On January 5th, Allegiant Travel Company (Allegiant Air) announced that they have entered into an agreement with Boeing to purchase 50 Boeing 737-7 and 737-8-200 MAX jets. The deal is a first for Allegiant, as the company has only purchased used aircraft on the secondary market since its inception. This move was somewhat unexpected considering Allegiant’s history of only acquiring used aircraft for their fleet.
Considering the history of Allegiant’s fleet strategy, what does this deal say about the state of the secondary aircraft market? The current secondary market seems to be tightening quickly even though there are still several aircraft that are parked by their owners. Some companies are willing to wait for the right opportunity to put their aircraft back into service and zero time the aircraft in the California and Arizona deserts. Airlines are holding on to aircraft and waiting for the time where their forecasts show demand returning to normal levels. Other airlines are seeing demand return and are working to acquire aircraft for the upcoming 2022 travel seasons.
By making this deal, Allegiant has secured 50 aircraft that will ensure the airline has the aircraft that it needs to grow. The airline will also have lower maintenance costs and better fuel efficiency which will help with inflation headwinds that the airline industry will face going forward.
Above Allegiant Air Boeing 737-7 MAX over the Florida coast line rendering from Allegiant Travel Company. Photo enhanced by FlyRadius.
The key strategy with this aircraft deal is that Allegiant has secured quick delivery of a new aircraft at a cost that is likely to be highly beneficial to Allegiant. The company can avoid the uncertainty with the secondary market and beat the market scramble that may occur when other airlines’ forecasts show that travel is returning to pre-2020 levels.
Allegiant Air has been a big winner during the post-2020 recovery as they have capitalized on the return of leisure travel in the United States. Allegiant’s investment in these new 737 MAX jets will allow them to have a stable flight plan to grow with the continued rebound in air travel.
