Originally Posted by
dawgdriver
How so? Not being argumentative, just curious. I can't see the business models fitting together with Allegiant being such a hybrid. Not to say the G4 model isn't highly profitable and robust, but it's wildly different and unconventional: sells packages, operating to vacation destinations twice per week, dramatically reduced schedules on Tues, Weds, and Sat.
As opposed to WN, G4 is a 'Travel Company' whose profits are derived mostly from it's ancillary revenue and continues to branch out to unconventional, non-traditional revenue streams. At present G4 is building a ~$1B in a resort in Punta Gorda FL (poison pill?), buying entertainment arcades (G4ce?), and has contracts for hotel rooms, rental cars and show tickets.
Throw in the fact that Allegiant operates mostly older 320s/319s (~ dozen or so new ones) and the rationale for a merger gets hazier. If WN were looking to acquire or merge, and that's a big IF, I would suspect they'd be eying NK over G4. With cheap fares and daily service, Spirit represents a far more significant threat to WN's market share and has far more, and newer, larger Airbii (145 vs. 93 with 50 new orders) at an almost identical price of $2.8B.
Again, just curious.
WN seems to be most comfortable with domestic US expansion, which has certainly served them well for decades. I see the G4 business model as a natural way to expand for WN since they already fly to just about every decent airport in the country.
The two reasons you bring up as negatives (ancillary revenue and travel packages) are two areas where WN really fails to develop despite their dominant position and captive frequent flier base. Those twice a week flights on Allegiant could easily be daily flights on WN due to their network and/or reroute travel package fliers to nearby WN strongholds (RSW instead of PGD, coach bus transfer included in package price).
There isn't a lot of expansion left for WN domestically without drastically changing their model one way or another, and this would be an easy way to do something new without really doing anything new operationally. You could even dump the Allegiant Airbus fleet in a few years if the MAX gets fixed and everything turns out OK. The Airbus airframes are paid for (I believe?) and in high demand for the leasing markets. I do think GK and the WN BOD feel pressure to do
something in regards to the MAX and this would be a way to show the world they are making changes, then could easily backtrack on those fleet changes down the road. Just some food for thought.