Last week, Allegiant’s management discussed its recent aircraft order campaign
in which the Boeing 737 MAX came out victorious.
While the airline considered the MAX against the Airbus A220 and Airbus A320neo family of aircraft,
it was the 737 MAX that checked the most boxes, paving the way for the large order.
Allegiant had been lookingp placing an order in recent months, deciding that now
was the time to grow. Coming out of crisis, the airline became one of the first to return to its
growth plans with its focus on leisure operations. The new aircraft order was, in the words of
Allegiant’s management, a question of “when not if.” The airline is currently an all-Airbus
operator, flying 108 A319s and A320ceos. The order campaign involved both Airbus and
Boeing, with Airbus coming to the table with two aircraft types and Boeing coming with just one.
It’s not uncommon for airlines to look at several different models before making an order,
even if one model might make the most sense from a fleet simplification perspective.
Allegiant looked at various criteria for its procurement, including:
Short-term delivery availability Fleet flexibility from an up-gauge perspective
Low unit and trip costs, And high reliability
This was on top of the traditional pros and cons associated with individual families.
Allegiant evaluated costs and reliability against the existing Airbus A320ceo family fleet.
The A320neo appeared, on paper, to be the best choice.
It would let the airline remain committed to a single fleet type while reducing operating costs.
However, a drawback was a lack of availability. Airbus did not have
delivery slots for Allegiant until the middle and later part of the decade, and the airline was
looking to get aircraft sooner rather than later. The A320neo also had the highest acquisition cost,
mostly because there are only two variants that Airbus is actively offering:
the A320neo and A321neo. The airline also seemed uncertain about the A319neo, which has not sold
well and has largely been overshadowed by the Airbus A220-300. The A320neo and
A321neo come at a higher cost than the A319neo. The A220-300 was also considered by Allegiant.
This appeared to be the best offering Airbus could provide when considering near-term
availability. However, given the low production rates on the aircraft, it would have extended the
delivery schedule. While the A220 offered low unit costs, low costs per departure,
and high reliability, the airline had concerns with spare parts coverage for the aircraft.
Allegiant was also worried about the flexibility of the family. The A220-100 is likely too small
for its operations, but the -300 is the largest variant Airbus currently offers.
While there has been plenty of speculation about an A220-500, it has yet to officially launch.
In the end, the 737 MAX family fit the airline’s base requirements, offering short-term
availability, low unit costs, low trip costs, high reliability, and high spare parts coverage.
While it did add the dual fleet complexity, the need for new aircraft was what sealed the deal.
The order for the 737 MAX includes 30 of the smaller 737-7s and 20 of the larger 737-8 200s.
When all is said and done, Allegiant sees the MAX coming into its fleet without
upending its low cost model, allowing it to still run low-frequency, low-utilization
schedules while growing its earnings. What do you think of Allegiant’s
decision? Does it make the most sense? Let us know by leaving a comment.