Allegiant Travel Company is a leisure travel company Essay

loyal Travel Company is a serenity start organization concentrated on giving travel administrations and items to occupants of little, underserved urban atomic number 18as in the United States. The Company works a traveler carrier showcased fundamentally to relaxation travelers in little urban communities, permitting it to affirm air transportation both on a stand-alone launching and packaged with the offer of air-related and outsider administrations and items. Further more than, it provides air transportation under neutered charge flying courses of action. The Company provides planned air transportation on restricted recurrence tenacious flights between little city markets and relaxation goals.Since Allegiant offers fares that are low, strict cost controls tend to be required to achieve the desired profit margins. One of the cost control standard utilized by Allegiant is the use of MD-80 jets. The MD-80 jets incline to be favored to the airline is that, at a price of four one thousand million Dollars, they are cheap to buy as well as maintaining (Yenee, 2004). These plans tend to be cheaper in comparison to the acquisition of the newer planes such as the Boeing 737. Allegiant too prefers the utilization of MD-80 because they are facile as well as economic to refurbish.The MD-80 agreeably is a dependable plane that with the emergence of the comparatively reform planes such as the Boeing 737, the MD-80 is becoming outdated sidereal day by and by day which wherefore it makes much sense for Allegiant gentle wind to succeed the better plane such as the Boeing 737. One of the key reasons as to why the Boeing 737 is superior 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 concern regarding aircraft maintenance (Vasigh, 2012).Back in the day when the McDonnell Douglas-80 came to be offset used, it was fuel-efficient compared to other planes. Today, however, the MD-80 is considered a fuel hog airplane with regards to the developments that view as emerged in fuel efficiency in the year 1980 when it was first built. In addition to this, companies that use the MD-80 airplanes such as Allegiant Air have to have the airplanes retrofitted to comply with the more modern noise rules as compared to the Boeing 737, which does not (Yenne, 2004).One major reason the MD-80s need a replacement by the Boeing 737 is the fuel efficiency. Airlines such as Allegiant, which tend to use the MD-80, suffer losses in fuel consumption of 25%-35% in comparison to the newer models of planes such as the Boeing 737. As crude oil prices adopt around $112 per barrel, it is advanceer that the future for the MD-80s is very limited. The latter also macrocosm based on the number of passengers that both MD-80 and the Boeing 737 take. The Boeing 737 after part carry more passengers 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 2 airplanes in comparison here- The MD-80 and the Boeing 737. Some of the variables to look at including the potential that the airplanes in discussion have to give financially. The potential that it has in terms of taxation as well as the contribution towards profitability that the two planes have to give should also consider. Flights crew expenses as well as the costs of fuel present a significant portion of total operational 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 preference so as to increase the profit margins.One of the aspects 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 office not look akin to a very good caprice but calculating these from a long run viewpoint (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 purchasing a 737 over the MD-80. Other monetary reasons as to why the MD-80 should be traded for the Boeing 737 is that the counts of cycle on the MD-80 frame in terms of depreciation. The MD-80 depreciates more than the 737 and it has to pay higher landing fees due to its noisy JT8D engine.ReferencesVasigh, B., Taleghani, R., & Jenkins, D. (2012). Aircraft pay Strategies for managing capital costs in a turbulent industry. Ft. Lauderdale, FL J. Ross Pub.Yenne, B. (2004). Classic American airliners. Osceola, Wis MBI.Source document