September 01, 2006

As I See It

In case anyone missed the "As I See It" on page 13 of today's paper. Maurice Gallagher, President and CEO, of Allegiant Air wrote the following letter.

http://www.telegram.com/apps/pbcs.dll/article?AID=/20060901/NEWS/609010432/1054/OPINION

Allegiant’s early exit: It’s just a matter of economic realities

In the past week, several articles have appeared in this newspaper disparaging Allegiant Air for our decision to discontinue air service to Worcester. Local politicians have been among the most vocal critics. One politician was quoted questioning my personal integrity while categorizing me as “an example of the charlatans that exist in the corporate world.” A simple truth underlies the events of the past week: Corporations must generate profits or they die. This is both a fact as well as the catalyst for our nation’s economic prosperity. Allegiant Air would never categorically commit to any market for the “long term” without regard to economic performance. That said, Allegiant would also never intentionally enter a new market expecting it to fail.

The airline industry is littered with the carcasses of companies run by management teams that were afraid to make difficult decisions about markets unable to economically sustain profitable air service. This is not to say that Worcester would be unprofitable for another airline with different criteria for acceptable economics. However, at Allegiant, all markets we serve must either stand profitably on their own or at least show a clear trend toward profitability. Worcester did not meet either of these criteria. Allegiant does not fault anyone in particular for this result. To the contrary, we believe local Worcester officials performed to their best of their abilities to provide the community with affordable nonstop air service to Orlando. Similarly Allegiant Air management believes it is acting to the best of our abilities in making a straightforward business decision to eliminate future losses at Worcester.

To summarize: In our view the market has spoken; it does not support Allegiant Air service at Worcester at a level necessary to sustain profitability. We sincerely believed Worcester would be a good market for Allegiant Air, but we were wrong. We hope Worcester finds another airline for which it is a good market, we thank those of the Worcester community who flew us during the past year and we wish the Worcester community the best.

8 comments:

Bill Randell said...

Dave:

Could not agree more. My bet is that any major annoucements will concern General Aviation and not Commercial Service. Losing Allegiant really hurt those efforts tremendously.

As far as what is next, we now sit back and wait for the New Regional Air Study Plan from Louis Berger and the Master Plan from Leigh Fisher. I know that is not what you, or I, want to hear but thats my bet.

302 days till the end of the current MassPort agreement.

Anonymous said...

Losing Allegiant is not the end of the world. Oklahoma City had their service pulled by Allegiant and they went on to land United to LAX I belive. A major announcement is what the airport needs and in my opinion GA is not a major annoucement that the people of Worcester will be excited about.

Anonymous said...

Dave I agree, we have to move on. But, in the City's defense (and I am critical on here) it has been only 9 days and it does take some time to strategize.


If I knew 45 days ago that I MIGHT lose my job on sept 3, I doubt that I would already have a new one on Sept 4th. Resumes out maybe, but still looking.

I still wonder if Allegiant knew we might bring a new carrier that could possibly dilute Allegiant's loads and they went to the City and asked for some specific compensation (waived fees, adv. $$$?) and maybe the master negotiator lost this battle? And I might add maybe he lost, but he still acts with dignity and professionalism.


Or maybe Allegiant just went to the city and asked w/o any rumors of a new carrier and were flatly denied?

If I am the only ball team in town, maybe I should get some freebies at least temporarily, ESPECIALLY if these freebies are fixed costs at ORH that wer have to incur with or without comm. air service.

Bill Randell said...

Tim:

I hope that I am wrong and we do have a commercial airline announcement. Simply do not see it happening.



Bill

Bill Randell said...

Dave:

How about if the Airport Director get a story in the T & G,local radio and local news detailing his game plan???

Bill

Anonymous said...

Dave, my take on mcFarlane's column...August is a real slow news month... so Wednesday night he composes this whiney, light masterpiece...jumping on the Alleg. bashing bandwagon............... and he gets a 5 day weeekend out of it.

Clive...take five

Bill Randell said...

I read Clive's story. I feel bad for these people, but I bet you Allegiant would honor these tickets out of Portsmouth??? Considering they offer free parking, I would rather go there then Boston??

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