General Lee
Well-known member
- Joined
- Aug 24, 2002
- Posts
- 20,442
Great Alaska article......
Alaska Airlines boss: Fees basically up to customers
Friday, April 10, 2009
AMY HSUAN -- The Oregonian Staff
Over the past eight years, the U.S. airline industry has flown through some nasty weather: terrorist attacks, new security measures, sky-high fuel prices and now a recession that's grounded business and leisure travelers.
Brad Tilden might be Alaska Airlines' fresh-faced president of four months, but he's no stranger to the airline business, with 18 years as chief financial officer among other titles.
Alaska Airlines, along with sister company Horizon Air, flies more passengers out of Portland than any other airline. Last year, more than 5 million passengers flew out of PDX on either an Alaska or Horizon flight, giving the airline nearly 35 percent of the Portland market.
But in the cutthroat world of airline competition, Alaska is trying to find new revenue streams and ways to cut costs. In 2008, the company reported a net loss of $135.9 million, which has spurred the airline to take dramatic measures such as going to an all-737 fleet and finding other ways to save fuel.
We caught up with Tilden on Thursday, when he addressed business leaders at a breakfast hosted by the Portland Business Journal. His answers have been edited for brevity and clarity.
Last year, air travelers saw a host of new fees, from baggage to blankets. Airlines blamed high fuel costs for the added charges. Now that fuel prices are coming down, are you going to get rid of the extra fees?
We are slow to make any moves on that. Our thinking is that customers will ultimately decide whether they want a la carte pricing, or if they want it all-in-one. Customers will ultimately tell us if they want lower fares and then to pay extra for the things they want, or if they want the fare to include it all. We are thinking through the notion of a first bag fee, and have been going back and forth for some time. This could play out for the next two to three years. The important thing about fees is that the customer feels as though they got something for it.
We've seen the auto industry go through a major overhaul with the consumer demanding greener cars. Do you see airplanes and the airline industry making a similar effort to become more green?
I think we'll be working with airplane manufacturers on becoming more efficient. If you look at us today, we have an entirely 737 fleet. Horizon operates entirely on the Q400 airplane. Those are some of the most fuel-efficient planes in the world. We're retrofitting our planes with winglets and reducing the amount of water we bring on board.
The airline industry has been trying to find a workable business model for the past decade. For the legacy airlines like United and American, that's meant the hub-and-spoke model. Where do you see Alaska going?
We do flow traffic through hubs, but we have four of them: Seattle, Anchorage, Portland and Los Angeles. We do have more of a point-to-point focus and are interested in commanding market share for those segments. We'd like to develop the Portland market more, and we do have to compete with the low-cost carriers. The analogy we like to use is that of Costco. If a customer buys a widescreen TV at Costco, they're not questioning the price. That's where we want to be.
Do you see Alaska taking on more international flights?
Probably not. We fly to Canada and Mexico. And we just launched flights from Portland to Hawaii. But international is not our thing. We don't have the right airplanes, and we are trying to keep things simple for now. Flights to and within Alaska make up about 25 percent of our business. We do better northbound to Alaska than up and down the West Coast.
What was the impact of the eruption of Mount Redoubt in Alaska on your business?
We canceled a lot of flights and probably lost a few million dollars. But we worry more about passengers than sweating money. We have $1 billion in cash on hand, which is way higher than other airlines. We try to build a very rugged company for those kinds of events.
Bye Bye---General Lee
Alaska Airlines boss: Fees basically up to customers
Friday, April 10, 2009
AMY HSUAN -- The Oregonian Staff
Over the past eight years, the U.S. airline industry has flown through some nasty weather: terrorist attacks, new security measures, sky-high fuel prices and now a recession that's grounded business and leisure travelers.
Brad Tilden might be Alaska Airlines' fresh-faced president of four months, but he's no stranger to the airline business, with 18 years as chief financial officer among other titles.
Alaska Airlines, along with sister company Horizon Air, flies more passengers out of Portland than any other airline. Last year, more than 5 million passengers flew out of PDX on either an Alaska or Horizon flight, giving the airline nearly 35 percent of the Portland market.
But in the cutthroat world of airline competition, Alaska is trying to find new revenue streams and ways to cut costs. In 2008, the company reported a net loss of $135.9 million, which has spurred the airline to take dramatic measures such as going to an all-737 fleet and finding other ways to save fuel.
We caught up with Tilden on Thursday, when he addressed business leaders at a breakfast hosted by the Portland Business Journal. His answers have been edited for brevity and clarity.
Last year, air travelers saw a host of new fees, from baggage to blankets. Airlines blamed high fuel costs for the added charges. Now that fuel prices are coming down, are you going to get rid of the extra fees?
We are slow to make any moves on that. Our thinking is that customers will ultimately decide whether they want a la carte pricing, or if they want it all-in-one. Customers will ultimately tell us if they want lower fares and then to pay extra for the things they want, or if they want the fare to include it all. We are thinking through the notion of a first bag fee, and have been going back and forth for some time. This could play out for the next two to three years. The important thing about fees is that the customer feels as though they got something for it.
We've seen the auto industry go through a major overhaul with the consumer demanding greener cars. Do you see airplanes and the airline industry making a similar effort to become more green?
I think we'll be working with airplane manufacturers on becoming more efficient. If you look at us today, we have an entirely 737 fleet. Horizon operates entirely on the Q400 airplane. Those are some of the most fuel-efficient planes in the world. We're retrofitting our planes with winglets and reducing the amount of water we bring on board.
The airline industry has been trying to find a workable business model for the past decade. For the legacy airlines like United and American, that's meant the hub-and-spoke model. Where do you see Alaska going?
We do flow traffic through hubs, but we have four of them: Seattle, Anchorage, Portland and Los Angeles. We do have more of a point-to-point focus and are interested in commanding market share for those segments. We'd like to develop the Portland market more, and we do have to compete with the low-cost carriers. The analogy we like to use is that of Costco. If a customer buys a widescreen TV at Costco, they're not questioning the price. That's where we want to be.
Do you see Alaska taking on more international flights?
Probably not. We fly to Canada and Mexico. And we just launched flights from Portland to Hawaii. But international is not our thing. We don't have the right airplanes, and we are trying to keep things simple for now. Flights to and within Alaska make up about 25 percent of our business. We do better northbound to Alaska than up and down the West Coast.
What was the impact of the eruption of Mount Redoubt in Alaska on your business?
We canceled a lot of flights and probably lost a few million dollars. But we worry more about passengers than sweating money. We have $1 billion in cash on hand, which is way higher than other airlines. We try to build a very rugged company for those kinds of events.
Bye Bye---General Lee
