chrisl137

Flying out of secondary airports in LA can let you be less competitive in fares - if you compare LAX vs BUR to points up the pacific coast, AS can and does get away with charging more to fly out of BUR - the convenience in time and traffic (or cost difference of a rideshare to the airport) is more than worth it. If traffic to LAX gets much worse it will make the B6 nonstop from BUR-BOS much more appealing, even though I'm unlikely to fly them for any other route.

eponymous_coward

Yes, I get that. But that all is what has to pencil out. Dumping money into A321s or 737Max10s with a transcon config for a small number of routes (we're realistically talking SFO/LAX-NYC/BOS, maybe SEA-EWR/WAS/BOS and SFO/LAX-WAS) is a pretty small portion of Alaska's route network and passenger count. It has to have a pretty outsize affect. And all AS's competitors on these routes have a hub in NYC (or in B6's case, BOS as well, or in UA's case, IAD) which helps the other side of their California transcons. AS doesn't.

Kacee

What's the relevance? UA doesn't offer premium t-cons to WAS. The only premium t-con service to WAS is DL LAX-DCA.

More generally, I think the question is whether AS can compete on t-con routes, which is apparently something it does want to do.

VegasGambler

Why does it have to have an outsize effect? If the number of routes is small then the number of planes to be configured is small the the cost is small. If it makes more incremental revenue than it costs on those routes then it's successful. It doesn't need to increase AS' margins network-wide from 2% to 5%. Solve a problem, see a gain, and then move onto the next problem.

But don't say that your numbers are not good because your yields on transcons are bad, and then when it's pointed out that the F product is worse, which of why no one buys it, dismiss the people who pay for F as a "small part of the market" and say that you'd rather give F upgrades away for free rather than sell them anyway. That is just horrible leadership. If something is causing your numbers to lag, the next thing out of your mouth has to be a proposed solution to the problem, not a statement that you are going to keep doing things the same way. This is not unique to the airline industry -- it's true for any business (or really anything in life)

fly18725

Its only horrible leadership if you grossly misstate someone’s words to prove a point.

jinglish

​​​​​Keeping a dedicated subfleet is not cheap just because said fleet is small. AS gets to spread slack across a fleet of 230+ mainline aircraft for IRROPS recovery. If they were to launch a dedicated subfleet of, say, a dozen planes, they'd basically have to have one sitting around at all times if they wanted the same level of recoverability. And an idle aircraft is an expensive aircraft.

CalanMan

This isn't true at all. Having a sub-fleet with a different product on board carries overhead. It reduces AS's ability to swap other aircraft in if there is an equipment issue, and creates a whole new set of parts that need to be stored. Presumably these lie-flat seats would require significantly more upkeep than the current F offering does, and on a different schedule than seats without servos require.

I'm not saying that adding that complexity can't be worth it. Clearly B6 found it to be worthwhile. But if adding a special tcon flat product boosts the performance of just those four routes by a small incremental amount, then AS will have lost a significant amount of money on the endeavor. That's why it would need to have an outsized effect.

JacksonFlyer

This thread seems to be turning into the Virgin faithful (SFO and LAX) versus the Alaska faithful. However, I do agree with this statement above. Much like AS went to the 737 model initially to align maintenance, pilots and crews, I cannot see how they would ever designate a portion of their fleet to just transcon to compete against the big 3. Given the size of the company, this would be an operational nightmare trying to align a sub-fleet to a specific route. I can see valid points in the numerous discussions above, however, I think AS management has a long term plan. I, for one, am a longtime investor in the company and despite the ups and downs that follow any company, I am confident in the long term success of this one. Have they stumbled in the past and will they in the future? Absolutely, but I think it is pretty solid. Of course, I am also a long time investor in Boeing, so we will see how that goes.

jinglish

As someone who defected from AS to DL last year, I don't think I even qualify as one of the Alaska faithful. I just don't appreciate armchair CEO-ing from parts of the "VX was my waifu" crowd who appear to know even less about running an airline than I do, which certainly isn't enough to qualify me for Tilden's job.

For what it's worth, I'm not convinced that AS's current path is going to work out for them, especially if they keep pricing their F product the same as the competition's lieflats. But between subfleet costs and the fact that the Big Three and B6 are running plenty of premium seats in those markets--with B6's entry having driven fares down considerably--I'm very skeptical that copying them is going to rake in a whole bunch of cash for AS as well.

williwaw

I'd be surprised if there is any investment in hard product for First in the next couple years just based on the concerns over the next recession. Premium cabin revenue is driven by business travel and if that softens in 2020 you'd hate to be holding the bag the costs for equipment.

eponymous_coward

Ding ding ding.

VX's network was more oriented towards "take out AA/DL/UA by offering a nice premium product and some interesting stuff in coach"- they didn't even really commit to serving PDX, becase OOOH LOOK SHINY THING DAL LET'S BUY SOME EXPENSIVE DCA AND LGA SLOTS. Well, everyone caught up in coach, and AA/UA/DL caught up in premium, then B6 decided to take their swipe at things with Mint. And here we are.

Oh yeah. One other thing.

if you add back in "merger related costs" (which are still a thing for AS at the moment) for their Q1 results go to 25 million behind B6. This isn't to say their results are amazing, but if Mint is so amazing...

JetBlue | JetBlue Announces Q1 2019 Results

Huh. A dedicated transcon fleet everyone swoons over might not save your bacon, and you could be in a tough, crowded market. Go figure.

tphuang

I think you are really looking at it the wrong way or trying to be difficult here.

B6 is in a different position than AS. AS has many things B6 does not have. AS has a hub with over 50% market share + 2 other hubs of over 40% market share with no other carriers building up. All of B6's major focus cities are huge battleground where other carriers are doing market share battles. Outside of the threat faced by HA these days, there is really no other carriers facing the kind of pressure that B6 faces. Only JFK is kind of free of new pressure, but they are still much smaller than DL in NYC. If not for mint, B6's performance would be even worse in an already tough quarter.

I think the lesson from premium transcon markets of JFK-LAX/SFO is that you need to have a competitive premium product to not loose your shirt off. B6 had the choice of either dropping LAX and only fly to BUR/LGB or join the arms race. It chose the latter in what was a risky move and it worked out really well. Without its mint success, it probably is takeover target right now. AS is not under the same type of pressure. It can chose to not fly BOS/JFK-LAX/SFO. It's model works pretty well outside of these markets. Or it could just drop BOS/JFK-LAX, since LAX is a secondary type of station where it's not serving big corporate client.

As you always say, WN has done very well without getting into these markets. AS managed great margins for years without serving these markets prior to the merger with VX. There is no reason it has to keep serving them.

sfozrhfco

Once again, just like ALK management, not understanding the market forces and trying to compare apples and oranges and not understanding why what one has always done does not work in highly competitive markets. Remember that every VX route was highly competitive from the start. They only survived by offering the best product at the time of their inception and creating a buzz with their brand--combined with their luck that UA at the time was a carrier to be avoided at all costs. In the same way, B6 has faced steep competition in every market since their inception. They also had a ground breaking product for the US AND started pricing every flight as one way fares which was also ground breaking at the time. They had multiple carriers trying out new business models against them which all eventually failed but put lots of pressure on the profits of B6. Delta installed in seat entertainment systems which continues to separate themselves from the other major carriers. AS has been able to coast with minimal competition at airports with little congestion. Now they have DL in Seattle which is getting more and more congested and their on-time performance has suffered. They are facing competition they have never had to deal with in California. Yet they have failed to adapt. If they want to continue as they had been, it would probably be best for them to just end many of the transcons from California and find a new niche for the excess capacity. They successfully made the transformation from Mexico flights to Hawaii flights at just the right time and were successful for years after that decision. Now they are facing competition there and just complain about declines in yields but continue to insist everything is fine. More and more competitive capacity will be added by WN and others and AS will likely not last on many of the California-HI flights--or at minimum will see significant decreases in their profitability. B6/VX had to fight for their lives every day on routes with significant competition. AS has been in a bubble until recently and now has to deal with a congested hub in SEA and a lot of competition from much bigger airlines with much deeper pockets in California. Pretending that they can just coast along without changing a thing has been enough to dupe the Wall Street analysts for the last two years but their patience will soon come to an end if things don't turn around.

eponymous_coward

So, AS sucks because Seattle. B6 rules because Mint. Don’t worry your pretty little head about B6’s quarterly profits going down year to year because Mint rules. The plan of premium transcon cannot fail, it can only be failed.

Got it.

fly18725

Don’t forget, if you disagree with my position it is because you’re too stupid to understand.