Allegiant Air expanding into resort business
Beating the odds
Allegiant has a history of hitting on unlikely bets. The airline’s core business model is based on flying to small and medium-size cities that big carriers ignored. “You didn’t go to Sioux Falls with a 160-seat airplane back when we did this stuff,” says Chairman and CEO Maurice Gallagher Jr., a member of the investment group that founded ValuJet Airlines. That discount airline became infamous after one of its planes crashed into the Everglades in 1996. Gallagher later became a major creditor of Allegiant and gained control of the company after it declared bankruptcy in 2000. Allegiant went public in 2006.
Today, Allegiant carries nearly 14 million passengers a year — more than 8 million of them to and from Florida — on a fleet of more than 80 jets flying nearly 450 routes. By passenger count, it’s become the ninth-biggest airline in the U.S., and it’s still growing.
Yet Allegiant still only faces mainline competition on 25% of its routes. Allegiant flies into seven airports in Florida and is the only regularly scheduled domestic carrier at three: Orlando-Sanford, St. Pete-Clearwater and — most important for Sunseeker — Punta Gorda, whose airport is just 10 minutes from the Sunseeker site.
More than planes
Executives often note that they chose to name their company Allegiant Travel Company — rather than, say, Allegiant Airlines — as a sign that they’ve always intended to do more than fly planes. But the plan for Sunseeker didn’t really begin taking shape until the fall of 2016, when the company brought on John Redmond as president. The former president and CEO at MGM Grand Resorts, who had been serving on Allegiant’s board for eight years, had never been to Florida before. He then spent a month in the state, driving up and down the Gulf coast scouting potential locations.
Executives say they chose to plant their flag in Port Charlotte for several reasons. For one, it’s in a relative backwater where most existing hotels are older and smaller — echoing the airline’s strategy of targeting smaller markets with little competition and lower costs. More important is the proximity to Punta Gorda Airport, where Allegiant flies more than 1.5 million passengers each year. Sunseeker also is just a 90-minute drive from St. Pete-Clearwater International Airport, where Allegiant flies another 2 million passengers a year. In fact, Allegiant says it could fill Sunseeker just by capturing one out of every 15 inbound travelers it brings into Punta Gorda and St. Pete.
Allegiant says it is emulating the strategy of Florida’s most successful tourist business. “All of the airlines fly millions of people in and out of Orlando, and Disney sits there on the end and collects 90% of the leisure customers’ spend, and the airlines get 10%,” Redmond says. “We’ve been looking at that for some time and saying, ‘Well, that makes no sense.’ We want to have the other 90% of that.
“We’re now the Disney of Southwest Florida,” he adds.
Disney, of course, has added hotels to a collection of theme parks that draw millions of visitors each year. And even Disney has run into trouble trying to build beyond its berm. More than a decade ago, the company unveiled an ambitious plan to build standalone hotels, niche parks and retail centers in outposts far beyond its signature theme-park resorts in Florida and California. But the company abandoned that plan after building an $850-million hotel and timeshare in Hawaii that didn’t perform as well as Disney executives expected.