Allegiant Travel Co. has officially finalized its $1.5 billion cash-and-stock acquisition of Sun Country Airlines, marking a major consolidation in the budget travel sector. The deal, which was first announced in January, brings together two carriers known for connecting smaller cities to popular vacation destinations. While the two airlines will operate under their respective brands and maintain separate booking platforms for the time being, the combined entity will now serve approximately 175 cities across more than 650 routes.

Greg Anderson, who has been appointed to lead the combined organization, emphasized that the company’s business model remains focused on margin protection rather than aggressive expansion. By maintaining a surgical approach to capacity, Allegiant intends to insulate itself from the volatility that has impacted other low-cost carriers. This strategy involves scaling flight schedules to match peak travel demand while significantly reducing capacity during off-peak periods, such as mid-week travel in slower months, to ensure profitability.

The merger comes at a challenging time for the aviation industry, which is grappling with surging jet fuel prices and broader economic pressures. Despite these hurdles, Anderson noted that demand among budget-conscious leisure travelers remains resilient. Allegiant has already signaled a cautious outlook for the coming months, planning to reduce capacity in the second quarter and keep third-quarter levels relatively flat compared to the previous year.

This consolidation follows a period of significant turmoil in the budget airline space, highlighted by the recent collapse of Spirit Airlines. As the industry faces increased pressure from rising operational costs, Allegiant’s focus on cost-conscious operations and strategic capacity management represents a distinct approach compared to the major legacy carriers that dominate the U.S. domestic market. Beyond passenger service, the acquisition also incorporates Sun Country’s established cargo operations for Amazon, further diversifying the company’s revenue streams.