Airport banks on Allegiant’s steadfast approach

Photo by: Vindicator file photo

Photo

A resolution passed by Youngstown City Council in 1992 said the facility in Vienna would “forever be named Youngstown-Warren Regional Airport.”

Officials hope to attract major airlines such as Delta and United

By Karl Henkel

khenkel@vindy.com

VIENNA

What role will Allegiant Air play in the future of Youngstown-Warren Regional Airport?

Local officials say the discount airline is a piece to the puzzle, but not the complete solution, especially as the Nevada-based airline pulls flights to and from its Southeast destinations.

The answer, says Doug Kibby, president of YNGAir, the nonprofit organization in charge of securing funds to attract bigger airlines to Vienna, lies with larger entities such as Delta Airlines, recently rumored to seek a flight between Vienna and Detroit, one of the country’s largest hubs.

Dan Dickten, aviation director at the airport, said thrice-daily flights to Detroit via Delta could be in the works; flights to Philadelphia through U.S. Airways and Chicago and Washington through United Airlines are other possibilities.

Both Dickten and Kibby, who along with local lawmakers are lobbying major airlines to add flights to and from Vienna, said the decision to look to those airlines has nothing to do with Allegiant’s schedule.

“[There will] be no loss of any Allegiant service,” Dickten said. “They’ve proven that daily air service can and will work here.”

Kibby said a larger airline is necessary to diversify the type and number of flights.

“It’s very important because Allegiant only handles the leisure travel,” Kibby said. “In order for us to handle the business community and residents of the region, we need to get another type of service.”

The airport backs Allegiant, a company that admits to a micromanaging style that can cause sudden route changes when market issues dictate.

The Vindicator in April outlined Allegiant’s plan to seasonally discontinue flights a month earlier than in 2010 to Orlando-Sanford International Airport and to Myrtle Beach, S.C., two locations that local travel agents said were prime vacationing spots.

Allegiant recently updated its fall schedule out of Vienna. It will begin flying to Orlando, Fla., in mid-October after ceasing flights Aug. 14. It is scheduled to fly to St. Petersburg/Clearwater, Fla., for the foreseeable future.

Flights to Myrtle Beach, S.C., cease Aug. 14 and will return in spring 2012, the airline said.

The hiatus issue, which Allegiant said has nothing to do with the Vienna airport, is simply a business decision, airline officials said.

“They’re not unique to Youngstown,” said Jordan McGee, Allegiant’s director of corporate communications. “Because we micromanage our schedules, we’re able to tell — pretty accurately — where demand is. When we see less demand from the community, that’s when the hiatus comes into place.”

Flight-schedule changes have been reported at other airports. Allegiant has announced that flights out of Savannah, Ga., will be discontinued altogether due to a “lack of market demand,” and the airport in Elmira-Corning, N.Y., also won’t fly into Fort Lauderdale, Fla., after Aug. 16.

Bob Herbst, an airline industry analyst at airlinefinancials.com, said Allegiant’s micromanagement is the way the company has always run its business — and it’s been an effective tactic.

Herbst said Allegiant has posted a profit every quarter since its inception in 1998.

“If they cannot make a profit on that route, they will not have that route,” Herbst said.

Herbst said Allegiant, a company with 1,300 nationwide employees, does business much differently from major airlines, and therefore can’t be expected to shoulder the same load.

Allegiant owns all of its planes outright, a decision that allows the airline to park its planes without throwing away money. It also doesn’t hedge its fuel.

Hedging fuel prices enables airlines to lock in a percentage of its overall fuel allotment. The practice normally saves airlines millions of dollars, except in instances where fuel or crude-oil prices drastically fluctuate, such as in 2008, which proved to be a costly decision.

That year, Southwest Airlines took a major hit, reporting a $120 million loss in the third quarter as a result of botched fuel hedging, and Allegiant believes the practice of not hedging fuel best fits its business model.

A lack of fuel hedging is much less of a gamble, though Allegiant currently has to make up for a decrease in profits as a result of sky-high fuel prices earlier this spring.

Kibby said cutting flights because of fuel costs isn’t something that worries YNGAir.

“They’re trying to run a business,” he said. “With the interest they’ve been talking to us about, we’re not so much concerned about it.”

The interest Kibby speaks of is new possible destinations such as Las Vegas, which would be the most high-profile destination to and from Vienna.

“The main goal is to get the traffic that is already going to other places ... and try to attract it back to Youngstown,” Kibby said.