Permanently reinstating the guarantee effective July 1!

August 1, 2007

Maury Gallagher
Ponder Harrison

Allegiant Air

3301 N. Buffalo Dr., Suite B9

Las Vegas, NV  89129

Re:  Compensation Package

Dear Mr. Gallagher and Mr. Harrison:

This letter is being sent by the undersigned in-flight team members (IFTM). The purpose of this letter is to discuss concerns related to Allegiant's newly implemented policy of paying IFTMs a base salary plus a percentage of net sales on board rather than a set hourly rate. This is an innovative concept and the undersigned are willing to continue to work toward increasing ancillary revenue on board. However, for reasons discussed below, we respectfully request that Allegiant permanently reinstate the guarantee wherein the IFTMs' salary is the greater of a lower base plus a percentage of net sales or the set hourly rate, thereby keeping its original promise that no IFTM will experience a financial loss as a result of this change. This guarantee will result in a win-win situation for Allegiant and the IFTMs.

Despite Allegiant's good intentions, the concept of basing the IFTMs' salary in part on a percentage of the net sales on board is not working as planned. Allegiant depends on too many third-party vendors to supply and ensure availability of the products to be sold. Processes to manage communication and adequate maintenance of inventory were not put in place in advance of the transition to the new compensation package. The carts are not stocked completely. There are inevitably missing, expired, or damaged products. All these factors contribute to the IFTM's inability to sell the products. The IFTMs lack the control to correct the problems; yet, are the individuals directly, and negatively impacted by them. Attempting to give the flight attendants credit for these inadequacies would be a tracking nightmare resulting in Allegiant's inability to accurately provide such a credit.

Another under appreciated problem is that the IFTMs cannot accurately predict their take home pay. This uncertainty has caused significant personal anxiety associated with being able to simply pay upcoming bills. The airline industry is fraught with instability and it is inadvisable to create additional and unnecessary concern.

An additional unanticipated consequence of this change is the diminished flexibility in scheduling throughout the network. IFTMs are reluctant to make certain trip trades because it is recognized that sales are low on those trips. Reinstating the guarantee will remove this concern. With flexibility in scheduling, there are fewer sick calls, DTG requests, etc., and the operation runs more smoothly.

As a result of the above factors, IFTMs are experiencing low morale and are quitting their jobs in record numbers. This increases Allegiant's costs for hiring and training and has resulted in situations wherein there are not enough IFTMs to maintain the integrity of the operation. Further, the IFTMs are the front-line workers and interact with our customers more than any other Allegiant employee. The increased worry over pay and low morale make it difficult to present the best face to our customers. For Allegiant's IFTMs, the company core values of "fun" and "passion" have all but disappeared. No matter how passionate one is, it is very difficult to have "fun" when the very real possibility of being unable to meet one's monthly expenses looms.

The IFTMs recognize that part of Allegiant's success stems from its willingness to be innovative and do things differently. We are willing to participate in these innovative efforts but need to feel we are being treated fairly in the process. Permanently reinstating the guarantee effective July 1 will decrease stress, increase morale, improve retention and the relationship with management, all of which will improve customer relations and improve the financial health of Allegiant. It will change this innovative plan from negative reinforcement--make the sale or don't get paid--to a positive one wherein Allegiant stands behind a job well done.

Refusal to reinstate the guarantee will have the opposite effect.


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