on Monday.
