Allegiant Air, a discount carrier that serves Bellingham and other cities in Washington, and which started the studies for commercial aviation service for Paine Field in Everett (WA), said it sees starting air service at Paine Field this fall. “We’re in negotiations now. The first opportunity is in the fall,” says Jude Bricker, VP of Allegiant, who made the announcement at the PNAA conference.
- Allegiant serves a half dozen cities from Bellingham, including Phoenix, Las Vegas and two cities in Hawaii with 15 flights a week.
- I am as bullish today about the business as ever. Will see real rationalization come to the space. Capacity will be rationalized. There is more ability to pass on higher costs.
- Allegiant serves about 200 markets. Scheduling is done for price. Thursday into Vegas, Sunday out. We don’t fly anything on Tuesday.
- We unbundle product because people who fly Allegiant are extremely elastic as to fares.
- $1.5bn market cap at $78 stock price.
- We schedule by week, by market. We always ask ourselves, what is the least crappy thing we can do with this airplane?
- Roughly we don’t make any money on air fares. We would lose money selling only fares. Ancillary revenue is the profit base.
The Pacific Northwest Aerospace Alliance today endorsed commercial air service at Paine Field in Everett (WA). The move is highly controversial. The Snohomish County Council and the City Councils of Edmonds and Mukilteo, adjacent suburbs, oppose the service.
PNAA made the announcement at its conference in the Seattle suburb of Lynnwood, a few miles from Paine Field.
Allegiant Air, which also spoke at the conference, first proposed commercial service at Paine a few years ago. Alaska Air Group, based in Seattle and the largest carrier at SEA-TAC Airport, opposes service at Paine but has filed the paperwork with the FAA to commence service if Allegiant does. Alaska Airlines and sister company Horizon Air would provide some 50 flights a week to a half-dozen destinations. Allegiant proposes four or five flights a week to two or three cities.
PNAA, a trade group that represents more than 100 companies with nearly 100,000 employees, said commercial service will benefit the supply chain, employees and residents who live north of Seattle who currently have to rely on the congested I-5 and I-405 corridors to go to and from SEA-TAC. The Seattle area is considered one of the Top 10 most traffic congested cities in the country.
Paine Field has about 400 flights a day, only one-third of the airport capacity. Boeing’s wide-body production is at the airport and accounts for only about 5% of the operations. The balance is private aviation and MRO traffic.
The future of bio-fuel is different from the bio-fuel today, says John Plaza, CEO of Imperium Renewables. He is speaking at the Pacific Northwest Aerospace Alliance conference in suburban Seattle. It will be drop-in fuel, potential to be cheaper, meet same specifications as petroleum, equivalent to civilian (JP-8) and military fleets (JP-10).
First generation of bio-fuel is bio-diesel. Second generation will be the drop-in described above. Bio-fuels have to become multiple products as in the petroleum industry.
- We’re seeing increasing density of bio-fuels, which increases BTUs and efficiency on long-haul flights.
- WA State has one of highest recycling programs in the country but still generates a lot of trash (much of which is trained to Oregon). Trash can contribute to bio-fuel.
- Bio-fuel without subsidy costs around $4/gal vs $3.25 or so for jet fuel, so there is still a price disparity.
- 200 million gallons of jet fuel within 100 mile radius of wood slash can be generated.
- Other feed stocks: Jatropha, Eucalyptus, mixed growth plots. Algae is interesting but requires more research.
PNAA Conference, Pt 2: Odds end Ends–Executive Director named; now largest conference in sector on West Coast
PNAA Executive Director: The Pacific Northwest Aerospace Alliance named its first Executive Director, Melanie Jordan. Jordan has been very active in Puget Sound aerospace matters for years and has been on the board of the Future of Flight Museum and the Historic Flight Foundation, both at Paine Field in Everett.
PNAA Growth: PNAA is 15 years old and has been holding its conference for 12 years. This year 400 are attending, a record. This has now become the largest conference of its kind on the West Coast. This is a mix of airlines, OEMs, suppliers, training institutions.
Aircraft interiors: Complexities of interiors are greater than seems obvious. Cockpit doors are example of conflicts: you want authorized and emergency access, but doors have to be able to withstand unauthorized access. Diaper changing tables need to weight no more than 2 pounds but be capable of withstanding 1,200 lbs of pressure and still be 3/4 in thick and three feet long. A light-weight door can be designed but the cost goes beyond the 12 month return on investment, so not favored despite long-term fuel savings. Airline Marketing wants a certain look and battles finance. Engineering has another opinion. Market conditions might suddenly change and make them rethink everything. Lower lobe crew rest takes away cargo space, impacting cargo revenue–but this can be offset by more passengers.
Each airline region of the world is different and many going through transitions US went through previously, says Bob McAdoo, the airline analyst for Imperial Capital (a boutique investment banking company in California).
McAdoo is speaking at the Pacific Northwest Aerospace Alliance conference in suburban Seattle today. Highlights:
- IATA traffic data doesn’t make a lot of sense any more. I can always get traffic–all I have to do is charge $19. Without knowing the data behind the numbers, traffic data is meaningless. People say US isn’t a growth market, but it’s making money.
- American Airlines-US Airways: Turn back clock to 2005/6: America West took over US Airways and in less than a year had best profit margins in the industry. Boeing is on AA creditors committee and I think there will be MD-80s coming out sooner and these guys (Doug Parker) will run it like a business. These guys will look at a route structure and say what works and won’t work, not a route planning department that likes the look on a map. I think you will see a lot of markets shut down.
- These guys have been in the top one or two in profit margin. US carries more people out of Philly than AA does out of New to Europe.
- This is a non-growth world in many respects.
- McAdoo recalls when he was at Texas International and his job was to put Southwest out of business. “I wasn’t very good at that.”
- Allegiant and Spirit are, in effect, next Southwest. Tells a story of a friend who rode Spirit once and will never ride them again, “but I’ll buy their stock.”
- 737-400 rent $65,000, 737NG (older) $135,000.