Like many American carriers, Allegiant is relying on Canadians’ willingness to cross the border to find cheaper airfares to U.S. destinations.
Allegiant Travel Co. will be ramping up its service in 2012 at Niagara Falls, N.Y., raising pressure on Canadian carriers that are finding it difficult to compete against cheaper fares offered by American rivals at U.S. terminals.
The expansion by the U.S.-based tour operator, which runs a discount airline, comes in addition to service provided at Niagara Falls International Airport by Direct Air of Myrtle Beach, S.C., and Spirit Airlines of Miramar, Fla.
The once-sleepy New York state airport, which handled 2,800 travellers in 2006, opened a new terminal in late 2009 and is expected to process 200,000 passengers this year. Given that an estimated 77 per cent of those customers are from Canada, that means 154,000 Canadian fliers will have gone through the U.S. airport by the end of this year.
This month, Allegiant launched a twice-weekly service between Niagara Falls and Florida's St. Petersburg-Clearwater International Airport on its 150-seat MD-80 planes. Starting in mid-February, the discount operator will introduce four flights a week to a new Florida destination, Orlando-Sanford International Airport, in a bid to poach customers from southern Ontario.
"We knew Niagara Falls had potential, and it's starting to live up to its billing. Canadians are saving money," said Douglas Hartmayer, spokesman for the Niagara Frontier Transportation Authority, which oversees the fast-growing Niagara Falls terminal and the nearby Buffalo Niagara International Airport.
He envisages growth in 2012 and the years ahead. "We're certainly not going to rest on our laurels," Mr. Hartmayer said. "We'll be cultivating business to attract new carriers and new destinations to Niagara Falls and Buffalo."
While Allegiant doesn't fly from Buffalo, other U.S. carriers do, notably Southwest Airlines Co. and JetBlue Airways Corp. combined, various U.S. airlines are on track to draw two million Canadians – both departures and arrivals – through the Buffalo terminal in 2011.
Allegiant has already established itself as a leading player in Bellingham, Wash., wooing traffic away from Vancouver International Airport, and now it's aiming for Ontario customers, especially those from Toronto's Pearson International Airport. It's part of a broader trend of U.S. border airports luring Canadian travellers – a pattern ringing alarm bells at Canada's top airlines.
Canadian consumers are flocking to airports in Washington, Montana, North Dakota, Michigan, New York and Maine to take advantage of lower fares.
Besides Bellingham, Allegiant is popular in Grand Forks and Fargo in North Dakota; Great Falls and Kalispell in Montana; and Plattsburgh, N.Y., which bills itself as "Montreal's U.S. Airport."
"It's worth the drive, worth the tradeoff for the value that Canadians are getting for our service," said Brian Davis, Allegiant's director of communications. "We're pleased with the response that we're seeing in Niagara Falls. We're pretty bullish about the opportunity."
Robert Kokonis, president of airline consulting firm AirTrav Inc., predicts there will be 230,000 departures and arrivals by Canadians at the Niagara Falls terminal in 2012.
"The thing about Florida is that it's become a year-round destination," Mr. Kokonis said. "Canadians who have time-share condos down in Florida will travel in the spring, summer or fall, not just winter and March break. The Allegiant flights will be a great service for them."
George Petsikas, president of the National Airlines Council of Canada, said higher airfares charged by Canadian carriers to and from U.S. destinations stem in part from rising taxes and fees slapped on the aviation sector in Canada, from HST to security levies to airport improvement fees. The council represents Air Canada , WestJet Airlines Ltd. , Air Transat and Jazz Aviation LP.
"We have major concerns about the difference in taxes and fees imposed on our flights here in Canada versus those imposed on flights out of airports in the U.S.," Mr. Petsikas said. "It's a question of competitiveness and making sure we don't price ourselves out of the market because of Ottawa's tax framework."
Mr. Davis said Allegiant is examining the long-term prospects for flights between Canada and the U.S., though he acknowledged that high landing fees at Canadian airports are a major deterrent. "We're constantly evaluating how to best connect with the folks in Canada who are looking for good value, so we'll keep an open mind about opportunities to cross the border," he said.
Brent Jang