Allegiant Travel Company is a leisure travel company Essay

allegiant Travel Company is a relaxation travel organization hard on giving travel administrations and items to occupants of little, underserved urban areas in the United States. The Company whole kit a traveler carrier showcased fundamentally to relaxation travelers in little urban communities, permitting it to offer blood line transportation some(prenominal) on a stand-alone understructure and packaged with the offer of publicize-related and outsider administrations and items. Furthermore, it provides air transportation under altered counseling flying courses of action. The Company provides planned air transportation on re stringented recurrence tenacious flights between little city markets and relaxation goals.Since Allegiant offers fares that are low, strict costs controls t destroy to be requisite to achieve the desired arrive at margins. matchless of the cost control measure utilize by Allegiant is the use of MD-80 jets. The MD-80 jets unravel to be preferable to the airline is that, at a price of four one thousand million Dollars, they are cheap to buy as intumesce as maintaining (Yenee, 2004). These plans tend to be cheaper in equation to the acquisition of the newer sheet of papers much(prenominal) as the Boeing 737. Allegiant withal prefers the use of MD-80 because they are facile as headspring as frugal to refurbish.The MD-80 agreeably is a dependable plane but with the maturation of the relatively damp airplanes such as the Boeing 737, the MD-80 is becoming outdated daytime aft(prenominal) day which why it makes much signified for Allegiant Air to acquire the burst plane such as the Boeing 737. champion of the key reasonablenesss as to why the Boeing 737 is select to the MD-80 is that, the MD-80 carries with it the many nuisances in flights assessments of safety at times when there is increased head ache regarding aircraft maintenance (Vasigh, 2012).Back in the day when the McDonnell Douglas-80 came to be first utili ze, it was can-efficient compared to other planes. Today, however, the MD-80 is considered a fuel hog airplane with regards to the developments that shoot emerged in fuel efficiency in the year 1980 when it was first built. In growth to this, companies that use the MD-80 airplanes such as Allegiant Air have to have the airplanes retrofitted to take after with the more modern noise rules as compared to the Boeing 737, which does non (Yenne, 2004).One major(ip) reason the MD-80s need a second-stringer by the Boeing 737 is the fuel efficiency. Airlines such as Allegiant, which tend to use the MD-80, suffer losings in fuel consumption of 25%-35% in comparison to the newer models of planes such as the Boeing 737. As crude oil prices find just about $112 per barrel, it is clearer that the future for the MD-80s is in truth limited. The latter(prenominal) also being ground on the number of passengers that both MD-80 and the Boeing 737 take. The Boeing 737 green goddess carry more p assengers than the MD-80 by around 17 passengers. The 737 can take up to 189 passengers whereas the MD-80 can only take up to 172 passengers (Vasigh, 2012).Operating economics is one of the major determiners of what type of plan is best used to increase the profit margins, but relatively hard to evaluate as it is in the case of the two airplanes in comparison here- The MD-80 and the Boeing 737. Some of the variables to look at including the dominance that the airplanes in discussion have to break-dance financially. The potential that it has in basis of revenue enhancement as well as the component part towards profitability that the two planes have to select should also consider. Flights crew expenses as well as the costs of fuel put a significant portion of make sense operating costs. The 737 with a better fuel economy and passenger comfort is the better option over the MD-80 to affect exogenous variables such as the customer gustatory modality so as to increase the profit margins.One of the fits that the Allegiant should consider is the aspect of shifting from buying one plane for $5 million to buy $40 million to save about 30%-40% fuel costs. Looking at this from a short run perspective, it might not look akin to a precise good conception but figure these from a long run base (Vasigh, 2012). It is clear that the 737 is a better option. The latter is based on the fact the savings on fuel in the end outshine the $35 million of buy a 737 over the MD-80. Other fiscal reasons as to why the MD-80 should be traded for the Boeing 737 is that the counts of vibration on the MD-80 frame in terms of depreciation. The MD-80 depreciates more than the 737 and it has to pay higher set down fees due to its noisy JT8D engine.ReferencesVasigh, B., Taleghani, R., & Jenkins, D. (2012).Aircraft finance Strategies for managing capital letter costs in a disruptive industry. Ft. Lauderdale, FL J. Ross Pub.Yenne, B. (2004).Classic American airliners. Osceola, Wis MBI.Source instrument