Allegiant Air, a low-cost, Las Vegas-based airline that primarily serves small cities, is entering the Hawaii market.
It plans to begin nonstop flights to Honolulu from Las Vegas and Fresno, Calif., in June and add additional routes to Hawaii from other mainland cities by the end of the year.
The airline is a subsidiary of Allegiant Travel Co., which provides packages that include hotels, rental cars and attractions.
MAKING ROOM
Allegiant Air plans to enter the Hawaii market this summer:
>> Hawaii routes: Las Vegas-Honolulu three days a week beginning June 29; Fresno-Hono?lulu one day a week beginning June 30 >> Aircraft: Boeing 757-200, which seats 223
Source: Allegiant Travel Co.
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Allegiant’s long-awaited entry into Hawaii will help the state further saturate the U.S. West, its No. 1 visitor market.
The airline is offering introductory fares as low as $174 each way that must be purchased by April 30 for travel by Nov. 13.
Visitors arriving on Allegiant flights will spend an estimated $29.8 million in Hawaii and pay about $3.25 million in state and local taxes, Hawaii Tourism Authority CEO Mike McCartney said Monday.
Allegiant, which was to formally announce its new service today, will fly from Las Vegas to Honolulu three days a week beginning June 29 and from Fresno to Honolulu one day a week starting June 30. The airline, which focuses on connecting secondary cities to leisure destinations, said it wants to test the Hawaii market before expanding.
"We wanted to start out in a modest way," said Allegiant President Andrew Levy. "We expect to offer Hawaii to other markets in a very significant way starting later this year."
Levy also said he expects to have employees based in Honolulu by the end of this year.
Allegiant announced in 2010 it was targeting Hawaii and subsequently purchased six Boeing 757-200 aircraft to fly to the islands. However, it had to wait to get certification from the Federal Aviation Administration to fly the two-engine aircraft to Hawaii. One of the 223-seat 757s already has been delivered to Allegiant, with two more due by the time service to Hawaii begins in June. The other three are due by the end of this year or early next year, Levy said. The remaining 58 planes in Allegiant’s fleet are MD-80s.
Allegiant, which flies to 170 markets in about 40 states, created a stir among travelers last week when it announced it would begin charging up to $35 for carry-on bags. Passengers are allowed to bring one personal item — such as a purse, briefcase or laptop bag that can fit under a seat — without incurring any charge. Checked-bag fees are also $35 for each of the first two bags.
Levy said he doesn’t think the carry-on luggage fee will be a deterrent to passengers because of the airline’s overall low prices.
"Our cost structure is so much lower and our base fare is lower, so I believe we’ll save people a substantial amount of money regardless whether they pay for a checked bag, carry-on or both," he said. "Additionally, we’re a big distributor of other products and services, particularly Honolulu to Vegas. We’re going to be able to offer a very attractive air-hotel vacation, so when you look at it as a travel experience instead of flying from point A to point B, it will allow you to save a substantial amount of money when you buy them together."
Allegiant has no direct competition to Hawaii on the Fresno route, but will be competing with Hawaiian Airlines, as well as Boyd Gaming Co.’s Vacations Hawaii charter flights, on the Las Vegas routes. Hawaiian offers daily service to Las Vegas, while Vacations Hawaii flights are five days a week.
"We do not expect that we’re going to run Hawaiian Airlines out of the market," Levy said. "We do think there is an opportunity, particularly with the air-hotel package product that we offer, that we can save people a lot of money when they buy both of those things."
He added: "Our philosophy in terms of flying is we typically start small and let demand take it from there. And the markets we serve are generally smaller and, in almost every case with the 170 routes we operate, there are only a handful that have daily service.
"We’re targeting the leisure customer, and they’re far more concerned about price than anything else, whereas a business traveler is more concerned about frequency and time of departure," Levy said. "We’ve constructed our entire business and everything we do to appeal to a leisure customer, and they don’t need to have daily service."
Levy said he can’t say how many routes he plans to add for Hawaii, but characterizes it as "quite a few."
"I think long term the opportunity in Hawaii is far greater than you can service with six airplanes, but first things first. We’ve got to get in the market and learn the market and go from there," he said.
Allegiant, which is publicly traded on the Nasdaq, was founded in 1997 and has posted 36 consecutive profitable quarters. It has a market capitalization of $1.1 billion, more than four times Hawaiian’s market cap of $260.2 million.
Allegiant’s stock closed down $1.30, or 2.2 percent, at $58.13 on Monday.