Alaska Takes on Allegiant in Bellingham

Bellingham, WA has been one of Allegiant Air's most successful markets, drawing traffic from both sides of the US/Canada border, and even becoming an operations base for the company. But now, the market is being assaulted by the local heavyweight, Alaska, which dominates traffic at Seattle's airport, roughly 2 hours south of Bellingham. Alaska announced today that it will offer nonstop service on the Bellingham-Las Vegas route, one that Allegiant serves daily for much of the year. Alaska will serve the route three times weekly, and the carrier will continue to offer connections to Las Vegas via Seattle every day of the week. While some airlines have tried and failed to battle Allegiant (such as Northwest offering competing services between parts of the Dakotas and Vegas a couple years back), Allegiant has shown remarkable resilience and has managed to fend off its competitors.

However, Alaska may offer tougher competition than Allegiant has seen before. Not only is Alaska a well-regarded carrier in the region, but the lure of letting customers mix and match nonstop flights and connecting ones (if I want to, for instance, travel on a day when neither Alaska nor Allegiant serves the route nonstop) will help make Alaska's service more attractive. Moreover, as explicitly stated in this press release, though absent from most others, Alaska notes its free services in contrast to Allegiant, namely: "online reservations and advance seat selection... water, soft drinks, coffee, tea and snacks, or the use of pillows and blankets." Wow, you can select your seat, get a free snack, and don't have to go to the airport to buy your ticket if you want the lowest price! It sounds like a winning combination. But Allegiant has a big head start in the market, and the company has engendered loyalty in its own right, posting load factors of well over 90% in recent months, something Alaska can only dream of. Even after Alaska starts its nonstop Vegas service, Allegiant will offer more flights on the route and combined with the company's wide array of tour packages, many price-sensitive customers who couldn't care less about where they sit would fly with Allegiant.

One thing, however, is clear. Allegiant tries to avoid picking fights. The airline has a good sense of which fights it will win and which it will lose. It beat Northwest in the Dakotas, but it withdrew quickly when JetBlue and AirTran added service to Orlando at Newburgh/Stewart. Allegiant has a lot invested in Bellingham, and it probably won't give up anytime soon. But Western Washington is also a key market for Alaska, unlike the Dakotas were for Northwest, and Alaska, even if it loses money for awhile on the route, probably will be in for the long haul. Is this market big enough for the two of them? The answer, sadly, is probably not, and while Allegiant may continue to offer some services on some other, thinner routes, such as to Palm Springs, I worry about Allegiant's future in Bellingham. Yet I have been wrong about Allegiant before, they have been more resilient than I have expected, and they may surprise me yet again.