Alaska Airlines: We Gave Away Too Many Rewards Seats for Too Few Miles
Jeff Edwards July 30, 2018
Seattle, USA - April 28, 2012: Alaska Airlines jet at the D Concourse being loaded with passengers and luggage.
During the company’s second quarter earnings call with investors, Alaska Airlines CCO Andrew Harrison said that mistakenly making too many seats available for frequent flyer rewards redemption during the start of the busy Summer travel season was a drag on earnings. The carrier says that the ongoing merger with Virgin America contributed to the misjudgment.
By most measures, Alaska Airlines had great second financial quarter – especially for a company in the midst of an expensive merger with onetime rival Virgin America. In an earnings call with investors this week, management highlighted strong adjusted net income of $206 million and reported that the most difficult phases of integrating the two airlines under the Alaska banner are in the rearview mirror.
“In the last year and half, we’ve made tremendous progress bringing Alaska Airlines and Virgin America together,” Alaska CEO Brad Tilden revealed. “We’re on very solid footing today thanks to the fantastic efforts of our employees, who delivered exceptional on-time performance and earned our 11th consecutive J.D. Power award for highest in customer satisfaction – all while completing the most complex part of our integration.”
The airline’s leadership team admits, however, that there have been a few hiccups along the way. Executives told investors that the merger related integration of Alaska and Virgin America’s reservation system caused the company to inadvertently offer too many rewards seats on too many flights for too few miles. The airline says that the mistake ended up being a drain on profits.
“We were way too open,” Alaska Chief Andrew Harrison told stakeholders on Thursday. “We are about generosity but we have the inventory misaligned with the demand … This was a miss on our part but it’s behind us now and we feel good going forward.”
Skift’s Brian Summers points out that it wasn’t just Alaska Airlines Mileage members who were able to take “AAdvantage” of the mistake – American Airlines AAdvantage members were able to redeem rewards seats from the oversized inventory on popular Summer travel dates at a bargain as well. The airline says that the costly misstep resulted in carrier losing substantial revenue that it might have otherwise collected from passengers paying in cash rather than rewards.
“We’re trying to balance two very important economic drivers of our business,” Harrison explained. “One is obviously selling revenue tickets and the other one is to continue to grow the loyalty program.”
[Photo: Shutterstock]
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What the statement should have said When we purchased Virgin America, we continued similar awards that Virgin America offered when their passengers flew and collected the Points/Miles Now we are upset that the former Virgin America frequent flyers actually received the redemptions at the rate they expected when they collected them. Then we actually dropped many of The Virgin Routes and substantially downgraded their Former Great Service.
The "loyalty program" was good and Alaska won awards....so maybe that goes hand in hand? Let's face it, the merger with Virgin Air was a total bust for existing Alaska passengers/customers....we lost all domestic partners and Alaska has pulled back on many of those acquired routes. A total LOSER. Brad Tilden simply screwed this all up.
MMM - I fly Alaska Airlines specifically because of their rewards programme and redemption opportunities. It certainly is not because of their great trans con business class.