
Allegiant continues to derive value from its efforts to move upscale, as its extra legroom and loyalty programs contribute to the carrier’s profitability. And the company is also finally ready to cut the cord on Sunseeker.
In its Q4 2024 earnings report Allegiant shared that 46% of its fleet is now flying with the Allegiant Extra, a product first launched with a handful of planes in 2019. At mid-2024 the company was planning for half the fleet to be fitted by the beginning of 2025. It came up slightly short, with just 46% seeing the interiors updated. The company targets 70% by the end of 2025.
CEO Greg Anderson says Allegiant sees “strong demand from our customers for this premium seating as we expand the product more broadly across the network.”
Read more: Allegiant plans more Extra on 737 MAX fleet
And while JetBlue, Spirit Airlines and Frontier are working to better market their extra legroom offerings (and Southwest Airlines will soon do similar), Allegiant appears poised to hold steady on its approach. Chief Commercial Officer Drew Wells suggested two reasons for that approach:
First, the tax implications are more favorable when the product is sold as an ancillary rather than as part of the fare. Saving that 7.5% is valuable to the company. Frontier manages to position its version as a fare plus bundle, albeit on display in the initial search results, so presumably there are ways around that. But it is definitely part of Allegiant’s concern.
Second, Wells alluded to “a few other kinds of back-end complications that are more Allegiant-centric that would make bundling it together up front a little bit more challenging.”
Wells concluded his comments on the topic noting “We will continue to debate this for a while, but for the foreseeable future we like having it separated. I feel like it’s the best overall thing for the consumer experience, but to be determined.”
Cobrand Conundrum
On the loyalty front, the company continues to tout its cobrand portfolio. Q4 saw an additional 10,000 members sign up for the Allways Rewards credit card, though that growth slowed from 20,000 added in Q3. And while remuneration from Bank of America is up, the total number of cardholders is down from its peak, as is the signup pace.
Read more: Saving on Allegiant’s optional fees can come with a cost
In 2021 acquisitions averaged 10,000/month. In 2022 the company number was even higher; Q1 saw 45k signups, 42k in Q2, 38k in Q3, and 35k in Q4. More than 46,000 program members signed up for the card in Q1 2023, and at the end of Q2 2023 more than 600,000 accounts were active. In the Q3 and Q4 2023 earnings reports the number of signups was not disclosed, and the total at the end of 2024 is 545k active, down more than 50k from the peak in mid-2023.
Selling off Sunseeker
It was mid-2017 when Allegiant decided to get into the hotel business. It was bullish on bringing travelers to Punta Gorda on its own planes and selling them on resort packages at its hotel. But the numbers simply have not worked in Allegiant’s favor. COVID-19 delayed construction (and demand), a couple hurricanes have passed through causing millions in damage.
This unique resort located in a popular state offers excellent amenities and is managed by a highly-skilled team. We have great confidence in Sunseeker’s future success and have observed material improvements in its financial performance.
Nonetheless, we need to acknowledge that a new capital partner will be important for Sunseeker to achieve its full potential.
The company is now formally writing off ~$322 million of its stake in the business and “launched a competitive process to sell at least a majority interest in the resort and are reviewing promising indications of interest from several investors.”
Read more: Allegiant’s Allways Rewards launches targeting Gen Z and Millennial travelers
The goal is to close that transaction over the summer.
Viva What?
Finally, the proposed joint venture with VivaAerobus did not come up at all in the call. Given the change in administration at the federal level it seems like there’s room for that to move again. Perhaps it’ll take time to figure out how that will work, however, given the chaotic transition being seen across federal agencies.
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