Just because Mint is being flown on a route doesn't make it premium transcon market the same way SFO/LAX-JFK are (for one thing the volume of premium seats on SFO/LAX-JFK is a multiple of everything else- as in HUNDREDS of F/J seats a day, not just a couple dozen). Let me know when UA starts flying EWR-LAS with lie-flats, or when AA starts flying three-class AFS on LAS/SEA-JFK. Then maybe I'll consider markets other than SFO/LAX-NYC a "premium transcon" market.

DL has historically not done great with D1 on SEA-JFK- it's been an on and off thing for them over the years (where they have tried and removed the service). Maybe B6 Mint is pushing them to on again. Maybe SEA has developed enough as a hub to support it. But I still think it's a secondary market. Go look at top 10 domestic airport destinations for SEA, SFO and LAX. You will find EWR and JFK are on the list for SFO/LAX. SEA, not so much. So again... I say California is where the premium transcon action is at (and by that I mean SFO/LAX). Maybe B6 can make it work for smaller markets out of JFK, or BOS. But you're still talking about smaller markets.

The fact is AS doesn't want a subfleet with lie-flats (or a VX configuration, or what have you that isn't a standard domestic F configuration). That's the price of admission to SFO/LAX-NYC premium transcon. They don't want to pay it.

First, I didnt say lounge networks, I said key airports.This mean airports that have a need and can support a lounge. Maybe start with a hub, like SFO. Then maybe airports that get a lot of flights, like SAN. After that get lounge partners in smaller airports, and deal with existing lounges to get them up to standard (like PDX). As far as lie flats I said transcons and Hawaii. Does that mean every flight over 2,000 miles, no. But on those obvious routes lets get ahead of the game. It seems like AS is 5 years behind DL/B6 and it would be nice to get in front of the curve. We finally just got all the aircraft converted to the new FC and premium class. One more thing, maybe price FC at a reasonable level. There is zero reason why AS should be charging almost 1/3 more than B6 Mint on the same route. Perhaps if they had reasonable price people would actually purchase a FC seat.

The fact is that the trend on transcons has shifted towards premium service since the introduction of Mint and the expansion of service by DL. Yes, it is true that AS can choose not to compete in these markets with a comparable product but if that is their plan they need to dramatically lower their fares. They can't get away with charging a significant premium for an inferior product over the long term when the competition increasingly offers better products at a lower price--offering a much better value. Will there be a few hold out loyalists that don't check out of the competition or that will simply pay the cheapest coach fare an expect a free upgrade? Sure, but AS will not be profitably in these markets if they continue to charge more for less. They really need to face reality.

The market will determine if Alaska’s transcon F fares are appropriate. If no one buys them, AS will either cut fares or upgrade lots of elites. Since F fares in many markets have remained high and upgrade rates low, it appears there is demand.

The word is that an updated, post-integration soft product will be announced soon with elements of the VX service (like pillows, blankets, maybe amenity kits) will be announced soon along with new menus. Ultimately, investing more in the soft product is a very cost effective way to compete out of JFK/EWR.

Most of those transcon haven't got increased competition yet. And transcon out of JFK where AS has no name recognition operating out of T7 is going to be a challenge. At least VX had some brand recognition here, AS will be purely dependent on west coast point of sale. One good case to look at is EWR-SAN performance since mint entered JFK-SAN, the F pricing basically is the same at $588 for almost everyday more than a week out, which indicates hard time selling F cabin. And coming Th/Fr/Mo have only 19/36 seats taken in total and not sure how many of that is paid F. The big test is BOS-SEA, which is going to be good gauge of AS pricing power out of SEA.

As for soft product upgrade and spending good chunk of $30 million on new lounge in JFK, none of that will cover up the hard product deficiency. It's not like D1 or mint have bad soft product or service, they are both good at that too. For the average Y cabin passenger, the experience between T4/5 and T7 at JFK is night and day. I can see why AS employees may feel they are just not investing money correctly to compete here.

One more thing to think about on that lounge cost. They have about 15 flights a day departing JFK or 30 flights both direction per day, so about 10k flights a year. If we assume $20 of the 30 million is on JFK lounge, that's 2k per flight in the first year for the lounge cost or about 15 per passenger (if we assume 80% LF) or 150 to 200 per F passenger. And that's not even counting the cost of operating that lounge. No wonder they have to keep F pricing high.

I think all the talk of premium transcon products misses the mark. The back of the bus is bringing in the most revenue and VX/AS have very competitive products (if not the best). I think it would be foolish to start throwing money at lie-flats for ~12 seats.

This would make the most sense in the short term while things get sorted out with the merger, with QX, and with partnerships.

Does it?

SFO-JFK advance purchase is $114 each way Coach, $659 Business ($559 Saturday only).
LAX-JFK advance purchase is $144 each way Coach, $659 Business ($559 Saturday only).

That's a 5-7x premium based on lowest fares. If the market is there to pay up for that, does that not cover the costs?

I get that not everybody buys advance purchase either. Leaving today, SFO-JFK starts at $449 Coach and $1,309 Business. LAX-JFK is $472 Coach, $1,609 Business.

There's a decent difference between Business and Coach, it's not clear where the revenues (and profits) come from.

Yes, it does.

And lest we forget, not everyone is getting that $114.00OW fare, and few if any of those are making their way into F on an upgrade basis - most AS transcons are paid F, or upgrades from higher-end fares.

AS does have plans for higher-end service on the premium transcons than their current offering, and the details will come out on that soon. But there won't be lie-flats or anything like that; it's a never-ending, costly "arms race" to one-up each other that AS is content to allow AA/DL/UA/B6 to fight out among themselves.

I'd say it's abundantly clear to AS Revenue Management, although far less so to us FTers

Maybe I'm missing something but it looks like AS is pricing that route at $699 in F on most days.

From my experience, AS rarely has difficulties filling its first class cabin - SAN <-> Hawaii or transcons - why is it necessary to attempt to compete with Mint? Personally, I would rather have an extra row of F and Y+, assure lower cost purchase / free upgrade availability than a lie flat seat for 4 - 5 hour flights.

From my personal perspective I agree with you as I will probably never actually buy F and your plan gets me more chance of an upgrade, however I am not sure that works as a business model. I think AS has to do one of two things. Decide their F product is not going to compete with DL/B6 and price accordingly OR actually compete. Assuming they want to compete then a Mint type product is critical in certain high yield markets. Right now what we see is an inferior F product and pricing as if they had a lie flat product. I stay loyal to AS (for now) but newer customers who actually pay for F are going to see pricing on DL/B6 that is in many cases is less than F on AS, plus they both have a better product.

AS has said their RASM expects to go to 4% in Q4 when every other airlines are reporting improvements. VX's old network is a big reason for that. Taking a look at those VX transcon numbers on FLL/BOS-SFO/LAX. A lot of real low yielding y ticket. And they haven't been able to get enough paid F to cover those y tickets.

Some transcon, others like BWI-LAX and EWR-SJC get very few paid F.

The ones where they have been getting a lot of paid F is getting increased competition. It doesn't matter that they have been getting paid F up till now. What matters is what happens going forward.

completely untrue. the transcon market is increasingly becoming like international flying where J cabin makes up for the cheap y prices.

Again, BOS-LAX and FLL-LAX are good example of that. sub $125 O/W y prices are common

The flights are 6 hours west bound. It's meaningless for airline that FC is filled if they are all on award ticket or free upgrades.

Have you flown BOS-SAN in the past month or EWR-SAN in the past 3 months (that's how long mint have been in these markets)? A lot of empty seats a week out even though AS does comp upgrades.

In every market that mint has entered, it has caused VX yields to drop significantly over time. What is AS doing that's going to cause that to change?