7 Things Allegiant Travel Co. Shareholders Should Know about the Company

1. Safety and operational issues are rampant as a result of the companys bare minimum approach, and consumers are raising concerns. A report released by the Aviation Mechanics Coalition (TAMC) shows the airline experiences a high rate of air returns and diversions due to mechanical issues. Between January and March of 2015 alone, there were 38 new instances of fixable mechanical issues such as engines failing, pressurization problems, smoke in the cockpit, radar being inoperable and anti-ice devices on windshields failing. (Full report available at https://www.apa1224.org/downloads/Allegiant/1503_TAMCReport.pdf.)

Tampa Bay 10 News reported on customers reactions to the mechanical issues: Denise Brouwer, flying Allegiant on Tuesday, is one of several passengers alarmed by the reportIt concerns me, because I want to be safe, said Brouwer.

2. The airline is cutting corners on crucial FAA-recommended safety programs. The majority of airlines in the U.S. implement FAA-recommended safety programs, such as the Aviation Safety Action Program (ASAP) and Flight Operational Quality Assurance (FOQA). While Allegiant Air does participate in these programs, it does not follow FAA recommended best practices.

The FAA states the key to ASAPs success is its collaborative nature. The vast majority of airlines ensure pilot participation by giving pilots days off and compensation to be at in-person meetings. After the Allegiant Air pilots voted in the Teamsters two years ago, the company changed the policy. Pilots serving as Event Review Committee (ERC) members under the program are often excluded from review meetings because Allegiant only permits them to participate in the meetings if they already have the time off.

Meanwhile, Allegiants version of FOQA was established with provisions that are in direct opposition to guidance provided by the FAA in an FAA Advisory Circular: (1) The FAA characterizes FOQA as an FAA/pilot/carrier partnership, yet Allegiants FOQA program excludes pilot participation; and (2) Rather than using FOQA as per its intended objective to identify and reduce safety risks, Allegiant is using the program for other means and possibly even to punish pilots.

3. A haphazard scheduling system is hurting pilots and customers. Two years ago, Allegiant unilaterally scrapped its scheduling system. The airline replaced it with a system that disregards pilot seniority and creates haphazard schedules that look efficient on paper, but in practice create confusion, pilot burnout and frustration.

The industry norm is to use reserve pilots to fill last minute slots to prevent workforce burnout. By insisting on a scheduling system that staffs the companys operations with too few pilots, Allegiant is disregarding pilot fatigue and customer safety.

4. The companys reluctance to settle a contract with the pilots is hurting business. The impact of the pending strike and the companys refusal to work with its pilots has taken its toll on stock prices. Allegiant opened March 31 at $194.60, but by the end of the day on April 2when pilots announced the strikethey were at $161.90.

Investor magazine, The Street, reports: A nasty fight between Allegiant and the International Brotherhood of Teamsters hasn't been a good thing for the airline's stock.

Vegas INC, a major paper in Allegiants hometown, wrote, Allegiants once ever-soaring stock price has dropped sharply since the aviators threatened to walk. Moreover, the Federal Aviation Administration stepped up scrutiny of Allegiant due to the labor spat. Company officials said last month that the FAA planned to block Allegiant from flying to more airports beyond its existing route network and from flying additional planes beyond its current fleet until the outcome of the litigation emerged.

5. Customer complaints and dissatisfaction continue to reach record levels. Cincinnati Enquirers analysis of federal complaint data shows Allegiant Air has the second-highest customer complaint rate out of any U.S. commercial airlines. This includes complaints about tickets, reservations, boardings, refunds and dealing with disabled passengers. Allegiant pilots also posted an open letter to Allegiant customers in April alerting them to safety concerns at the airline, including operational problems that lead to the delays and cancellations.

6. Allegiant needs to be a career destination, rather than a stepping stone to a better opportunity. Pilot shortages at the company can be attributed to a lack of stability and the need for a better quality of life. The numbers confirm that Allegiant Air pilots are not staying at the company. Despite the companys insistence that pilot attrition is not an issue, a monthly communication piece released in February that is designed to keep Allegiant Flight Operations professionals informed of recent company operational and strategic programs and decisions shows the opposite (PDF available upon request). For example, in 2011 0.66% of the pilot group resigned voluntarily, while in 2014, the percentage grew to 3.66 an increase of 600%. Pilots have been conducting exit surveys of the pilot group as they resign, which shows that pilots are leaving Allegiant Air for other airlines.

7. Allegiant pilots and customers agree: the company must change its ways. Both pilots and customers believe that instead of spending hours in court, Allegiant should focus on addressing current maintenance and staff issues to ensure the prosperity of the airline and its crew.

In an open letter to Allegiant customers in April, pilots wrote: If youve had problems with Allegiant, you are not alone. The companys record delays and cancellations have led Allegiant to have the second-highest customer complaint rate out of any U.S. commercial airline. Meanwhile, the fleet is plagued by persistent mechanical problems due to poor equipment and the companys unwillingness to invest in its operation or its workforce, as attested by the numerous FAA safety investigations, aircraft groundings, and training program closures.

An Allegiant Air passenger told Tampa Bay 10 News, Something needs to be done. They need closer checking or whatever it takes. More maintenance, or better maintenance. - Passenger Tom Goepfrich