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Alaska Air stock falls sharply on difficulties with Virgin, Horizon Air

Alaska Air stock falls sharply on difficulties with Virgin, Horizon Air

Old Oct 27, 2017, 12:20 pm
  #91  
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Originally Posted by milypan
At this point I have no idea what their SFO/LAX expansion strategy is. They don't want to provide a reasonable network for business travelers, they don't want to compete on price for budget travelers, they don't want to provide a competitive product for people willing to pay for premium cabins...who is going to fly them? I like MileagePlan, and the simple fact that they're not UA, but that's barely enough to keep me, and it's certainly not enough for the other 99% of potential customers. What a mess...
If I was still living in the Bay Area (or more specifically, on the peninsula), I wouldn't be flying AS/VX very much. I wasn't flying them individually except for occasional one-offs on VX to LAS when they were a lot cheaper than UA. The merger so far wouldn't have changed anything for me. Right now I would probably get myself one of those WN credit cards with a free companion pass and fly my wife for free all over the place for a year
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Old Oct 27, 2017, 12:33 pm
  #92  
 
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There appears to be a lack of understanding of what type of customers Alaska is targeting and what type of airline they want to be in the future. Im not going to lay out whats already been described, but premium travelers expecting a leading premium transcon product and most road warriors are not their target. If youre not comfortable with this strategy, you shouldnt be an investor or a customer.

Management certainly dropped the ball ball on a few issues and failed to say the right things to analysts. At the end of the day, Im more concerned with management doing the right thing over scripting out the perfect responses.
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Old Oct 27, 2017, 12:40 pm
  #93  
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Originally Posted by notquiteaff
Well, I asked because you are mentioning last-in-class transcon proposition and "lamest product offering". Clearly that is the case in F on premium transcons. Not so clear to me that it's the case for someone like me who buys the cheapest fare because it comes out of my own pocket.
"Lamest product offering" applies to F, to be sure, but the other half of the problem is, AS+VX does not add up to a comprehensive national network. Without the AA alliance, you get an array of slim-frequency, high-priced routes to a mix of major and medium markets. No way to reach smaller markets outside the west; no way to get to MIA, or anywhere north of BOS, or any of Canada east of BC, or any of the South except ATL and CHS.

So that leads you to either shop on price, or -- more likely -- concentrate spend with another airline that has comprehensive coverage.
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Old Oct 27, 2017, 12:47 pm
  #94  
 
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Originally Posted by fly18725
There appears to be a lack of understanding of what type of customers Alaska is targeting and what type of airline they want to be in the future. I’m not going to lay out what’s already been described, but premium travelers expecting a leading premium transcon product and most road warriors are not their target. If you’re not comfortable with this strategy, you shouldn’t be an investor or a customer.
Even after the AA partnership unraveled I argued that AS wasn't targeting the type of travelers (road warriors) that required an AA-scale network. But come on, this is getting ridiculous. They're not targeting road warriors, they're not targeting premium cabin customers, they're not targeting "Kayakers"...who are they targeting? "Leisure enthusiasts," which apparently is a much smaller group than they'd bargained on.

Seriously, why would anyone flying out of SF or LA choose AS unless they were the cheapest option? What is the value proposition there?

Management is coming to the same realization. On their own conference call they admitted that they don't understand why fares are so low in their CA markets and why they can't fill planes if they try to charge a premium. The "we're relevant on 70% of trips" line is nonsense. By "relevant" they just mean "you could fly us if you happened to be going there," but they give no reason why you'd pay a premium to fly them, especially since they would be entirely irrelevant for 30% of potential trips.
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Old Oct 27, 2017, 12:52 pm
  #95  
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The target is not the VX customer, the target is the WN customer. If you look at the intra-CA adds and the fact they're trying to have a reasonable map for CA residents if you compare AS vs. WN, AS can come out ahead, especially at the Gold or 75K status level - assigned seats, upgrades, free changes, free bags. It's basically an ehnanced level of service over WN. No companion pass, but other perks. The value proposition is solid. So much so that WN is afraid (look at their latest promo for 1 purchase with a CC and a companion pass for a year for CA customers).

SFO-JFK flatbed flyer, yeah, not so much. North-south flyer, absolutely can work. Mix of flights, maybe AS can work.


Originally Posted by milypan
They're missing three of the top 15 markets from the SF Bay Area (PHX, HOU, ATL). And by "missing" I don't mean "you can't get there on a non-stop." I mean you can't get there on any reasonable itinerary at all. That's not true for UA, AA, DL, or WN. The only large carrier with a worse network here is B6 (and yes, that is exactly why AS paid $2.6b for VX despite having no real plan at all).
AS SFO-PHX service starts in March. AS also has their code on AA LAX-IAH and LAX-ATL. Come late April when VX goes away, SFO-LAX-IAH/ATL is easy enough. AS has their code on AA ORD-ATL as well. SFO-ORD-ATL is not terribly out of whack.
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Old Oct 27, 2017, 12:54 pm
  #96  
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Originally Posted by milypan
Seriously, why would anyone flying out of SF or LA choose AS unless they were the cheapest option? What is the value proposition there?
That's the same question I always asked (myself) about VX or WN when I lived in the Bay Area. And that was always the reason why I booked them, which I rarely did. When the flight was cheaper *and* it was a short flight to SoCal or Vegas and I didn't particularly need elite benefits and E+ seating and the earned status miles were not needed.
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Old Oct 27, 2017, 12:59 pm
  #97  
 
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I think the one major thing we are forgetting is AS has the best loyalty program hands down, particularly for those of us that cant fly on expensive fares or purchased F. I try to fly on AS as much as possible as I find the value of the miles earned (if used wisely). As long as they continue to have a miles based program I will continue to use AS.
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Old Oct 27, 2017, 1:00 pm
  #98  
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Originally Posted by BearX220
"Lamest product offering" applies to F, to be sure, but the other half of the problem is, AS+VX does not add up to a comprehensive national network. Without the AA alliance, you get an array of slim-frequency, high-priced routes to a mix of major and medium markets. No way to reach smaller markets outside the west; no way to get to MIA, or anywhere north of BOS, or any of Canada east of BC, or any of the South except ATL and CHS.

So that leads you to either shop on price, or -- more likely -- concentrate spend with another airline that has comprehensive coverage.
All true, and I while I personally have not had much of a problem with the weak network because they generally fly where I want to go, I would not hesitate to just book Delta or AA or UA (MM status!) these days if it works better for me or is the only way to get somewhere. I am biased towards AS because of my location in the PNW, but I am not married to them

Originally Posted by fly18725
Management certainly dropped the ball ball on a few issues and failed to say the right things to analysts. At the end of the day, I’m more concerned with management doing the right thing over scripting out the perfect responses.
It's not really a mutually exclusive thing/skill to have for an executive
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Old Oct 27, 2017, 1:01 pm
  #99  
 
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Originally Posted by BearX220
"Lamest product offering" applies to F, to be sure, but the other half of the problem is, AS+VX does not add up to a comprehensive national network. Without the AA alliance, you get an array of slim-frequency, high-priced routes to a mix of major and medium markets. No way to reach smaller markets outside the west; no way to get to MIA, or anywhere north of BOS, or any of Canada east of BC, or any of the South except ATL and CHS.
+1 Mind blowing there is no VX/AS service to CLT!
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Old Oct 27, 2017, 1:10 pm
  #100  
 
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Originally Posted by jsguyrus
I think the one major thing we are forgetting is AS has the best loyalty program hands down, particularly for those of us that cant fly on expensive fares or purchased F. I try to fly on AS as much as possible as I find the value of the miles earned (if used wisely). As long as they continue to have a miles based program I will continue to use AS.
That is another AS marketing line but is just not true for most people. VX was much better for occasional travelers as they could earn a free flight within California or to Las Vegas very easily. Higher end travellers earned points and status quickly. UA has way more partners--most of whom don't charge ridiculous fees. B6 and WN always have availability so I never have to worry about not being able to use my points. With the B6 credit card you also get 10% of your points refunded. I am mostly a leisure weekend traveler and AS usually charges a ridiculous amount of points for Friday to Sunday travel--even when the fares are not too high. Mileage Plan is not the worst program ever but it does not encourage me to choose AS at all--especially as their F product is so poor for longer flights that I would never accumulate points to fly on it.
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Old Oct 27, 2017, 1:16 pm
  #101  
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Originally Posted by Madone59
+1 Mind blowing there is no VX/AS service to CLT!
CLT is like IAH -- the bulk of the traffic is fabricated connecting traffic that has no need or interest in going to CLT. I can't find the report, but last I saw, CLT had the highest amount of connecting traffic (on a percentage basis) of anywhere in the country, and IAH was second or third.

Big East Coast airports with lots of flights, where nobody wants to go don't make sense for a West Coast O/D carrier. AS is at a disadvantage for these as their nearest hub is 2,000 miles away...they can't just send a feeder plane in and grab what little local traffic there may be. Unless they get enough West Coast volume, they can't make it work. An East Coast hubbed airline can do it, though.

You'll notice that nobody serves CLT from the West Coast, except AA who is the beneficiary of the flows through there. DL doesn't have LAX/SEA-CLT, UA doesn't have SFO-CLT, etc.
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Old Oct 27, 2017, 1:16 pm
  #102  
 
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Originally Posted by channa
AS SFO-PHX service starts in March. AS also has their code on AA LAX-IAH and LAX-ATL. Come late April when VX goes away, SFO-LAX-IAH/ATL is easy enough. AS has their code on AA ORD-ATL as well. SFO-ORD-ATL is not terribly out of whack.
SFO-PHX starts in March but it also ends in March. It's just a promo spring training seasonal.
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Old Oct 27, 2017, 1:26 pm
  #103  
 
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And no one but a tiny collection of diehards is going to fly SFO-LAX-IAH or SFO-ORD-ATL when plentiful cheap non stops are available on UA/WN/DL
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Old Oct 27, 2017, 1:41 pm
  #104  
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Originally Posted by jsguyrus
I think the one major thing we are forgetting is AS has the best loyalty program hands down... As long as they continue to have a miles based program I will continue to use AS.
I think people underestimate the (now weakened) role of the FF program in keeping people outside the west coast glued to AS. When I moved to Chicago last year I thought, well, AS/VX has pretty low utility from ORD -- but I'll fly AA when heading east, south, or to Europe, take 4-6 AS trips per year to Hawaii, YVR, or SFO, and maintain status. With AA exiting the program, though, I'll just fly AA all the time and build my AA or Avios accounts. I expect AS is off my radar next year.
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Old Oct 27, 2017, 1:46 pm
  #105  
 
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Originally Posted by BearX220
I think people underestimate the (now weakened) role of the FF program in keeping people outside the west coast glued to AS.
Even for those in the Bay Area it is not that great. I may have 5 carriers that go to my destination non-stop or I can get an award on AS with a connection through SEA--many times over-nighting there to catch the one flight that either exists or has award space. There is just very little draw.
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