eponymous_coward

rustykettel

WebTraveler

Sad, considering what was. AA and United own the EUG-LAX route now; Alaska none. That's plain amazing and shows how Alaska has lost its way.

bmvaughn

sfozrhfco

Don't think this is actually true. It was more of a function of AS having their attention diverted by the QX fiasco last year, the need to keep gates in SEA, and the rush to "gain relevance" in California while subsequently pulling back...in combination with the decision to basically halt growth through 2019. While AS may be standing still for the next 14 months as they find more ways to cut costs, their competitors have even more time to pick at AS and poach routes in former AS strong holds.

bmvaughn

acarney

I saw that! I'm very happy to hear my "little" (almost 300k people) home of PSC is getting it's direct to LAX route. I'm much less happy that it's on UA... but so far prices aren't too bad and I'm glad it's an E175 and decent schedule. I love the ability for the single seat F aisle on the E175 and round trip in F seems to be $550 to $600, which isn't to terrible considering that's what I would pay on Delta to do round trip to LAX in F and that forces a stop in SEA. I kinda thought AS might run some ~$89 economy fares like they do from SEA to LAX where as I doubt UA will go much below their ~$120 economy price on this route. I also wish I could be earning miles on AS or Delta compared to UA...

sfozrhfco

Except that it was self inflicted wounds that caused them to need to halt their growth. If you are not growing and need to add flights you may not even need to maintain your market share at SEA, that is not a great position to be in--especially as your competitors continue to chip away at routes that were once profitable additions to the company. You become less relevant in formerly important markets and are in a never ending battle trying to tread water in SEA while overall profitability continues to slide. Cutting your way to success when your competitors are all growing has not been a very good strategy for any US airline.

WebTraveler

Perhaps, but Alaska will never be successful if it remains concentrated as a one city airline. Abandoning traditional markets and loyal customers altogether has impacts as well. Customer loyalty is an intangible that is often priceless. I still predict in 5 years Alaska will be toast if it can't figure itself out. Cutting and alienating customers is not ever going to bring the loyalty necessary.

The Virgin acquisition was a colossal disaster for Alaska. Sure it eliminated a competitor, but on very few routes. Maybe if Jet Blue was the buyer it would have had a greater impact.

For Alaska to be successful and grow in market share it needs to build loyalty in a city other then Seattle.

jinglish

If they hadn't bought VX, B6 was going to be the buyer. Period. And AS would've found itself in a far worse position than it's in now if they'd let that happen.

Snowdevil

Isn't this a contradictory post? You say they can't be a one-city airline, they need to build loyalty outside Seattle, then in the same post, say acquiring Virgin was a "disaster."

Acquiring VX was never about eliminating a competitor, as they only overlapped in six markets. This was about keeping a much more nimble competitor (B6) from getting a west coast franchise to build on, while simultaneously attaining a fully functional hub operation in SFO and even more market share in LAX, two cities that are already maxed out.

In short, the goal was to do exactly what you've suggested, which is to build loyalty in California in general, using the Virgin platform as a springboard for that growth. And while some un or underperforming routes out of SFO have been cut, since the acquisition, the number of departures out of SFO and destinations served from there are up.

Calling the VX purchase a disaster is completely misreading the situation. It actually accelerated Alaska's plans, which would have taken at least a decade to do if attempted organically.

sfozrhfco

Would have been a much smarter move if AS started those negotiations a few years before they did. The "disaster" was not about the idea but about the cost, timing, and execution. Making the purchase at the height of the cycle was not a great move and may end up being more harmful to them but only time will tell. SFO/LAX may well up being more of a liability than a benefit for AS--especially as they need to continue to shift assets to SEA to protect their market share there at the same time competitors are growing much faster and getting stronger and stronger in California.

eponymous_coward

VX wasn't turning an annual profit as late as 2012; the IPO was November 2014 (and the profits for 2013-2014 weren't exactly huge, they were less than the loss for 2012). VX had to tap the brakes on their expansion plans and benefit from that rising tide of better fuel prices/stronger economy to get to a profitable status. Also, the VC firms that financed VX (and put in a LOT more than they were originally told they were going to) weren't about to leave until they got their money back, so I'm not sure an AS/B6/whoever lowball offer "a few years before" would have been accepted- not to mention that offering much at all for an airline that was losing money hand over fist doesn't make a lot of sense. VX didn't prove the proposition could work at ALL at doing anything other than lose large buckets of money before 2014-2015.

Yeah, sure, "winner's curse" arguably applies to whoever won the VX bidding. But good grief. AS still has a nice balance sheet after the VX buy. They have a better debt to capital ratio than they did in 2012 (better than UA's, incidentally). It's not like they're going to go broke or have to leave SFO/LAX tomorrow. They'll probably be #2 at SFO at around ~10% and around %10 at LAX for a while, and we'll see where they go from there (basically it's execution, and I don't think they're perfect but it's not like they're a complete disaster either). Basically they'll grind it out in their other CA airports for little bits of market share like they did for SAN/SJC, as an LCC that has some traditional carrier dressing. They can probably do this the same way FL did in ATL (and VX did in SFO/LAX). Expanding in CA is a hard task against everyone (Big 3 and WN) but SEA/PDX have never been fortress hubs the way someplace like EWR, IAH or MSP are with ~70% dominant market share for one airline, so competition is something AS is used to. We'll see if they can hack it.

AS Flyer

This is a ridiculous statement. By what metric is this "colossal disaster"? There are still Virgin planes flying around with seatback TV's and ordering and their small First Class cabin. The dust is still settling and the two airlines are still in the process of becoming one airline. When all workgroups are merged together, Airbus and Boeing planes are flying throughout the merged system, there is no distinction between a L-VX plane and a L-AS plane, then you can start to consider whether or not the merge is actually a failure or a success. Delta closed Memphis as a hub and significantly downsized Cincinnati. United and American crews have only begun flying together recently. UA is still figuring out what's working in terms of network, and so it seems is AA. It doesn't seem that those mergers were failures - they seem to be growing and making tons of money. All of these things will take time, but in terms of time, Alaska has forged ahead much faster than the other airlines. There have been some successes and some failures. As a company, there will probably always be successes and failures. That's the way business goes. Sometimes if you don't try something you won't know if it's going to work or not. The SFO and LAX networks are larger than they were before. PDX is as well. SAN and SJC have slowly grown into much more important focus cities. The network will mature and some things will work and some won't. It doesn't mean anything is a "colossal disaster".

WebTraveler

The Virgin purchase and the integration has been a disaster. Netwise they picked up a few routes and abandoned the rest. Abandoned. Started off strong and then pulled back on almost everything. So SFO has been largely lost as a market. Alaska has a hub at LAX where Virgin also had a presence, and has pulled back on that as well.

With some exception, Alaska is a one city airline. I don't think putting all your eggs in one basket is a good option. That's my opinion. And I still think in 5 years Alaska won't exist.