Fast-expanding Allegiant Air lands in NY-area market

The fastest-growing airline most New Yorkers have never heard of is making a big push to fly more people in and out of the country's biggest metro area.

Allegiant Air is expanding service in the Northeast adding flights out of Long Island MacArthur Airport and Stewart International Airport, which is approximately an hour north of Manhattan near West Point.

"I don't expect those flights to be primarily filled with people that are driving north from Manhattan, but I think we offer a very low price point, far less than most other alternatives. People who are cost conscious will drive a good distance to get on our airplanes," said Andrew Levy, president of Allegiant Travel, the parent of Allegiant Air.

A file photo of an Allegiant Air plane
Source: Allegiant Air | Wikipedia
A file photo of an Allegiant Air plane

Allegiant is also adding flights out of Syracuse in upstate New York and out of Portsmouth, N.H., which is about an hour outside of Boston. It is the airline's biggest push yet to attract passengers in the Northeast United States and specifically out of metro New York City. The initial flights will be to destinations in Florida.

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"We went in there [the N.Y. metro market] with very little frequency. We think it will do well and we think we have a chance to expand it from there if it does more than we expect."

Quietly growing thanks to small cities

Allegiant will soon serve 99 cities in the United States, more than any other low-cost carrier including Southwest. Small cities like Springfield, Ill., or Fort Wayne, Ind., have been overlooked or ignored by larger airlines because the population is not big enough to support daily service.

That's fine with Allegiant. The low-cost airline has thrived by offering just a few flights a week between small cities and popular vacation destinations like Orlando, Phoenix and Las Vegas, where Allegiant is headquartered.

It's one of the changes in the airline industry because of major carriers merging and consolidating their schedules.

"As routes get eliminated or at least there is less service particularly into our smaller cities, it opens up opportunities for us and we have taken advantage of that over the last several years," said Levy.

Allegiant can fill a few flights a week out of smaller cities because the people in those markets are willing to adjust their vacation or travel plans in exchange for the convenience of having a low-cost flight out of an airport closer to home.

Bundling hotel, rental car and vacation packages

While controlling costs and flying out of smaller airports that have lower fees has helped Allegiant grow to the point where it carried 7 million passengers last year, the airline's profits are growing thanks to the other travel services bundled into vacation packages.

Allegiant has become a one-stop shop for many going on vacation. If you need reservations for a hotel, rental car or some attraction at your destination, Allegiant is ready to make it happen.

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"We are very successful at getting people to buy these other products and services that they're going to want when they go on vacation from us," explained Levy "We are able to offer them savings as opposed to if they were going to buy those things independently."

The big challenge for Allegiant is keeping costs in check as it continues growing. The airline is already noticing an impact at its home base in Las Vegas where the addition of a new terminal at McCarran International Airport means the airline is paying $600 more in fees per flight. That increase is spread out among passengers and translates into the cost of each ticket going up a few dollars.

That's not enough to force someone to cancel or postpone a flight, but over time higher fees could have an impact.

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—By CNBC's Phil LeBeau. Follow him on Twitter @LeBeauCarNews.

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