AW: Alaska's World periodical
Harrison: Vice President / Planning and Revenue Management
AW: Virgin America just announced an aircraft order that will triple the size of its fleet. Delta may soon order up to 200 jets and other airlines are planning large aircraft orders, too. Are we being too conservative with our growth plans? And are you worried the industry will abandon its “capacity discipline?”
Harrison: Our order for 15 new aircraft should not be interpreted as a signal that we’re abandoning capacity discipline. It represents measured growth that enables us to meet demand in our core markets, continue to serve all the new markets we’ve started over the past 24 months, and generate additional revenue in certain high-volume and high-frequency markets with the larger-gauge 737-900ER.
We plan to take delivery of 26 aircraft and retire eight 737-400s by the end of 2014 for a net increase of 18 jets. That allows us to grow the airline a moderate 3 to 6 percent annually for the next four years. But we’ll only do this if economic conditions, our cost structure and fuel prices support that level of growth.
Are we being too conservative? Historically, the airline industry has suffered from overcapacity, which forces fares down as airlines try to fill empty seats. A lot of excess capacity was taken out of the market in the past two years, and analysts believe airlines now understand they have to maintain capacity discipline to remain profitable.
We need to be cautious at Alaska in light of an economy that’s growing slowly and all the changes at our competitors—the new Delta, the new United and even Southwest with its acquisition of AirTran and goals of flying to Hawaii and Alaska. If we over-reach on growth, we’ll start the downward spiral of cutting fares and capacity and furloughing employees. It’s one thing when the economy forces us to do this—it’s another when we do it to ourselves. We think our approach is right, but only time will tell.
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Remember to read the fine print...or in this case the disclaimer buried in the middle of an obscure article.
Pure lawyer speak for "well...we will only take delivery of those additional airplanes if the pilots vote through a concessionary contract next time around. If not, we're only too happy to contract out more of Alaska's flying to regionals with no affiliation what-so-ever to AAG. Heck, if we don't come under fire from our latest "test" of five outsourced jets, the sky's the limit. Oh and BTW, don't even think about scope protection now or in the future. That's a "non-starter." You'd have to give up the whole Kit-n-Kaboodle for that. Remember, we have you pilots by the short hairs so if you even want to think about growth you'll play nice and give us what we want.
Here's to being perpetually junior.:beer:
