I was able to have a one-on-one discussion with Brett Catlin, VP of Network and Alliances. During this thirty-minute briefing, I was able to get a sense of Alaska Airlines’ post-pandemic business plan. Many of you out there have questions about both the airline and its frequent flyer program. Here’s what I was able to learn.
The “Value Proposition”
The airline realizes that business travel as we used to know it is a long way from coming back. Alaska does have a niche market in “business commuters” where employees who work remotely in the Pacific Northwest have an easy commute to their office locations when they need to. The network foundation had been growing over the last year and a half. The key is being measured in how the airline grows. There is a tremendous value proposition for being a part of a global alliance. Alaska is honed in on the quality of the brand and growing customer loyalty.
The focus, for now, is on the leisure market.
Alaska Airline operates at Seattle-Tacoma International Airport from Concourses C, D and the North Satellite. The construction of the renovated North Satellite should be completed this summer. With all of the gates available, Alaska should be able to grow from 300 – 310 daily departures by adding another 50 – 60 flights. The airline isn’t looking to spill into their competitors but to continue to add flights to and from Seattle.
Before the pandemic, Alaska was growing the Portland International Airport market as a minor hub. The focus is on being in the top markets and rebuilding depth. The intent is to increase operations at Portland to 140 – 150 departures.
Growing The Leisure Market
This is something that Alaska Airlines is very good at. When I started flying with Alaska over twenty years ago, their route structure was primarily Alaska and the west coast. Alaska grew the Mexico flights, later to the Hawaiian markets and building transcontinental routes. Their flights are full to these popular leisure destinations.
Another is matching seasonal demands throughout the year. In the winter, they fly to Palm Springs and top ski resorts. Then they will move the aircraft to summer destinations. Some of the recently announced new routings are:
- Portland to New Orleans,
- Portland to Tampa
- San Francisco to Cancun and
- Palm Springs to Austin, TX.
One of the biggest tools in the toolbox is the Embraer E-175 regional jet with first class, premium economy and economy seating for 76 passengers. When Alaska starts a new route, especially a long and thin route, the E-175 is the perfect aircraft. They can begin with the regional jet and if the route takes off, they can swap the aircraft to a mainline Boeing 737. These aircraft are flown by Alaska’s regional carrier Horizon Air and also under contract with Skywest Airlines. These capacity management contracts give Alaska the flexibility to alter routes as demand changes. The new Boise routes are perfect examples of starting with the E-175 regional jet:
- Boise to Phoenix,
- Boise to Austin and
- Boise to Chicago.
Brett explained that developing regional markets as “feeder” or stand-alone routes are essential for the success of the carrier.
Alaska Airlines is not really concerned with Southwest flying to Hawaii. The airline has been flying to Hawaii for years and they have a loyal following because of the inflight experience they bring. The growth in the Hawaii market will be in California and by the end of the year, Alaska will have 40 flights per day to Hawaii. It’s all about building the franchise.
For Mexico and beyond, the carrier wants to open new destinations in Mexico and Central America. A few years ago, Alaska started flying to San Jose and Liberia in Costa Rica. They are expanding to Belize a market that they would really like to see work out. They have no plans at this time to fly to the Caribbean.
Additionally, a focus will be on growing the California and west coast traffic. As the new service to Cincinnati, the airline will look at markets lacking connections to the west coast.
Alaska Airlines Mileage Plan
The core of the Alaska Airlines Mileage Plan is the value it offers. With that in mind, Alaska Airlines will be mindful on how it evolves.
Alaska Airlines has joined the Oneworld alliance and mileage earning is available when flying on partner carriers. In terms of award ticket redemption, Qatar Airways reservations should be available later this summer. Redemptions for awards on other Oneworld carriers should be available by early 2022.
There was no new insight on two of the perks of the Alaska Airlines Mileage Plan – award charts and the free en-route stop on one-way award tickets.
As the airline industry has evolved over the last 40 years, Alaska wants to be transparent. They have capped most of their revenue tickets below $1,000.00. It is the value proposition that matters.
The new MVP Gold 100K tier is still under development and has customers who split airline redemptions in mind. One possibility would be to use “choices” as a theme for elite tier benefits.
Even though Emirate will leave the program on July 31, 2021, the other non-Oneworld airlines like Icelandair should continue their partnerships.
Aircraft Fleet Plan
All of the Boeing 737MAX aircraft in the Alaska Airlines fleet are flying. The airline has a total of 88 737 MAX aircraft on order and will be used to replace Airbus A320 aircraft and for route expansion. The benefit of a single aircraft fleet is an economy of scale that brings huge financial benefits to a carrier. Southwest is a prime example of how crew certification, maintenance and operations can bring substantial cost savings. Alaska Airlines enjoyed this aircraft commonality prior to the merger of Virgin America and inheriting an Airbus A-320 fleet. The Airbus aircraft will be replaced as new 737MAX aircraft are being delivered and Alaska mainline operations will once again be based on the Boeing 737.
The regional fleet has 32 Bombardier Q400, 76-passenger turboprop aircraft. There is a strong regional market that still needs the economics of flying turboprop aircraft and will be a player in the network through 2025.
There was a lot to cover in a 30-minute time frame. I wanted to get the answers to the questions that Alaska Airlines Mileage Plan members want to know.
Alaska Airlines is proud of the brand it pioneered. They value the customer loyalty that comes with a product that offers value and by building the Alaska Airlines franchise.
The Alaska Airlines Mileage Plan is still evolving and Travel Codex will have more details when they become available.