jinglish

I understand that inventories don't always line up between carriers, but when B6 added SEA-BOS mint to the schedule at $549, I checked the competition's fares for an April redeye. DL wanted something like $440 or $480 for F for the same timeframe, and AS wanted $700-800. Needless to say, I passed on the EQMs.

Nevsky

I agree. I was thinking a $400 price point would be good. I just paid that on flights to/from California on UA for economy plus. I just was not going to pay $2,000 or thereabouts for VX.

sfozrhfco

It is the same for SFO-FLL on many days where B6 is not sold out. B6 is offering $549 and VX offers $1099. Needless to say VX has zero seats sold a few days in advance while B6 only has a few seats left among the 32 seats available each way on the 2 flights. When are they going to recognize that nobody in their right mind is going to pay twice as much to fly the VX product? With the AS configuration insanity would be the only defense for paying that premium for a far inferior product.

sfozrhfco

On the opposite end of the spectrum, ALK management was complaining that their average LAX BOS fare was $104 and that they were totally baffled how little capacity was added and yet the fares are so low. At the same time insisting that they are not losing customers.

One week out, the VX fare is $118--excluding tax that is just $96.74 and yet their planes are still nowhere near full. B6 is generally more expensive in coach and less expensive in Mint compared to Virgin yet and are selling more seats at a higher average fare.

AS needs to get a reality check and realize they need to do something drastic to compete or just forget transcons from SFO/LAX.

rustykettel

Until the VX product goes away, with those kind of numbers it's possibly better to buy a coach seat and pay for a day of departure upgrade than booking F to begin with.

sfozrhfco

Even that is crazy as you can get a confirmed seat in Mint for less than coach plus the upgrade fee on Virgin.

BayAreaTrvler

All of this news should be a wake up call for AS management and investors. The “Switzerland” partnership model AS followed for many years has now come back to haunt them as they openly attempt to compete with the Bigs. The Bigs, in turn, have totally turned in AS. As a long-time AS flyer in PNW that now lives in the Bay Area, AS is just not competitive in this bigger pool. The VX product was great, but it was actually falling behind the big 3 at the time of the AS purchase, and AS has promised to make it worse still. AS first is not competitive on trans con routes, They don’t have frequency to compete with UA in SFO on any routes, and UA is increasing both routes and frequency. B6 can spend the billions avoided on a merger on further expansion and planes.

Overall, Alaska seems to be positioning itself as a “Premium LCC”, if that’s a thing. This will not appeal to me or any other premium travelers in the Bay Area, and will make them way more vulnerable than they’ve ever been in their sheltered PNW environment. Perhaps they’ve done the research to confirm this is a viable market, but if they haven’t yet analyzed the VX route structure (!), I’d be skeptical.

My thoughts for AS consideration:

- You need to either revisit your pricing or cabin layout strategy - pick one. If you want to offer a sub-par premium cabin, price it accordingly low and market it like Norwegian — “ it’s not the best, but it’s good enough and a good value relative to coach.” While not attractive to us FF’s, I’d set a goal of selling out the cabin to make upgrades very rare in this model.

- If you don’t do the pricing adjustment, then you need to figure out a better first class product. Rather than copying everyone, figure out what could allow you to price it at a steeper premium. Given that VX’s product was already aging, what would Ver 2.0 of that product look like?

- Ask yourself if you have the right leadership at Horizon. AS admitted that they took their eye off the ball; I’ve avoided Horizon completely ever since these issues started. If they’ve taken their eye off the pilot-scheduling ball, how can we possibly assume they haven’t taken their eye off the maintenance and safety ball? I’m amazed the Horizon leasership hasn’t been sacked.

This is an interesting challenge for AS — welcome to the big leagues. If your assumption is that it will get easier form this point forward, it will not. The Bigs have awakened to your challenge.

rustykettel

I'm thinking it's cheaper, particularly for an elite. Upgrade fee on that route should be $190 or less from MCS (based on the longer SFO-FLL), so either elite paying ~$150 and taking the MCS complimentary upgrade or purchase MCS outright for ~$230-280 would be ~$340-470 all in. From main cabin I'm guessing it's around $350 for the upgrade fee so ~$500 ai.

Still either way, paying outright for VX F is cray-cray unless you love the idea of flying Virgin.

mikexner

They are still two companies. Same owner yes, but different revenue management. Different forecasts.

Alaska is still profitable alone alone because of revenue management and yields.

When the the two become one, routes, planes, deployment, and more will change. This is part of a merger. We've all seen it on the others. Once it's one operating certificate, things change a bunch.

The real headache ache that I think got lost here is that amidst the expected merger complications, Horizon as the regional just totally blew things. And with how bad they blew things, Alaska has had to deal with more issues than they expected.

Straight up - Horizon has hit my buttons way way harder than AS or VX issues.

Once theres one company, this will rebalance. New routes, changed routes, dropped routes, balanced schedules.

sfozrhfco

QX has barely impacted California as few people here have any need to fly them. The problems for AS are not going to be solved by being on one AOC. They have a blah product while still being a niche West Coast player. With no captive audience there is literally no reason to choose AS. They are not as cheap as Spirit, they don’t have the network of United, they don’t have the frequecy and national network with free checked bags like Southwest, they don’t have Mint and seat back entertainment and free fast internet like JetBlue, etc. When you have a blah product which is worse than people are used to while still having a very limited network, how do you sell seats? There is no more clever advertising, no product features which get people excited to fly. Even Spirit generates some excitement from people that say they made it to Florida for $19 and survived the trip.

There is a reason jetBlue started out with a splash offering a new and unique product. This is the same reason VX came in with a new and differentiated product. When you are a small player, you have to do something unique to get people excited enough to pay a premium for your product.

They would have had an easier time if they bought a carrier which was far worse than them. At least they could have sold the benefits. Having your customers know that there will be a slow and steady deterioration of the product is not exactly a means to win over those customers. It is always easier to give something than to take it away.

You can’t be a windows phone selling your product to iPhone fans and expect that you are going to get a premium price for a product nobody cares about.

fly18725

I think AAG management would disagree that they are not relevant to people on the West Coast. While the network in California may not have the breadth and depth of Southwest or United, it is pretty good, including almost all top markets served from SFO, LAX, SAN, and SJC. The post-merger Y product lacks inseat IFE, but is otherwise competitive.

sfozrhfco

What you and ALK management are not getting is that in SFO/LAX we already had the VX network and that will be replaced with a product that is WORSE that what already exists. People in California that rarely go to Alaska or the PNW are gaining little to nothing and what little they had is being downgraded. Combine this with the loss of AA/DL as partners and the relevance of AS is no greater than it was before. A single flight a day to ABQ/BNA is not changing that dynamic. There is literally no reason to choose a combined AS over any number of other competitors in any market outside of flights to SEA/PDX/Alaska as AS is still the weakest.

fly18725

Well, VX customers in SFO/LAX are gaining more flights to more destinations, including out of SJC, SNA, and BUR. On paper, the network has more value to local customers. Yes, the product is worse from some perspectives. If an outdated TV screen in the back of a seat is important to you, Delta will remain an option in the future. They are the only airline that's committee to domestic seat-back IFE across the entire fleet.

jsguyrus

Oh please! From my travels on VX out of SFO the crowd on the plane is exactly the same type of people who fly AS. Pretty much people of all ages and backgrounds. I just call B.S. on this premise that VX flyers are all uber sophisticated wealthy tech folks. If that were the case VX would have more than four FC seats on their planes.

sfozrhfco

The money is in primary airports. Even WN is not only sticking with out of the way secondary airports. VX is not the competitive product to AS--every other carrier is. B6 is refreshing their cabin to have even better in seat entertainment and the fast, free internet is fantastic. Plus they have the aspirational Mint product at a competitive price. The VX network is long haul heavy. Putting the very worst product on the long haul segments is not going to attract profitable customers. Offering QX service from LAX to STS and having people be happy that there is any service at all is totally different than dealing with long haul service where every other carrier has a built in advantage over you.

The management team needs to get their head out of the sand and stop complaining about low yields and give people a reason to pay a premium for their product. Otherwise, just accept that lower yields for them are here to stay and be happy as the bottom feeder carrier.