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Alaska Airlines Makes Renewed Bet on California

Madhu Unnikrishnan
July 1st, 2021 at 1:55 PM EDT

Alsaka Airlines 737 taxiing

Alaska Airlines’ long-term future is in California, especially now that the Golden State has lifted most of its Covid-19 restrictions and Californians are eager to travel. The carrier is rejigging its route network to capitalize on more leisure demand as the country climbs out of the pandemic.

But among the casualties is a route it inherited from Virgin America: Los Angeles-New York John F. Kennedy International Airport, which ends in October. The route is among the most competitive in the U.S., and Alaska — and Virgin America before it — never had the schedule depth to be a player among lucrative corporate travelers. It is the smallest carrier operating the route. Moreover, Alaska only had four slots in the prime 3-9 p.m. window at the slot-controlled airport, which hamstrung its ability to eat into the legacy airlines’ corporate traffic.

“We’re rebuilding our New York portfolio to optimize our long-term competitive positioning across the West Coast markets we serve,” said Brett Catlin, Alaska vice president for network and alliances. “This includes increased frequencies and improved schedules to Seattle, Portland, Ore., San Francisco, and San Diego.” Alaska will serve New York from Newark and will rely on its Oneworld alliance partners, including American Airlines, for lift between Los Angeles and JFK, he said.

A robust California network always was the prize for Alaska when it acquired Virgin America in 2016. Shortly after the acquisition but before the two carriers fully merged, Alaska expanded its network from San Francisco, including to several cities in the Midwest. It’s since retrenched from those routes. “We are far more deliberate about the business markets we grow in,” Catlin said in an interview with Airline Weekly. “Some Midwest markets — San Diego-Omaha, for example — didn’t have a path for us to realistically compete.”

Virgin America’s brand resonated in California, where it was based. Immediately after the merger and after the Virgin America livery disappeared from aircraft, Alaska struggled to stand out in the state. The carrier has had decades to build up a strong brand loyalty in its Pacific Northwest base, and hopes to replicate that loyalty in the Golden State. “We need to sharpen our pencil on how we compete in California,” Catlin said, adding that the state is key to the carrier’s long-term growth plans. “Our legacy has been in leisure markets, and we need to be more assertive in California, where we know there is leisure and [visiting friends and relatives] demand.”

Part of that strategy is on new routes from Los Angeles to vacation destinations like Belize and Ft. Myers, Fla. Another leg in the strategy is to beef up connections between California and Alaska’s Pacific Northwest bastions. “In those North-South markets, we win over every other carrier,” Catlin said. The carrier plans to build up its networks from both San Francisco and San Jose as demand starts to return. San Francisco is recovering more quickly than expected. San Jose lags now but Catlin expects demand at the airport to return when road traffic between San Jose and San Francisco gets more congested, which makes San Jose more attractive for passengers based in Silicon Valley.

Another focus city is Boise, where Alaska expects to operate 30 daily flights by this winter. The reason for this expansion was simple, Catlin said. Boise has about 70 percent of the population of Salt Lake City, but only half the air service. “It was a bit of a sleeper market,” he said. Demographic shifts, as remote workers from Silicon Valley flock to Boise, also present an opportunity if those workers have to commute to California a couple of times per month. The carrier is shifting its California schedule from Boise to accommodate passengers to facilitate day trips, he said.

Boise also presents an opportunity for Alaska to capitalize on its new Oneworld alliance membership by connecting passengers over its hubs in Seattle, Portland, and San Francisco. The carrier also recently announced an enhanced codeshare agreement with fellow Oneworld member Qatar Airways. Catlin said about 100 passengers per day connect from Alaska’s network to Qatar’s, traveling to East Africa, the Middle East, and South Asia.

The carrier’s Oneworld membership and its West Coast partnership with American Airlines make it more attractive to corporate customers, Catlin pointed out. “It’s all about international routes,” he said. “The partnerships allow us to compete from Seattle to international destinations without us having to buy [Boeing] 787s.” This makes Alaska a “one-stop shop” for large corporate customers, which in the past may have had a contract with Alaska for domestic flights and another airline for international.

Turning to fleet, Catlin said the carrier’s future fleet strategy is built around the Boeing 737 Max. The carrier is divesting the Airbus A320 aircraft it inherited from Virgin America, but it plans to keep Virgin America’s A321s “for the foreseeable future,” he said. The larger A321s provide the capacity to serve constrained markets like Washington Reagan National Airport, as well as Hawaii’s Maui and Lihue.

Madhu Unnikrishnan
July 1st, 2021 at 1:55 PM EDT

Photo credit: Alsaka Airlines 737 taxiing Alaska Airlines

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