Alaska ready to ‘pounce’ on growth opportunities

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Alaska Air Group is ready to “pounce” on any significant growth opportunities that it sees, says chief executive Brad Tilden.

“If we keep our costs low, our operation great [and] a very compelling value proposition for customers, we think opportunities will come our way,” he says during an earnings call today. “When we do see the big opportunity we’ll pounce on it.”

Previous examples of Seattle-based Alaska pouncing on opportunities include its entry into mid-con and trans-con routes after 11 September 2001 and to Hawaii after the 2008 financial crisis, says Tilden.

The airline will continue to grow its available seat miles (ASMs) by between 3% and 5% annually until such an opportunity comes along, he says.

Alaska increased capacity by 7.1% in 2013 and anticipates a 5.5% increase in 2014.

One opportunity that Alaska may be pouncing on already is Salt Lake City International. Notably absent from Tilden’s comments, the airline has announced new service from the airport to Boise, Las Vegas, Los Angeles, Portland, San Diego, San Francisco and San Jose from June.

Alaska began service between Seattle Tacoma and Salt Lake City in April 2013.

Most of the airline’s near-term growth will be from Portland (Oregon) and Seattle Tacoma, says Tilden. There are significant opportunities for Alaska to increase its market share on east-west routes, especially in mid-con and trans-con markets, from these airports, he says.

Seven of the 15 new routes that Alaska added in 2013 could fall into these categories, Innovata FlightMaps Analytics shows.

New service that Alaska and its regional subsidiary Horizon Air have added from San Diego International and San Jose International airports during the past two years is also “working very, very well”, says Tilden.

Recent additions in these markets include new flights from San Diego to Boise, Boston and Lihue, and from San Jose to Honolulu and Kahului.

“We’re seeing a real nice maturation of all the new markets we’ve started,” says Andrew Harrison, vice-president of planning and revenue management at Alaska, elaborating on Tilden’s comments during the call.

He says that these new revenue flows are helping offset any yield pressures in highly competitive markets, for example north-south routes where Delta Air Lines has recently announced new service.