Allegiant to pull out of Hawaii market

Allegiant Air’s expansion into Hawaii turned out to be short-lived.

The Las Vegas-based carrier, which entered the Honolulu market in June 2012 with service from Las Vegas and Fresno, Calif., said in a video to employees Tuesday that it will end service in August due to increasing competition and higher costs for its six Boeing 757s used on the routes.

Allegiant at one time served the islands from 10 mainland cities, but cut back in recent years to include only routes to Honolulu from Las Vegas and Los Angeles. Previously it also served Hawaii from Bellingham, Wash. (to both Honolulu and Kahului); Boise, Idaho; Eugene, Ore.; Spokane, Wash.; Phoenix; Stockton, Calif.; and Santa Maria, Calif. A plan for service from Monterey, Calif., to Honolulu was canceled in 2012 before it even started.

The company said it is closing its Hawaii base and seeking to relocate 46 workers affected by the pullout.

“We’re leaving Hawaii because the competitive environment in the market is uncertain and likely to worsen over the coming years,” Jude Bricker, senior vice president of planning for parent Allegiant Travel Co., said in the video. “We want to simplify our network and get out of the 757 and move toward an all-A320 fleet (that is more reliable and fuel-efficient), and we want to make the investments commensurate with that initiative.”

Allegiant, whose business model is to connect travelers from secondary cities to leisure markets, struggled in Hawaii nearly from the outset as it continually put routes on “seasonal hiatus” and suffered from mechanical breakdowns and labor problems.

And while the Hawaii Tourism Authority is expecting airlines to bring a record 11 million seats to the state this year, that increased airlift — especially from the West Coast — proved a detriment to Allegiant, which discovered shortly after starting service that it couldn’t fill its 215-seat planes on flights to Hawaii from secondary cities year-round.

“Over the next several years the competitive environment in Hawaii is going to worsen,” Bricker said. “We’ve seen the initiation of service from Virgin America to Hawaii. I think over the next several years we’re going to see Southwest (Airlines) in the market.”

He also said Hawaiian Airlines is adding narrow-body A321neos over the next several years. These smaller planes can fly to new West Coast markets that are not viable with Hawaiian’s current wide-body fleet.

HTA President and CEO George Szigeti said in a statement that Allegiant has been a good partner.

“Currently, Allegiant accounts for about 1 percent of all inbound domestic capacity to the state of Hawaii, or approximately 98,000 scheduled nonstop seats in calendar year 2015,” Szigeti said.

Bricker said the decision to leave Hawaii “is really about where we want to go in the future.”

“We know definitively that everything we do with the 757 that can be done with the A320 is better done with the A320,” he said. “So essentially we’re maintaining this small fleet of six 757s and all the complexities that go along with it for just these two markets (in Las Vegas and Los Angeles).”

He also said the 757s are due for costly heavy maintenance.

“Over the next several years, each of the aircraft and potentially all of the engines will need to have heavy (maintenance) visits,” he said. “The aggregate value of all that work is about $50 million. We feel that those dollars are better spent in our A320 growth plans.”

But Bricker said the airline has “a lot to be proud of” regarding its brief time serving Hawaii.

“We’ve carried about 650,000 passengers to or from the islands on about 3,500 flights,” he said. “We’ve launched new nonstop service to markets that have never had nonstop service to Hawaii before — like Fresno, Stockton and Santa Maria. … Many of the passengers that flew on us to Hawaii wouldn’t have been able to go but for our really low fares.”