Allegiant Travel comes up short in LaGuardia access bids

Allegiant Travel Co. will have to put off its Broadway debut.

The Las Vegas-based airline and booking company's bids for two sets of scarce takeoff and landing slots at New York's LaGuardia Airport came up short when the results were made public Wednesday , spokesman Brian Davis confirmed. He did not disclose what the company offered to pay.

"This was a unique opportunity that doesn't come along every day," Davis said. "We put a lot of thought into what the slots were worth to us."

But when the online auction run by the Federal Aviation Administration ended Tuesday , Allegiant stood well behind the leaders. The top price came in at $32 million for one package, followed by $17.6 million for the other. The remaining bids, including Allegiant's, identified only by numerical codes and not the airlines' names, offered $800,000 to $13 million.

FAA officials said they would not disclose the winners until Dec. 1. However, Canadian discounter WestJet, the largest international carrier at McCarran International Airport, issued a statement announcing its success. Speculation about the other finalist centered on JetBlue, whose officials prior to the auction said they would pursue the slots aggressively, though the company declined to comment Thursday.

Bidders had to have less than 5 percent of the market at LaGuardia, but could not buy both slot bundles.

In an early November report, Deutsche Bank analyst Michael Linenberg said that people in the airline industry had established JetBlue and Southwest as heavy favorites among the seven airlines that registered. However, he added, "We think observers should not count out two financially sound airlines as possible 'dark horse' victors: Allegiant and WestJet."

Allegiant Travel, which operates Allegiant Air, has put New York on its list of future destinations, which it would connect to smaller cities in the company's typical style.

"We think New York is a tremendous market," Allegiant President Andrew Levy told stock market analysts on Nov. 10. "It is the biggest tourist market in the United States, not Las Vegas, not Orlando."

Also, New York has a large inventory of hotel rooms with very high rates, important as the company tries to build revenues for non-flight bookings.

Executives did not plan to fly there for several years as they fill out the route structure elsewhere. But Allegiant quickly improvised when a deal between Delta and US Airways led to the auction of two bundles of 16 slots, evenly split between takeoffs and landings. At very crowded airports such as LaGuardia, the FAA rations traffic by distributing slots among the airlines, with the effect of keeping out newcomers or preventing incumbents from expanding without acquiring slots.

McCarran, by contrast, is not governed by slots, so airlines can come and go at will.

In the process of setting the auction rules, Allegiant had unsuccessfully argued against the bundles and in favor of selling them in smaller chunks. The company did not want to start with eight weekday flights in a new market -- the slots did not cover Saturdays and some excluded Sundays -- but it could have leased them to a rival until it was ready.

The rare chance to gain a foothold at the airport closest to Manhattan proved a strong enough lure to overcome qualms about the process.

"Whether is it LaGuardia or some other airport, we will serve New York at some point in time," Levy said.

In a separate auction that Allegiant shunned, the high bid for 16 slots at Reagan Washington National Airport finished at $40 million. Because of the similarity of the exact winning numbers, $40,000,050.01 for Washington and $32,00,050.01 for LaGuardia, aviation industry officials guessed JetBlue was behind both.

The winners have until Dec. 1 to close the purchases with cash.

Contact reporter Tim O'Reiley at
toreiley@reviewjournal.com or 702-387-5290.