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Actually, AirTran took on Allegiant by going into the secondary markets already served by AAY. Even emulated the same low frequency/twice a week type service that AAY does. AirTran's difference was going right into MCO.
Allegiant is simply defending their turf.
I know AAI's CASM is about 9.5 cents, anyone know what AAY's CASM is? My bet is it's higher, due to lack of frequency, despite the lower salaries.