A discount airline flown by many hundreds of Iowans every week is announcing its merger with another carrier.
Headquartered in Las Vegas, Allegiant is buying Minnesota-based Sun Country Airlines in a $1.5 billion dollar deal.
Kyle Potter, executive editor of the Thrifty Traveler, says Sun Country has been a bright spot among low-cost carriers for the past three years, and Allegiant is also in solid shape.
“When airlines want to grow, they need to grow in order to continue generating more revenue and try to increase their profitability,” Potter says. “The easiest way to grow is just to buy another airline. You get those planes, you get those pilots, you get those routes. I think that is what is really driving this acquisition from Allegiant.”
The merger is expected to be finalized in the second half of this year. The combined company will continue under the Allegiant name.
Potter says a worst-case scenario is that Allegiant will scale back over time. Right now, Sun Country prides itself as a competitor to larger airlines like Delta.
“Offering travelers a cheaper fare than Delta will sell them for, and in many ways, that has kept Delta in check and has forced Delta to be at least more competitive on price than they otherwise would be,” he says. “Allegiant just doesn’t do that. Allegiant’s entire business model is built around flying from smaller cities.”
Together, the airlines will operate more than 650 routes, 551 from Allegiant and 105 from Sun Country.
Allegiant flies from cities including Des Moines, Cedar Rapids, Omaha and the Quad Cities.
