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High in the Americas

While US carriers are seeing a resurgence in growth, there are big changes afoot in Canada too, with old players learning new tricks. Meanwhile, South America is becoming increasingly enticing. Ian Putzger reports from Toronto
 

A year ago, Allegiant Air and Spirit Airlines were embroiled in a legal wrangle with the US authorities over legislation requiring the display of full fares. The airlines lost their challenge, but the new regime does not appear to have hurt their business.

 

Spirit emerged from 2012 with a net profit of $103.8 million, a record for the carrier. This was followed by $32.8 million net earnings in the first quarter of 2013, while operating revenues advanced 22.9% to $370.4 million.

 

The carrier remains in expansion mode, having added two used Airbus A319 aircraft and two new Airbus A320s, which brought its fleet tally to 49 planes. Five more A320s are scheduled for delivery this year, all of which are equipped with sharklets.

 

Allegiant is also boosting its fleet. In May, the company announced the purchase of an A319 that had been previously operated by easyJet, a plane in a similar configuration to the nine A319s that Allegiant signed a lease agreement for last year. The carrier should have three of the aircraft in operation by the end of this year, bringing the overall fleet tally up to 68 aircraft. With the first two A319s brought on in March and April, Allegiant added eight routes to its network during the period, following the addition of 21 routes in the final three months of 2012.

 

The airline’s capacity is set for a surge in the fourth quarter, when seven of nine A320s on order are due to join the fleet, with two more to follow in the first three months of 2014. No decision has been made yet where the aircraft will be deployed. “We will use them for a combination of things. Some will be for new markets, some for existing markets,” says Allegiant public relations manager, Jessica Wheeler.

 

Allegiant’s balance sheets reflect the carrier’s rapid expansion. In the first quarter, operating revenue was up 14.8%, while net earnings soared 47.1% to $39.1 million. In 2012 the company’s revenue grew 16.6% and net profit advanced 59.1%.

 

George Hamlin, president of Hamlin Transportation Consulting, sees no danger of established carriers taking market share from Allegiant. “They have a different business model, focusing on markets where legacy carriers can’t match their offering. They create new markets,” he says.

 

JetBlue also showed a strong improvement in its net result for the past year, with earnings up 48.8% to $128 million, despite the impact of Hurricane Sandy. The airline will take delivery of both A319 and A320 aircraft this year, as well as an Airbus A321 towards the end of 2013. “We are planning a premium transcontinental product that we will roll out in 2014,” says company spokesperson Allison Steinberg.

 

Currently much of JetBlue’s expansion focus inside the US is on Boston and Fort Lauderdale. Over the next couple of years these stations should see activity go up to 150 and 100 flights a day respectively, Steinberg says.

 

Frontier also showed improvement in the first quarter. With four aircraft taken out of service, revenues declined 9.2%, but load factors improved 3.1 points to 87.7%, and revenue per available seat mile was up 3.9% to 11.86 cents. Still, the carrier faces an uphill struggle. >>


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